An entrepreneur is one who takes on the personal and financial risk of starting a business. Increases in new jobs in recent years are primarily due to the growth of small companies. New books and magazines cover the topic in great detail. Special features in established newspapers and magazines provide readers with how-to-do information and profiles of successful entrepreneurs and their businesses. Colleges and universities offer special classes and even degrees in entrepreneurship. Large organizations, recognizing the value of an entrepreneurial approach, look for employees who function as part of "entrepreneurial teams" to develop new products. Americans of all ages possess the entrepreneurial spirit. This spirit in combination with knowledge and experience contribute to success.
Challenging career options for business professionals also exist in the areas of education and consulting. These areas along with business ownership provide opportunities for individuals who value individuality, freedom, and variety. On the other hand, the work can be more demanding and require greater knowledge and skills than other areas of business. For these reasons, the careers described in this article may not be for beginners.
The purpose of article is to help you decide which of these-- education, consulting, or business ownership-- are viable career options for you. You may decide that your interests are strong, but you lack some of the requirements for success at this time. In this case, any of these options can be incorporated into your career plan but as a medium- or long-range rather than an immediate goal. This article will make you aware of the challenges and risks involved in these careers and describe how to prepare yourself for entering these fields.
Business Education
College and university teaching is very satisfying to those who value flexible schedules and the ability to identify and pursue their own areas of research. Professional business educators find positions in two- and four-year colleges and universities offering programs in business. A master's degree in one of the business disciplines or an M.B.A. is usually sufficient qualification for a teaching position in a community college. Depending on supply and demand, a doctorate might be required. It always helps to have the doctorate. A doctorate is always required for tenure track positions in four-year colleges and universities. Earning one's doctorate requires a large commitment both of time and money. After a four-year bachelor's degree program, a master's program requiring at least two years of full-time study and usually a master's thesis must be undertaken. Successful completion of a master-level program does not guarantee admission to a doctoral program.
Applicants to graduate business programs must have earned a specified grade point average in undergraduate courses, obtained a certain score on the Graduate Management Admissions Test (GMAT), and demonstrated the potential for conducting original research. Doctoral programs require at least two years of full-time coursework and seminars along with the design and completion of a doctoral dissertation. This can be a lengthy process, and each step must be approved by a committee before the candidate may go on. A review of the literature, design of the project, data gathering or laboratory experimentation, and an analysis of results can take well over a year to complete.
Instructors in two-year schools primarily teach but may be expected to write books and articles as well. University professors normally have lighter teaching loads but are required to publish articles in their field as a requirement for promotion and tenure. The "publish or perish" edict is in force in most colleges and universities. In addition, both instructors and professors are evaluated on service to their schools, which usually includes serving on committees and can involve fund-raising. Assistant professors are promoted to associate professor, then full professor. Often college professors enter administrative positions such as department chair or dean. Such posts as Dean of Undergraduate or Graduate Business Studies or Dean of the College of Business Administration are usually filled by former professors, as are other deanships on a college campus It is not unusual for professors to earn money outside the university as consultants, writers, and sometimes entrepreneurs.
As the demand for business professionals increases, so does the demand for educators. Demand may vary with the area of specialization. Professors in accounting, finance, and management information systems are in high demand at this time. Doctoral candidates may concentrate in one or more specific areas within their chosen field, for example, accounting in not-for-profit businesses or marketing research in service industries. New doctoral graduates are considered for positions as assistant professors. Selection criteria can include dissertation and other research publications, evaluations of professors, and experience outside the doctoral program such as previous employment in business. In addition, teaching evaluations may be considered since most doctoral students teach undergraduate business classes as part of their graduate assistantships.
The reputation of the university and its doctoral program as well as the student's assigned major professor are factors that come into play when recent recipients of doctorates apply to prestigious and well-known universities. Therefore, those seeking doctorates should carefully evaluate a school and its program before entering. Finding a major professor who shares a student's research interests and who is well known in the field can make doctoral study more valuable, thus the student more marketable when entering the job market. Similar to the mentor in business organizations, the major professor can help the student develop the research interests and abilities to guarantee success in the academic community.
