RFID In Use Worldwide

An update on the worldwide use of RFID tags:

• In London, fuel efficiency is being increased by using RFID tagged tires in combination with tire pressure and tread measurements to quickly and efficiently identify tires in need of maintenance/replacement  http://dld.bz/bPURn

• A Finnish Railroad agency is combining RFID tagged railroad cars with wheel & axle monitoring equipment to identify cars in need of maintenance  http://dld.bz/bPUQR

• A Canadian company is testing the use of RFID tagged hard hats combined with sensors on heavy equipment in order to improve worksite safety -- this would be like a smart-tech version of the tractor beeping while backing up  http://dld.bz/bPUQr

• Pennsylvania Theme Park HersheyPark is using RFID wristbands to allow guests to easily make payments and access their RFID-enabled lockers http://dld.bz/bPUQe

• A French grocery store can change the prices on 30,000 items instantly using it's RFID tagged inventory http://dld.bz/bPRHW

• An Italian Art Glass studio is using RFID tagged art to ensure the authenticity of the piece while also providing information on artist http://dld.bz/bPR9X

S/Cap RFID Tags Are Being Sold Worldwide

Our S/Cap RFID Tags have gained quite a level of acceptance worldwide.  We are ecstatic to be working with William Frick & Co. (one of the oldest and largest RFID distributors in the world) in the Americas; they have private labelled the product as part of their SmartMark(TM) line. 

http://www.fricknet.com/products/smartmark_rfid/Solar_Powered_RFID_Tag_On_Metal.html

http://www.fricknet.com/products/smartmark_rfid/Solar_Powered_RFID_Tag.html

They issued a press release last month announcing the agreement.  It can be found on their website, here:

http://www.fricknet.com/News/William_Frick_Company_Releases_Solar_Powered_UHF_RFID_Tag_With_Enable_IPC/

We are also proud to work with RFCamp in South Korea, who helped us create the technology.  They have listed our products for sale opn their website as well:

http://www.rfcamp.com/contents.asp?id=product&seq=201

GAO RFID, in Shanghai, China, is also private labelling our tags.  This is on of th elarger RFID frims around and we are happy to be partnered with them for that region.  Our tags, under their labels, are also listed on their Chinese-language website:

http://gao-rfid.cn/index.php?_m=mod_product&_a=view&p_id=719&cap_id=164

http://gao-rfid.cn/index.php?_m=mod_product&_a=view&p_id=729&cap_id=164

We are also working with other firms and are excited about future products that address different, suibstantial markets.  Stay tuned . . .

OTC Markets Data Shows Increases in Credible Companies; Decreases in Some Questionable Securities

For the last couple of years, we've reported some of the trading statistics released by the OTC Markets.  Today, they released their latest numbers.

According to their data, the number of transparent, credible companies seems to be growing while the number of “dark” firms (i.e., those that do not provide much [or timely] information) appears to be shrinking.  We compared the numbers from 2009, 2010, 2011 and the numbers as of July 2012.  The OTC Markets have several tiers:

OTCQX - the highest tier for companies that go through a rigorous review and meet certain financial standards.  This group has more than tripled in size since 2009:
2009:     78 companies
2010:    159
2011:  246
July 2012:  385  

OTCQB - for companies that are "reporting" to the SEC or a banking regulator and are current in their reporting requirements. This group (with the 2009 numbers combined between the OTCBB on Pink Quote and the OTCBB only) has seen small decreases, year-to-year, since 2010:
2009:  3,390
2010:  3,851
2011: 3,716
July 2012:  3,510

The decreases could be due to a number of reasons – for example, companies could have voluntarily decided to move to the pink sheets (to save money) or they could have been forced to do so due to failures in their reporting obligations, or they may have been promoted to a higher exchange, either within the OTC Markets, or to NASDAQ or one of the other exchanges.

OTC Pink Current Information - for companies that follow certain standards and make certain information available through the OTC Market's news and disclosure service. This group has risen steadily since 2009:
2009:   1,695
2010:  1,830
2011:  2,043
July 2012:  2,353

OTC Pink Limited Information - for companies that may or may not be troubled, but have not been current in reporting through the OTC Market's news and disclosure service. This group has seen decreases in two consecutive years: 
2009:  739
2010:  749
2011: 723
July 2012:  645

OTC Pink No Information - which includes "defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices." This group saw a sharp rise between 2009 and 2010, but has decreased substantially (by over 10%) over the last year:    
2009:  2,445
2010:  3,375
2011: 3,355
July 2012:  2,982

RFID in Hong Kong Customs

Hong Kong Customs has implemented a combined RFID and container locking system to ensure the integrity of cargo containers at two of its customs houses. Combining the RFID and locking system allows customs officials to track not only the location of containers, but to remotely track, allow or prevent the opening and closing of the container. When a container is transported from the customhouse to the airport, the receiving officials are able to see that it has not been opened en route.

Customs officials also estimate that the new system cuts the time needed to clear containers through customs from 2-3 hours to 5 minutes per container. Quite a significant increase in efficiency.

Full text of the article may be found here: http://www.rfidjournal.com/article/view/9490/3

Small Business and Entrepreneurship - To Startup or Not to Startup Part XI - Testing and Conclusion

"The concept is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible."
--- Yale professor on Fred Smith's paper proposing overnight delivery service. (Smith went on to found FedEx)

"A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make."
--- Response to Debbi Fields' idea of starting Mrs. Fields' Cookies.

"We don't like their sound, and guitar music is on the way out."
--- Decca Recording Co. rejecting the Beatles, 1962.*

In this final article on the decision of whether or not to start a business, we will discuss testing customers and then conclude the series.

We've spent the last few articles researching our potential company's environment beginning with broad industries and narrowing things down into markets and market segments. Going through the exercise of researching all these areas should give a good idea of what is going on in our chosen market segment and give us an idea of how we want to approach our target customers. The next step is figuring out if our strategy will work.