At the same time, the student works hard for the major professor, enhancing that professor's productivity.
Consulting
In good humor, consultants have been defined as professionals who have been out of work for more than two months. Regarding their work-consultants borrow your watch, then tell you what time it is. Humor aside, consultants provide a valuable service in a constantly changing business environment. Business consultants are problem solvers with both extensive experience and an area of expertise. Specializing in various areas of business such as strategic planning, information systems, feasibility studies, and market and product research, consultants are widely used throughout business and industry to help plan strategies and solve problems when strategies go awry.
What Consultants Do
The primary work of consultants is to structure and solve problems. Since consultants work for many clients, they are exposed to different methods of solving problems and a variety of valuable sources of information. The consultant uses diverse experiences to analyze and solve problems for clients. Having knowledge of what works and what doesn't work in a variety of situations, the consultant makes recommendations that can save time and money. Most consultants have tremendous freedom over their time and other resources. Whether they freelance, work in small companies, or work for large consulting firms, they work very independently with individual clients. In order to be rehired for additional work by a client, a consultant must demonstrate the ability to help solve the client's problems in both creative and cost-effective ways. Consulting is not the job for someone who wants to work less and avoid the nine-to-five routine. Longer though less routine hours are required for successful consulting. Often client companies impose difficult-to-meet deadlines and expect unrealistic results.
Unless a company is rehiring a consultant who has worked for it previously, sometimes several consultants are scheduled for interviews. Who is hired depends on a number of things. The first is how well the interviewer and consultant get along personally, since they will usually be working together. Another factor is the quality of the consultant's references, including companies for whom the consultant has completed an assignment similar to the one proposed. Though consultants may work for competing companies, often consulting contracts stipulate that they may not disclose privileged company information or work for a competing firm for a certain time period. Finally, the number of years of experience and the quality of that experience is considered. Consulting fees vary greatly depending on the scope and complexity of the project and the reputation of the consultant. Well-established, successful consultants rarely lack employment. However, building a reputation as a consultant requires hard work over a number of years.
Consulting Firms
Top consulting firms hire the most talented graduates and then train them. These opportunities in firms also offer summer internships to promising candidates. Since people are the greatest resource in consulting companies, everyone in large consulting companies gets involved in recruiting new employees. In general, consultants enter the field with two to four years of experience and a college degree, often an M.B.A. or doctorate. Top consulting firms hire graduates from the best business schools, then train them. Summer internships are offered to promising candidates by these firms, enabling them to evaluate recruits performing typical tasks before offering them permanent employment with the firm.
Work in large consulting firms is characterized by pressure, long hours, travel, and high turnover. These firms are partnerships with an up-or-out policy, that is, consultants have from five to seven years to make partner. If they fail, they are out. Only one in five who begin work with a large company are expected to make partner. Many opt for consulting with large firms for the training and experience, then go out on their own by choice. Most consulting firms are based in the Northeast and California. Larger firms have branches throughout the country.
Clients retain consultants on a continuing basis, so their work tends to be long-term oriented. Entry-level consulting work in large companies is primarily research. As junior consultants or associates demonstrate the analytic, interpersonal, and motivational skills required for success in the job, they are promoted to a position entitled case team leader or senior consultant. In this capacity, a consultant supervises a small team, normally working on one or two cases at a time. Three or four years later, if the senior consultant is performing well, he or she is promoted to consulting manager. As manager, a consultant leads a consulting team on important client projects. Once promoted to junior partner and finally senior partner or director, the consultant's work is primarily marketing the firm and its services.
Though exceptional beginners may be hired out of college with undergraduate degrees, an M.B.A. is required by many firms for advancement. An average annual salary offered a beginning consultant is $35,600, according to the National Association of Colleges and Employers (NACE) April 1997 salary survey. In addition, a consultant may earn mid- and end-of-year bonuses. Beginning consultants with M.B.A.s from top business schools such as Harvard and Stanford earn $60,000 plus bonuses. Salaries increase dramatically with promotions.