We want to remember too that one of our goals in conducting this research is that we want to aim to try to get to our first customer, and our first sale, as quickly as possible. In the testing phase we are attempting to really get to know our customer and perhaps in doing so we can even secure an order or even an up-front payment? Either would surely make the decision to start a business an easier one to make.

Based on the information we've already compiled in our research we want to spell out who we think the target customer is, what benefit our product provides for that customer, how the customer decides whether or not to purchase our product, and the means by which we can reach our customer with our product.

Once we have all this information we can begin testing. The purpose of testing is to validate our business concept, verify what we think we know, and try to figure out what we don't know in order to then make adjustments.

Our methods for testing are surveys and interviews but may vary wildly in action depending on the nature of the target customer. If our product is something we are targeting at a very broad consumer market like for example, a new beverage, we can possibly test with surveys and taste tests at popular shopping locations. However, if our product was something like a business consulting service, it may require researching who at a target business makes the "buy decision" and figuring out how to contact some of these specific people for interviews.

We want to design our surveys or construct our interviews to find out first hand from our potential customers whether or not they would buy our product, why they would buy it, what is it that causes them to decide whether or not they would buy it, and how we they could be reached with our product.

Knowledge gained through testing can then be utilized to make adjustments prior to launching, or if the necessary adjustments are significant, perhaps a re-haul of our entire plan, and a later re-testing of the concept.

Once we've tested we want to go back and review all aspects of our research - our  financial projections, our industry and market research, and our testing results - and consider all of these prior to deciding whether or not to move ahead and start the business.

Every idea or product will be unique, some may have more attractive financial potential while others may have more attractive market opportunities, and even after all this work it will likely still be a very difficult decision. But the more we know about what we may expect if we launch, the better prepared we may be, and hopefully the higher our chance of finding a quick success.

* Full credit to "Things People Said - Bad Predictions" for the quotes at the top of this article. 

Small Business and Entrepreneurship - To Startup or Not to Startup Part X - Market Segmentation

"The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself" -- Peter Drucker

"A market is never saturated with a good product, but it is very quickly saturated with a bad one" -- Henry Ford

The last article in this series focused on the difference between industries and markets, and the benefits of focusing on market segments.  For this post we will look at how to segment markets, what bases we should use for our comparisons, and how to select attractive markets.

As we stated in the previous post, studying market segmentation is an important practice for all companies but is especially so for a start-up. With limited resources market segmentation can focus a potential start-up on its most likely avenue of success, and least likely avenue of wasting those limited resources. What we want to do is identify different customer groupings in our market, explore what it is that drives each segment,  pick the most attractive segment and begin testing our product/idea on that group.

Let's begin with how to segment our market. In their book Consumer Behavior, Leon Shiffman and Leslie Kanuk identify four major categories of bases for segmentation[i]. These are Empirical Personal Features, Usage and Purchase Behaviors, Personality Lifestyles and Sociocultural Values, and Attitudes and Preferences Regarding the Product. When trying to decide how to best segment your market try looking at your market from these angles and see if one of them lends itself to your customer groupings:

Empirical Personal Features -- Demographics, age, location, gender, marital status, etc.

Usage and Purchase Behavior -- How and how often the product is used, purchased, etc.

Personality, Lifestyles and Sociocultural Values -- General attitudes and beliefs not related to the product for example, early vs late technology adapters, vegetarians, outdoor enthusiasts, i.e., this can be nearly anything.

Attitudes and Preferences Regarding the Product -- This is attitudes and beliefs specific to the product like benefits desired, attentiveness to and involvement with the product, etc.

Hopefully these give ideas for possible segments for your market. Perhaps you can use a strictly regional mark up of North America, Europe, Asia, etc, maybe it's how the product is used such as for commercial, residential or industrial applications, or maybe you can segment based on benefits desired such as functionality, size, or low cost. 

Once we have our bases for segmentation we need to define each segment. The important things we want to know are:

• Identity - How do you define this segment, what is your separating characteristic?
• Size - How large is this segment?
• Growth - Is the segment growing, shrinking or stable?
• Benefits - What are the key benefits that customers in this segment seek?
• Competition - What is the nature of competing offerings in this segment and what are the competing products strengths or weaknesses?
• Examples - Can we identify specific examples of potential customers in this segment?

After compiling all this information it may be helpful to organize it into a chart for easy comparison. If no segment appears to be clearly more attractive, perhaps the market can be segmented in another way in which will better describe the market from the perspective of our product.

Once we have completed our segmentation we can identify which segment appears to be the strongest or best fit for our product based on our preliminary research. We should understand that all this information is likely to change as we learn more about our customers, and that we may even shift our  focus a few times before deciding to launch our product. 

What this exercise does is give us a direction towards which we can begin testing potential customers. The next article in this series will deal with how to test target customers.

---

[i] Shiffman, Leon G., Kanuk, Leslie Lazar Consumer Behavior, 10th edition Prentice Hall Publishing, 2010, pg 58

Enable Subsidiary Solrayo Inc Awarded $499,498 Grant From The National Science Foundation

Those of you following Enable IPC over the past few years may be aware that Enable IPC subsidiary Solrayo Inc recently successfully completed Phase I of a National Science Foundation (NSF) Small Business Technology Transfer (STTR) grant and that the company had applied for Phase II funding. Today Enable announced that Solrayo, Inc has been awarded the Phase II grant of $499,998. 


The award builds on the successful NSF-STTR Phase I project, titled “Using Nanoparticle Oxide Coatings to Extend Cycle Life of Cathode Materials in Lithium-Ion Batteries”.  During the Phase I research, this inexpensive and easy-to-apply coating was shown to help increase the cycle life of certain rechargeable lithium ion batteries by several times.  This Phase II grant is designed to allow the full commercialization of the product.  The research and technology is being developed in collaboration with the University of Wisconsin in Madison

The work is being conducted jointly at SolRayo’s facility in Madison at the lab of Professor Marc Anderson at the University of Wisconsin.  The project officially commenced on April 1, 2012 and is scheduled to conclude on March 31, 2014.  

To read the full press release please follow this link: http://www.enableipc.com/press/2012/PR20120417.htm

Small Business and Entrepreneurship - To Startup or Not to Startup Part IX - Markets

"In marketing I've seen only one strategy that can't miss - and that is to market to your best customers first, your best prospects second and the rest of the world last." -- John Romero


"Marketing is too important to be left to the marketing department." -- David Packard 

We continue our discussion on the decision of whether or not to start a business with a look into product markets and market segmentation. In this article we will examine the difference between industries and markets and the benefits of focusing on market segments. The next article in this series will look at how to segment markets and identify which to target.

Last post we started at the broadest industry our product could fit in and then narrowed industries down until we thought we might begin cutting out potential customers. This led us to the beginning of market segmentation, so we'll start here with a discussion of the differences between industries and markets, as the definitions can get a little hazy and distinctions can blur.

According the Robert M. Grant in Contemporary Strategy Analysis industries are groups of firms that provide products for markets - and industries compete in both product markets and input (supply) markets. Industries are therefore broad while markets refer to more specific products and a company in a specific industry can compete in multiple product markets.[1]

As an example, we could say a company in the automobile industry can compete in multiple markets like the individual consumer market, the rental car fleet market, and maybe golf carts.

 Why are we discussing this? Decades ago there was one primary marketing technique -- mass marketing. Basically, a company would attempt to tout their product at some general level or appealing to a very basic need in order to appeal to as many people as possible. As an example maybe advertising a cereal as satisfying hunger, a very basic need and therefore “food for everyone”, as opposed to a cereal positioned as quickly dissolvable, healthy, and full of all the vitamins needed for an infant just starting on solid foods (therefore satisfying the same need but for a very specific group). The mass marketing approach is still possible today in some industries like commodities where there is little product differentiation.

However, with competition and product differentiation companies can and do focus products on specific groups within the broader market. Today when you look at major companies, they will often have separate products targeted at specific groups or combinations of groups.

Since we've just passed Easter let's take a look at a company like Cadbury. If you look at their product line at their website (here)  you will see dozens of different types of products. They have the cream-filled chocolate eggs always available this time of year, chocolate bars with very colorful, fun wrappers (perhaps to draw the eye of children), chocolate bars with more simple wrapper designs emphasizing the chocolate (perhaps to draw the eye of adults), and even cakes, hot chocolate and coffee creams. This complicated line of products is almost all chocolate based meaning they could theoretically all be targeting the same broad market, but there likely exist many charts in the Cadbury company's marketing department detailing their definition of the different Cadbury customer groups and how each product is positioned relative to the different segments.

Large companies can afford to develop large product lines and target specific groups of customers, they can position products to overlap each other, target multiple segments, they can have broad-targeted products and very specifically targeted products. They can saturate segments for the sole purpose of preventing competitors from targeting that group. However, for someone trying to decide whether or not to launch a product and start a business, it is probably best to focus on what appears to be the best bet at the time.

There is definitely an appeal to targeting the larger number of customers that may be available in the broader market. However, it is often the case that some form of differentiation of a product could yield more success focusing on a smaller segment, then an undifferentiated product unfocused on the broader market.

Let's consider a product that has two potential market segments (A & B) which prefer different features. We can choose one or the other, or both. We can focus our product on segment A by providing A's features, or we can focus our product on B by providing segment B's preferred features. To target the general (A+B) market though, we would need to either provide both A&B's features (which would likely be more costly) or we would need a basic product which provides neither groups features (which would be less appealing).

Failure to focus on one, could lose both as a competitor will come in with an A-targeted product and another with a B-targeted product and they will either have the features your product does not (if you created the featureless version) or their products will be cheaper (if you have created the A+B version).

However, the more immediate concern is that this is a start-up company. A start-up will want successes and self-sustainability as quickly as it can get them. It may also have limited resources preventing it from targeting both markets. Studying the segments, identifying which is the most attractive and then launching one differentiated product focused on either A or B, (whichever is more attractive) will likely yield the greatest chance of success. Ideally, after achieving a bit of success with A, the company can look at offering a product for B as well, but getting to the first customer, and the first dollar, quicker, is often a key to success for a start-up.

Next in this series we will look at how to differentiate between market segments and how to identify which is the most attractive.

---

[1] Grant, Robert M. Competitive Strategy Analyis Blackwell Publishing 2008 pg 85

Small Business and Entrepreneurship - To Startup or Not to Startup Part VIII - Industry Analysis

"There exist limitless opportunities in every industry. Where there is an open mind, there will always be a frontier" - Charles F. Kettering

"The early bird gets the worm but the second mouse gets the cheese" - Willie Nelson

We continue our series on the decision of whether or not to start a business by analyzing industries and markets.

Industries are typically defined according to their product (automobiles, soda, solar panels, etc), and industry participants can include all those companies along the value chain leading to product creation. Since an industry may be defined by its product there are therefore nearly an infinite number of industries. It can therefore be difficult to decide in which industry you are competing.

Let us say we want to start a company making solar power inverters (a device that converts the direct current (DC) received from solar panels into the alternating current (AC) used in our homes). Are we in the inverter industry? The photovoltaic (PV) industry? The solar power industry (Photovoltaics, Solar Thermal (ST), Concentrating Solar Power (CSP))? It can be tough to figure out where to draw the line, but for this section we want to take a pretty broad approach, and narrow things down more when we get into markets and customers (markets are typically defined along customer groupings).