Retired executives or executives between jobs find their experience and insights very marketable as consultants. A strategic planning consultant should have been employed as a successful manager in a position fairly high up in an organization before endeavoring to establish a reputation as a consultant. Although consultants are well paid when they work, paying the bills requires steady work. Self-employed consultants must earn 50 percent more money to pay for the costs of doing business and the benefits normally provided by the company such as health insurance, holidays and vacations, travel expenses, office space, supplies and equipment, clerical help, telephone expenses, and so on. The image projected through the consultant's dress, manners, and office will have great impact on landing jobs. Recall that when people pay a consultant considerably more than they pay the average manager, they expect a high degree of professionalism. Even though consultants are self-employed, they are still governed to some extent by the behavior and dress codes of the particular industry for which they consult. For example, consultants are better received in the banking and insurance industries if they are conservatively dressed and clean shaven.
It is unlikely that one can be a rugged individualist and a successful consultant at the same time. The successful consultant is aggressive and willing to go out and hustle business. This alone is hard work. One way to do this is to become known through publishing articles in trade journals. Still another way is to become actively involved in professional organizations, thus meeting many potential clients. Efforts can't end here, however. Using former clients to identify potential clients, consultants must sell their services to executives with the power to hire them. Consultants who want to run their consulting as a small business and maintain independent contractor status in the eyes of the Internal Revenue Service may use broker firms (which operate something like headhunters) to find consulting jobs. The broker earns from 25 to 40 percent of what the consultant is paid on the initial contact with the hiring company, and less in subsequent contacts.
Independent consulting is not for everyone. But if one has expertise in a sought-after area of specialization, can sell himself or herself, is financially well off enough to survive the lean times, and wants the challenge and freedom of consulting, my advice is to go for it! Those who are unsuccessful can always give up the business and find a salaried job. It is easier to recover from a loss of self-esteem if a person is gainfully employed.
A subset of consultants who provide a specific service are contractors. Some people make the following distinction between consultants and contractors. Consultants analyze a situation, propose a solution, but do not implement it. Con-tractors, used predominantly for programming, implement predefined solutions. From teenagers to those with years of experience, from the physically handicapped to the most athletic, from totally self-employed to moonlighters-any creative individual with good computer programming skills can be a contractor. Industry experts believe that one-half of the nation's full-time programmers moonlight.
Sources of Additional Information for Consultants
Numerous publications are available to those interested in consulting as a profession. Consultants are listed in a number of directories, including Dun's Consultant's Directory and Consultants and Consulting Organizations Directory, found in the reference section of many libraries. Consultants News and Journal of Management Consulting are periodicals covering up-to-date information in the field. Some associations for consultants are listed below:
American Consultants League 1290 Palm Avenue Sarasota, FL 34236
Association of Management Consulting Firms (ACME), New York, NY 10175-3598
(ACME provides the Directory of ACME Member Firms Interested
in Receiving Resumes from Candidates to job seekers.)
Institute of Management Consultants (IMC), New York, NY 10075-3598
(Members of IMC include ACME firms, public accounting firms, small firms, and independent consultants. The organization offers a three-day course, Fundamentals of Management Consulting and certifies its members as Certified Management Consultants[CMC].)
Entrepreneurship and Franchising
The new generation of entrepreneurs is better educated and starting more sophisticated businesses than their predecessors. Some new business start-ups have been by those who lost their jobs as a result of downsizing, but most have been started by individuals seeking a better quality of life than they were able to have working for someone else. Most of today's small businesses provide only a modest living for their owners. The majority will go out of business within the first three years. Entrepreneurs are those individuals who are willing to assume huge personal and financial risks to use their skills or abilities, to gain control of their lives, to build for their families, for the challenge of it, to live the way they want or in the place they want, to gain respect or recognition, to earn lots of money, to fulfill someone's expectations, or as the best employment alternative available.
Succeeding as an Entrepreneur
It is amazing to think of small businesses that started out in a garage--Walt Disney drafted his first cartoons, Steve Jobs and Stephen Wozniac assembled the first personal computer, Lila and DeWitt Wallace conceived the Reader's Digest, Buddy Holly and the Crickets rehearsed the music that helped create rock-and-roll, C. E. Wollman turned his crop-dusting business into Delta Airlines, and Ruth and Elliot Handler together with friend "Matt" Matson founded Mattel toys and Barbie. A billion dollars worth of Barbies are sold every year, and the number of Barbies exceeds the U.S. population. From small beginnings arise Fortune 500 companies. Entrepreneurs find a market niche and develop a product. The entrepreneur has the freedom to run the company in his or her own way. However, small businesses are built on more than dreams of money and independence. A tremendous amount of knowledge and effort is involved. The entrepreneur needs total commitment to the business, support from family members, a tolerance for hard work, good health, and good financial backing. Starting a business is difficult; staying in business is harder still.
The prospective entrepreneur must secure financing for the proposed venture, usually from relatives, friends, and lending institutions. Normally entrepreneurs put a good bit of their own money into their businesses. If they have developed an impressive business plan, they may be successful in getting financial backing from outside sources such as banks or venture capitalists. Venture capital firms are groups of investors who extend financial backing annually to 30,000 to 40,000 start-up companies in return for part ownership of the company. Usually the venture capital firm wants to protect its investment by having considerable say in how the company is run.
Given the idea is good, raising capital for high-tech businesses is somewhat easier than for other small businesses. This is not to say that many high-tech businesses do not go under. But the growth and potential profits in high-tech areas are appealing enough to venture capitalists to offset the risk. Many fledgling businesses fail because they are underfinanced and lack sufficient capital to remain in business long enough to turn a profit.
Once the financial backing is obtained, the entrepreneur begins planning, accounting, purchasing, producing, marketing, staffing, and managing. This requires a good general knowledge of the activities of business. Such attributes as a willingness to face risk, to work long hours, to tolerate the uncertainty of success during the early stages of the business, and to keep very thorough records in order to fill in the innumerable forms required by the government are all needed to be a successful entrepreneur.
A tremendous amount of sales ability is needed, not only to raise the capital but to attract employees willing to risk job security in a newly formed company, and to sell the product to consumers being constantly bombarded with ideas for new and better products. The entrepreneur is of a rare breed, both resilient and tough-flexible enough to change plans when advantageous and strong enough to handle the disappointments and problems that plague all who go on their own into business.
Franchise Ownership
Many who want to own their own small businesses, but have neither an original idea nor the business acumen to start a business from scratch, choose to buy a franchise. A franchise can be defined as an agreement between a small business owner and a parent company that gives the owner the right to handle the company's products or services under conditions agreed upon by both. The store itself is also called a franchise. Franchises are in over 65 areas of business and generate around $800 billion in sales every year. A great many small retail stores are franchises, including fast-food stores, gas stations, print shops, and others selling almost every type of good or service. Statistics show that the proportionate number of failures among franchises is significantly less than among other independent businesses. And success stories are plentiful. Leon Harman, the 1996 Pioneer of the Year, became the first Kentucky Fried Chicken franchisee in 1952 and now owns 350 stores around the country, making him KFC'S largest privately held franchisee.
Certain advantages to franchises help minimize the risk of failure. Training and assistance from the parent company in choosing a location, setting up shop, estimating potential sales, and designing marketing strategies that have worked in similar locations are very helpful to the new owner. Another advantage to franchises is the benefit of having a nationally known name and tested products. Cooperative buying power enables the franchisee to get supplies at lower costs, and sometimes credit assistance. These advantages do not guarantee success. Even parent companies sometimes fail, bringing down all franchise stores as well.
Costs associated with a franchise include some or all of the following: a franchising fee, a percentage of the profits of the business, and an agreement that products or equipment will be purchased from the vendors specified by the franchiser. In the relationship between franchiser and franchisee, the bargaining position of the franchisee is far less than that of the franchiser. Thus caution should be exercised before entering into an agreement.