Running with this example, what we can do then is start with a brief look at power generation (gas, coal, nuclear, solar, wind, etc), then look at solar power generation (PV, ST, CSP) when it looks like we will begin excluding potential customers by narrowing further that may be a good time to stop.

For example, inverters would not be used with ST and probably not with CSP, so we concentrate on PV, but if we try to narrow the PV industry down further we may start excluding inverter users.

Now that we’ve got an idea of what our industry is we can move on to what we want to know. We will eventually want to become experts in our industry, to start we can begin with:

• What has happened in our industry in the past?
• What is happening now?
• What changes are coming, what will happen in the future?
• Is the industry growing?

Answering these 4 questions can give us a good grasp and insight into our industry and help us understand changes that are occurring. Change means opportunity and the ability to find a niche for a new company or product in a changing landscape is many an entrepreneur’s key to success.

When trying to understand the dynamic of the industry as it is now, one analysis tool that is helpful (and taught in every business school) is Porter’s 5 Forces. Our list will include more than 5 items but is heavily based on the original Porter’s forces. Analyzing our industry along these lines can greatly contribute to our understanding of the way the industry works.

Substitutes – A substitute product is a competitor that does not directly compete in your industry but which customers may still choose as an alternative. This is best explained with a simple example: in the soda industry where Coke and Pepsi may compete with one another, tap water is a substitute.

Barriers to Entry / Exit – Are there heavy capital requirements to get in our out of this industry? If so it may be a big deterrent. When thinking of high barriers to entry or exit one common example may be the airline industry, where if you decided you wanted to start an airline you may need quite a bit of money to get in, conversely if you felt you were done running your airline company and wanted out, having to sell off your assets in order to exit may be a little difficult.

Suppliers – How common or rare are the supplies you need to create your product, and therefore, how much power over you will your suppliers have, how vulnerable are you to shifts in supply? In 2009 the PV industry saw a major drop in prices (revenues for some companies) due to an overproduction of silicon, an important component of photovoltaic cells. This overproduction was a response to prior years of short supply in which the high cost of silicon made solar installations much more expensive. How vulnerable is our industry to shifts in supply?

Buyers – On the other side, what is the power of the buyers in this industry? If your industry has few buyers then they would seemingly have more power, however if the buyers have limited options available to them, limited competing products or substitutes that would lower the buyer’s relative power.

Complements – Complementary products are those that increase value when combined or used together with other products. If our product has a complementary product, where does the power in that relationship lie? Think of the solar panel example. To the end user, let’s say a homeowner, the solar panel and inverter may be complementary products, in fact, if the homeowner wishes to use a solar panel he needs an inverter to convert the power to useable alternating current. From the perspective of the inverter company, the solar panel is a strong complement, but an extremely powerful complementary product as few customers are likely to buy inverters without also buying the solar panel.  

Rivalry - In this area we are considering what are the established competing companies, how concentrated is the industry, are these companies locked in fierce price-wars (which would make things a little unattractive to a new entry)? Perhaps there is room, if there are large companies locked in fierce competition perhaps a small new entry focusing on one product niche may be tolerated as the larger companies focus on each other?

Considering all these angles, where the industry has been, whether it is growing, the nature of competition in the industry, and where the industry may be headed will hopefully lead to a good idea of the way the industry operates and possibly point out potential problems or potential opportunities for our new venture. In our next section we will narrow things down a little bit and look at analyzing markets. 

Entrepreneurship and Entrepreneurs Part II

"A ship in harbor is safe. But that's not what ships are built for." -- William Shedd


"Ever notice how it's a penny for your thoughts, yet you put in your two cents? Someone is making a penny on the deal." -- Steven Wright


In our last post we looked a little at “what is entrepreneurship” and discussed some aspects of entrepreneurial thinking. Here we will look at some common entrepreneurial traits and behaviors and then take a look at “why” entrepreneurs do what they do.

One major trait that entrepreneurs may have in common is a higher tolerance of risk. There is a definite perception that taking the leap and starting a new business is a risky endeavor. A failed business could potentially result in serious financial problems, strained relationships, and even health problems due to the high levels of stress that can be associated with entrepreneurship. A person deciding to start a business may be walking away from a regular paycheck, a secure job, a career path, and future opportunities derived from their career path. They may be walking into a time of uncertainty and high stress.

Entrepreneurs often need to take additional risks beyond those above by putting themselves on the line, making promises and taking chances. Sometimes these actions are necessary in order to get the business moving forward. Also there is always unpredictability in business, one may never know when their number one customer may leave, or which if any of a myriad of potential problems may be waiting around the next corner. When the responsibilities for the business rest largely one one person’s shoulders, the problems for the business can potentially pose big problems for that person and their personal reputation, credit and relationships.

Many entrepreneurs will try to mitigate these risks as much as possible, perhaps by conducting extensive market research or talking to as many potential customers as they can prior to launch (“testing” the idea). They may attempt to start a business in the cheapest possible manner to mitigate financial stress. Perhaps they can seal a deal with a customer, getting their first order in before they really begin to incur any costs.

There are also others arguing that entrepreneurship isn’t nearly as risky as it is perceived, especially in today’s world where jobs are not as secure as they once were. They also cite the off quoted “90% failure rate” (or something like that) for new businesses that everyone has heard and show why that number is misleading or wrong (in fact, we’ll be writing about the misleading business failure statistics in an upcoming post as well).

Whatever the true level of risk facing the entrepreneur, honest is an important characteristic. Entrepreneurs need to be honest with themselves about the condition and capabilities of their company. They need to be honest to themselves about the real potentials of their products. It is good for them to exude optimism about the company’s future and how great their product is when talking to others but if the entrepreneur buys too much of his own salesmanship they may be headed for unexpected troubles. Finally, and quite importantly, entrepreneurs need to be honest to their spouses and the friends and family. They need to be honest up-front with those people that they will need to rely on when the stress gets very high, or the money gets very low. Hopefully all of these people are aware that such things may be headed their way in the future.

Why then, with these pressures and risks do entrepreneurs choose to start businesses? Of course, with higher risks come higher proportions of rewards. Strictly monetarily, many entrepreneurs have the potential to make far more money starting a business than they may have sticking to their prior career paths. However, money isn’t everything (right?) and entrepreneurs are often quoted saying things like “you have to be passionate about what you’re doing otherwise your business will not survive the low points”. Entrepreneurs often make it sound like the potential money alone could not inspire them enough to get through what they need to go through as they grow a business.

So what does get them through the low points? Inc. Magazine, in their March 2012 issue published the results of a survey they conducted of 2,000 business founders asking why they start businesses. The #1 reason among all groups (males in their 20s, 30s, 40+s, females in their 20s, 30s, 40+s) was – Autonomy. According to the article the only distinction was whether they were seeking independence or whether they were “fiercely” seeking independence.

The next most popular response, for 5 of the 6 groups, was Power and Influence – the desire to be a leader (female entrepreneurs over 40 preferred intellectual challenges over power and influence). Other common responses where desire to manage people, seeking variety, altruism and financial gain.

We asked David Walker, CEO and founder of Enable IPC for his thoughts -  why did he start Enable IPC and other companies. Here is his response: "I think the biggest motivating factor for me to start a new venture was to avoid becoming old and regretting that I never tried". 

This concludes our brief look at entrepreneurs. Next week we will return to our series on deciding whether or not to start a business by beginning to take a look at industries and markets. 

Entrepreneurship and Entrepreneurs

“I have not failed. I’ve just found 10,000 ways that won’t work.” - Thomas Edison 

“My son is now an “entrepreneur.” That’s what you’re called when you don’t have a job.” - Ted Turner

We've decided to take a brief break from our series on deciding whether or not to start a business to take a look at the business starters themselves. We'll begin here with entrepreneurial thinking and "what is entrepreneurship" and then continue next week with a discussion of some common traits and behaviors and a look at "why" entrepreneurs start companies.

First of all, what is entrepreneurship? It is a difficult subject to discuss. According to the Small Business Administration over 600,000 new businesses are started per year in the U.S. alone. The process of forming an organization therefore can take many paths and the people behind the process come from a wide variety of backgrounds. It can be very difficult therefore, to find commonalities and it is probably impossible to say "this is what makes an entrepreneur"! For that reason, in discussing entrepreneurship we will be talking a lot about "tendencies" as opposed to "certainties".

In academia there is even debate about how to study entrepreneurship. Some advocate "behavioral approaches" focusing on the process whereby organizations come into existence. This removes the entrepreneur's personality characteristics from the equation and instead focuses on his/her actions and behaviors. The other approach, the "trait" approach focuses on the personality of the entrepreneur, seeking to identify key qualities and characteristics held in common among entrepreneurs in order to explain entrepreneurship[i]. The basic idea behind this debate is this - how do we define or explain entrepreneurship? Is it  what the entrepreneur does or who the entrepreneur is?

At http://enableipc.blogspot.com/, fortunately, we do not have to answer such questions. Instead, we can look at a wide range of common tendencies, behaviors and attitudes that help explain entrepreneurs and entrepreneurship without having to settle any academic debates (and therefore avoid having to read dozens of journal articles dating back to 1816). 

In a previous article "The Idea" we looked a bit at entrepreneurial thinking, specifically focusing on the "pains" in life and looking for solutions to those pains. In her article "What Makes Entrepreneurs Entrepreneurial", Saras D. Sarasvathy discusses different forms of reasoning - causal, strategic, and effectual:

Causal reasoning - (also called "managerial thinking" by Sarasvathy) a person identifies a goal and their given means, and then identifies paths from their means to their goal.

Strategic reasoning (or "creative causal reasoning") -  a person identifies their goal and their given means, and then identifies paths from their means to their goal, however, they may also identify or imagine new or other means, and new ways to reach the goal provided by these new or other means.

Effectual reasoning (also called "entrepreneurial thinking") - a person identifies their given means and then imagines multiple possible ends that may be reached by these means[ii].

The "pain" focused thinking comes into play more prior to developing a product or idea while effectual reasoning takes place more post-business-launch but what these two modes of thought share is that they are opportunistic. Entrepreneurs tend to benefit from flexibility and adaptability. 


The ability to re-imagine the company or the company's product in order to fit the present opportunity can be an entrepreneur's key to success. Target markets and target customers may need to be very fluid as entrepreneurs adapt to new information and head towards their next (or first) customers. This is exemplified in the "ready, fire, aim" approach -- study, research, decide and launch a company, then adapt that company to market realities.

An important part of entrepreneurial thinking therefore is in their view of the future.  Looking for and attempting to predict change is a way of identifying new opportunities and anticipating obstacles in the road ahead, but entrepreneurs often also try to shape the future. They believe that the future can be controlled by their actions and that "To the extent that we [entrepreneurs] can control the future, we do not need to predict it."[iii]

In our next installment we will look at some more common entrepreneurial traits and behaviors, and also discuss "why" entrepreneurs do what they do.

---

[i] Gartner, William B. "'Who Is an Entrepreneur?' Is the Wrong Question" American Journal of Small Business Spring 1988

[ii] Savarsthy, Savars D. "What Makes Entrepreneurs Entrepreneurial" University of Washington 2001

[iii] Savarsthy, Savars D. "What Makes Entrepreneurs Entrepreneurial" University of Washington 2001

Enable IPC Update - First Profitable Quarter!