Some general guidelines for those interested in starting a franchise are as follows: Before entering into an agreement, a potential owner should carefully read the prospectus provided by the parent company and get legal advice as well. Potential profits should be assessed by questioning other franchisees and objective sources. The Federal Trade Commission requires that franchisers divulge any litigation in which they are involved. Complaints filed with the Federal Trade Commission against parent companies have been growing more than 50 percent annually since 1990 and number in the hundreds. The franchisee should obtain his or her own land and lease-hold improvement costs and not rely solely on the franchiser's estimates. Return on investment should be calculated using the prospective franchisee's figures. Remember that the franchiser is in business to sell franchises and is bound to make them look as attractive as possible.
Growth in Small Businesses and Franchises
Small businesses contribute greatly to the health of the U.S. economy, creating both products and jobs. About half of the nonfarm, nongovernmental employment in the country is in small businesses. Apart from job creation, entrepreneurial companies spur large ones to make innovations in products and to create new markets. Women have been starting businesses at twice the rate of men. Today, more than 7.7 million women-owned businesses, not all small businesses though, pro-vide jobs for 15.5 million people and generate nearly $1.4 trillion in sales. More African-Americans are starting their own companies with help from a black business network.
It is estimated that half of all retail sales are generated by franchises. Such mainstream franchises as hotels, fast-food restaurants, service stations, and car-rental agencies have been joined by business and professional services. Growth in franchise opportunities will be helped by the lower cost of franchising. Uniform disclosure documents are accepted in all states, reducing legal fees. Experts were asked to predict tomorrow's successes and they listed better tasting bagels, business services, temporary employment agencies, travel agencies, fast food in Eastern Europe, buffet-style dining, home-based services such as mobile dry cleaning and auto detailing, and the information superhighway because someone is bound to figure out how to sell a franchise.
Sources of Additional Information for Small Businesses and Franchises
Usually small family businesses employ family members in key positions and. if the business has a board of directors, they are all family members. The question of where to get objective advice on business matters arises. The Small Business Administration, with offices in all major cities, is an excellent source of information for those who want to start their own businesses or need help once they have set up shop. Numerous brochures published by the SBA are available in SBA offices around the country or may be requested by mail. These brochures give valuable "how to" information such as developing a business plan, acquiring financing, marketing products, and much more. Many books have been written on managing small businesses. Small business consultants offer services to small business owners who can afford them. A source of advice for businesses with annual revenues of at least $2 million and at least twenty-five employees is through a San Diego-based company called Executive Committee Inc., which organizes sessions for groups of executives from small companies. These sessions consist of a presentation by a business expert and a problem-solving session during which the executives help one another find solutions to problems. Membership in an executive group is by invitation and costs $7,600 per year.
Information and assistance for small business and franchise owners can be obtained by writing to some of the following:
Chamber of Commerce of the United States, Washington, DC 20006
International Franchise Association, Washington, DC 20005
National Association of Small Business Investment Companies, Alexandria, VA 22314
National Association of Women Business Owners, Silver Springs, MD 20910
National Federation of Independent Business, Nashville, TN 37214
SWAP Club International, Arvada, CO 80001
U.S. Small Business Administration, Washington, DC 20416
The Small Business Administration (SBA) offers a wide range of publications useful to those interested in starting small businesses and franchises and running them profitably. SBA offices are located in cities around the country and toll-free phone numbers are offered for those who live in towns without them.
Another source of information on franchises, the Franchise Opportunities Handbook published by the Bureau of Industrial Economics and Minority Business Development Agency of the United States Department of Commerce, can be found in the government documents section of most libraries. Published monthly, it includes a list of franchises for sale as well as excellent tips for prospective franchise owners such as a checklist for evaluating a franchise, financial assistance information, and a bibliography of sources of franchising information. The following directories list opportunities and advice:
Directory of Franchise Business Opportunities Franchise Business Opportunities Publishing Company 1725 Washington Road, Suite 205 Pittsburgh, PA 15241
Directory of Franchising Organizations Pilot Industries, Inc. 347 Fifth Avenue New York, NY 10016
The Franchise Annual Info Press 736 Center Street Lewiston, NY 14092
The directories listed above are revised annually and provide information on many franchise opportunities. These franchises should be thoroughly checked out by contacting both the Better Business Bureau and the International Franchise Association. Many excellent books on franchising are on the market, a number of them available through the International Franchise Association itself