Today we have announced that Enable IPC will close this fiscal year with the first profitable quarter in the company's short history! 


Enable's CEO David Walker was quoted as saying:


"The company’s revenues have increased substantially, quarter-to-quarter, beginning with the S/Cap RFID Tag® product announcement in June 2011. As the company continues its efforts to commercialize new products including RFID tags, AAO nanopore templates, ultracapacitors and lithium-ion battery cathode coating materials, we anticipate revenues to continue to grow through the next fiscal year and beyond. We are pleased with the current pace of revenue and product development and expect these exciting times for Enable IPC to continue."


Enable IPC also announced an agreement to begin S/Cap RFID Tag® sales in China, the world's second largest RFID market, and also that the S/Cap patent applications have been filed and that the product is now officialy considered "patent pending". 


The full update can be read here: http://www.enableipc.com/press/2012/PR20120313.htm


For more information on Enable IPC's products check out the following links:


RFID Tags 
The Enable product page: http://enableipc.com/rfid.htm
Our original blog article about the product's release: http://bit.ly/yrqe4n
RFID Journal (leading industry publication) S/Cap Feature: http://bit.ly/naJqhy


AAO Nanopore Templates: http://enableipc.com/aao.htm


Ultracapacitors: http://enableipc.com/ultracapacitors.htm

Small Business and Entrepreneurship - To Startup or Not To Startup Part VI - Sensitivity and Scenario Analysis

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." - Charles Dickens David Copperfield

 "A nickel ain't worth a dime anymore." - Yogi Berra

After reviewing costs, sales projections, and compiling our cash flow projections over the previous 3 weeks, we turn this week to analyzing our statements using sensitivity analysis and discussing the use of different financial scenarios.

Now that we have our completed financial projections we can begin playing with the numbers to better understand our company. First we need to think about the figures we just developed and try to determine the key assumptions that were made. Do we think that everything hinges upon the sales price we used? Maybe we think it is our ability to secure a certain cost of materials, or to charge and collect a certain amount of shipping revenue?

If, for example, our figures were created with a sales price of $10.00 per unit, what happens to our cash needs (from Part V of our series, the amount of money needed to get our company to a cash flow positive state) if we can only sell our item for $9.00? We need to understand how vulnerable our company is to changes to our assumed figures. It may be that a change in sales price from $10.00 to $9.00 makes it impossible for this company to ever become profitable. It may be that the change has virtually no effect. If the change is drastic than we know our company is very sensitive to the sales price, but maybe we can find something to alleviate that sensitivity (maybe increasing shipping fees or find an additional source of revenue) or maybe the company is a no-go due to that sensitivity. Either way we would want to know prior to moving forward.

The other thing that sensitivity analysis can do is uncover hidden dangers. Perhaps we are certain about our cost of materials but find out that a slight increase in those costs could be devastating. Once we've studied our company's sensitivity to our assumptions we can make changes to our assumptions, or even modify the company's business model.

In this manner we need to play with our spreadsheet, alter the numbers in our assumptions, or alter combinations of our assumptions (e.g., what happens if we adjust our sales price and our rent?) and see the effect these have on our projections. This helps us to understand the interplay between the components making up our revenues and costs.

Now we can also create separate financial projections for different scenarios. We can make full sets of projections with different assumptions to show what could happen if we have to sell for $9.00, or if our material costs are higher than estimated. This can lead to "optimistic", "pessimistic" and "most likely" scenarios.

After conducting sensitivity anaylsis and compiling different optimistic, pessimistic and most likely scenarios you may begin to wonder just what are your actual cash needs? Well there are a few ways to answer that question. You can simply use your original financial projections and chalk the extra work up to better understanding the key characteristics of your company.

There are also a few methods others have suggested for what to do with your different scenarios. Say you have a pessimistic scenario with cash needs of $25,000, an optimistic scenario with cash needs of $10,000 and a most likely scenario with cash needs of $22,500. Which should you use as the real cash need for your company when considering whether or not to start this business?

One is to simply take the highest number, but this may be the least realistic of any approach as it does not take into account the likelihood that this would be your true need. In our example the highest cash need comes from the pessimistic scenario but how likely is this scenario to happen?

Another method is to take the average of your pessimistic, optimistic and two-times your most likely scenario. So in our example: $25,000 + $10,000 + 2x$22,500 = $80,000 / 4 = $20,000. This method factors in the pessimistic and optimistic scenarios while weighting the final number with the most likely cash need.

Another method we've heard of is to take the greater difference between either your most likely and optimistic, or your most likely and pessimistic, and then add that difference to your most likely number. So $22,500 - $10,000 = $12,500 (most likely minus optimistic); $25,000 - $22,500 = $2,500 (most likely minus pessimistic). The greater of the two is $12,500 and we add that to our most likely number $22,500 + $12,500 = $35,000. This method is designed to provide more of a safety net.

You can also simply weight each scenario based upon your understanding of the true likelihood of each scenario and come up with your figures that way.

This concludes our look into the financial aspects of deciding whether or not to start a company. Beginning next week we will start looking at our industries, markets and customers.

Summing it Up - Part 20 in our IP and Patents Series

This is the final part in a 20-part series of articles on intellectual property protection and commercialization.

Over the past few months, we’ve posted a lot of information, consisting mostly of summaries relating to intellectual property, patents, commercialization and other related topics. None of these articles are comprehensive, and they are not meant to be – they were simply meant to help a novice acquaint his or her self with some of the processes involved in these areas.

We’ve been concentrating on three general areas:

• Having an idea
• Protecting the idea and
• Turning the idea into something useful

Intellectual property is an interesting term – the words themselves seem to refer to things you own in your head. But, to expand on that, to make the idea useful, takes work, perseverance and a sometimes difficult but vital dose of honesty.

We are a country and a people built on innovation and risk. Ideas are great, but good ideas that are not implemented are useless.

And, while we have harped on the concept that, if there is no market for the idea then it might need to be abandoned, keep in mind that creativity is not black and white – true innovation rarely is planned.

Penicillin, potato chips, Teflon and Viagra have one thing in common: they were each discovered by accident.

So, despite our harping, an idea that seems nutty might just change the world for the better.

It’s a tough, unexplainable and impossible balance. No one can truly tell 100% of the time when to quit and when to continue a pursuit.

All we can do is keep in mind a quote from someone who knew a whole lot more about ideas than anyone else:

“If at first, the idea is not absurd, then there is no hope for it.” – Albert Einstein

Small Business and Entrepreneurship - To Startup or Not To Startup Part V - Profit Loss and Break-even

"Remind people that profit is the difference between revenue and expense. This makes you look smart." -- Scott Adams

In this section of our look into the decision of whether or not to start a new business, we will look at compiling the results of our financial projections. We've taken a look at collecting our expected costs, and predicting our future sales. Now we will combine the two but first we should note that there are many ways to format a cash flow projection spreadsheet. We will make some general recommendations that may help with analyzing the results but these are by no means the only way to do things.

For your columns, a typical dating format may begin with monthly figures (Month 1, Month 2, etc) for the first year, go quarterly for year two, and yearly for the remainder of the projection. Financial statements will typically be compiled for 3, 5 or 10 year periods.

As far as formatting the rows it is usually helpful to arrange figures categorically, and to help analyze your results later it is best to put in as much detail as you can. Remember, this set of figures is to help you make a decision on starting a business (as opposed to presenting an idea to an investor, or convincing a boss to authorize a project), we are not looking to hide anything from ourselves, we want information and functionality. Typically you would start with revenue figures, then costs, then totals, and it is helpful to try to list your assumption in the first column after your descripion, something like:

If you are able to list your assumption this way and tie your monthly or yearly figures to the assumption using formulas then changing the assumption should update all the fields in the forecast allowing for quick updates or easy sensitivity studies.

When listing your revenue figures it could be helpful later to embed in your projections the process used to determine your numbers. If you are using a salesman/marketing effort based calculation perhaps your revenue section will look something like:

• Number of Sales Staff
• Number of Potential Customers Reached per Staff Member
• Amount of Advertising Budget
• Number of Potential Customers Reached per $10,000 in Advertising
• Total Number of Customers Reached
• Percentage of Reached Customers Converted to Sales
• Total Unit Sales
• Price
• Total Forecasted Sales

Of course we can abbreviate them in our spreadsheet, but laying out all the detail will allow us to play with the assumptions and analyze changes once we are done.

When listing costs it is helpful to be organized by categories perhaps by listing up-front costs first (these may only show up in month 1 but it is nice to have the total easily identified). We can further organize our costs into variable and fixed monthly expenses. Variable would contain things that vary with the level of production (such as materials, shipping, packaging, manufacturing labor, etc); while fixed costs are monthly expenses that are expected to be roughly the same despite the current level of production (such as rent, salaries, insurance, utilities, office supplies, etc).

Now that we've compiled our revenues and costs we will want monthly (or quarterly or yearly depending on your date formatting) totals for:

• Total Cash In
• Total Cash Out
• Net Cash Flow

In addition to this we will want a running total of our cumulative cash flows. Totals should look something like the simplified example below:

Once we've compiled all our figures and totals we can look for some key points. One is the cash-flow positive point. This is the point where your net income exceeds your net outflow, when you have more money coming in than you expend. At this point your company will start making back some of the money it needed to get started. In the simplified example above, this occurs at Month 8 of Year 1, with a Net Cash flow of $2,500 ($7,500 in sales and $5,000 in expenses).

The month prior to that, Month 7 year 1 is significant as well as that is the point where your cumulative losses cease to increase. This figure is thus your "cash need". In the simplified example this company expects to lose a total of $17,500 before it becomes cash-flow positive and therefore this company needs to come up with $17,500 in order to make it to Month 7 of Year 1 at which point it should be okay on its own.

The other significant point is Month 11 Year 1, this is the cash flow breakeven point, the point where the company has made back the money from its cash needs. Next week we will take a more detailed look at our completed financial projections including cash needs, and sensitivity to our assumptions.

The Copyright Process - Part 19 on our IP and Patents Series

This is the nineteenth in a planned 20-part series of articles on intellectual property.

In this posting, we will take a look at the process of obtaining a copyright.

In reality, the way one obtains a copyright is to simply produce an original work. According to the US Copyright Office, “your work is under copyright protection the moment it is created and fixed in a tangible form that it is perceptible either directly or with the aid of a machine or device.”[1]

However, you might want to let them know about it just the same! Registering the work ensures a public record of your ownership.   In the event of legal issues surrounding the work, a registration with the copyright office can be of great benefit.

Submitting a work for copyright registration is straightforward and can be done online or by hard copy. An application form, with a small fee (generally $35 to $65 [renewals are more] depending on the form, the item being copyrighted and whether it is submitted online or by hard copy) and copy or copies of the work in the proper format are all that is required. The copyright office will review the filing and respond.

Visit the US Copyright Office website at http://www.copyright.gov for more information and to register your work. Doing so is inexpensive and, in many case, well worth the effort.

In our final post we will provide a summary of intellectual property and commercialization.

[1] http://www.copyright.gov/help/faq/faq-general.html

Small Business and Entrepreneurship - To Startup or Not To Startup Part IV - Sales Forecasts

"At my lemonade stand I used to give the first glass away free and charge five dollars for the second glass. The refill contained the antidote." -- Anonymous

In this part of our series on the decision of whether or not to start a new business we will look at sales forecasts. The two major parts of our financial projections, costs and sales, are very different entities to predict. Whereas predicting costs can be basically an exercise in brainstorming and collecting quotes, sales projections require a lot of thinking about what exactly is the nature of our business and what is our business model - how are we going to make money?

First off, what are sales projections? Well, they are educated (hopefully) guesses about how much money the company expects to generate over the next few years. They are usually wrong and the farther out the projected figure, the more likely it is to be wrong. They are often shaped something like a hockey stick (see Exhibit 1), and they tell a story. Sales forecasts can say something like "we don't expect to make any money for the first year while we do product development, but then we will start limited sales as we hire a small sales staff. Soon our marketing efforts will begin to pay off as customers realize the superiority of our product and viola! We get a larger sales staff, things take off and we never look back (see Exhibit 1)".

Before we begin to determine some numbers, let us think about the purpose of these projections. In this circumstance the figures are for ourselves. We are not trying to sell a project to ourselves, we are trying to decide whether or not to start a business. This is a potentially serious undertaking, and we want to have as clear an idea as possible of what to expect should we decide to go ahead. For that reason we want to use as much of a sound and realistic basis for our projections as we can.

So a good way to begin is to think about the nature of your product, how you expect to generate revenue, and what the major roadblocks to more significant revenue may be:

• Will your sales be reliant upon the efforts of a direct sales force?
• Is the size of the sales force a limiting factor in your ability to generate additional revenue?
• Do you need the cumulative effect of marketing efforts (i.e., "getting the word out") before you see significant sales?
• Are you limited by manufacturing capabilities - can you only produce X number of units per month?

Consider the following two sound examples of determining initial sales figures:

"I will begin with 3 sales people, and we will spend $50,000 on advertising. I expect my sales people and ads to reach 300,000 people and 5% of those will purchase my product meaning 15,000 units sold. I do not expect to have any difficulty meeting those production demands. With my product priced at $10.00 this gives me $150,000 in sales during the first year".

The second example is:

"My product will take 300 hours to produce and I expect to start with 4 technicians meaning I can produce at a maximum 2 products per month. I don't expect to have difficulty selling the product at $25,000 a piece so I expect initial sales of $50,000 per month".

What both of these examples have in common is that the basis for the sales figures is founded in logic. If all the assumptions (such as "5% will purchase my product", "my product takes 300 hours to produce", or "$25,000 is a good price for my product") are reasonable then the sales projections these methods yield can be just as reasonable.

Both of the above examples identify where the sales come from, and both identify limiting factors. However, it will not always be possible to generate a sales forecast using this "bottom-up" type of method. One common "top-down" method used instead utilizes market share to determine sales figures. This method is to identify the likely size of the market during your time period and identify what percentage of the market you think your product can control, relative to competing products. So if you enter a $150 million per year market and expect to control 0.5% (for the duration of the year) you would generate $750,000 in revenue.

The sales forecasts generated by this "top-down" method are just as reliable as the assumptions used to determine the size of the market and the percentage of market share expected to be captured. The problem is that it can be difficult to make a logic-based prediction of captured market share, and that when compared with "bottom-up"forecasting methods, the "top-down" methods do not take into account as much the nature of the product or business.

Whatever the method we have used to determine our initial sales forecast, it is now time to think about growth. If we've used a "bottom-up" type approach for our initial sales forecast, growth could be determined by adjusting the variables according to the future nature of the company. Looking at the "sales force" first example above, perhaps after a year and $150,000 in revenue you think it would be a good time to expand the sales force and increase your marketing budget. You could then adjust the figures and %s accordingly and calculate your sales figures for the next period.

When using a "top-down" market share approach to predicting sales two things to consider would be the growth in market share of your company (say we moved from 0.5% to 1%) and also the growth in the market itself (maybe the market itself by 10%). Adjusting both figures accordingly will yield your next period's sales forecast.

The bottom line in both forecasting costs and forecasting sales is that the numbers are going to be just as good as the logic and assumptions we used to create them. If we are trying to decide whether or not to start a business we do not want to mislead ourselves with poorly founded figures. The numbers are going to be wrong, it is doubtful that any financial projection ever compiled was 100% accurate; but it is important to get as close an idea as possible to what we can expect should we decide to start this business. Now that we have calculated our expected sales and costs we will take a look next week at compiling and analyzing the results.

An Overview of Copyrights - Part 18 in our IP and Patents Series

This is the eighteenth in a planned 20-part series of articles on intellectual property.

In this posting, we will take a look at copyrights – what they are and what their value might be.

A copyright protects “original works of authorship” (see the link below to the US Copyright Office, which explains copyright law in detail). This is different from a patent (which protects an inventor from someone who might steal an invention) and a trademark (which protects the use of a word, phrase, symbol or design that is used to distinguish one source from another). Copyrights protect things like original books, stories, songs and software.

In terms of protection, the US Copyright Office says that once an original work is created and put into a tangible form that is decipherable, it is automatically protected. However, like trademarks, it probably makes a lot of sense – from a legal standpoint – to copyright one’s works.

One of the most famous cases of copyright infringement involved Napster – the website that offered music sharing online without the permission of the copyright owners. Napster was sued, lost and was purchased in bankruptcy proceedings.

Another well-known example is George Harrison’s song My Sweet Lord, which was found to be an unintentional and “subconscious” use of the tune from the copyrighted song He’s So Fine by the Chiffons from several years earlier. Although no one believed Harrison plagiarized the song intentionally, he still had a judgment entered against him for over a half million dollars, which was paid and the issue resolved.

Brad Templeton has a nice web page that explains some myths about the use of copyrighted works. If you want to learn more, it’s definitely worth a visit, as is the US Copyright Office site:

Templeton’s site: http://www.templetons.com/brad/copymyths.html
US Copyright Office: http://www.copyright.gov/

In the next post, we will discuss the (very straightforward) process of obtaining a copyright.