In continuation of yesterday’s post on my experiences with the top 5 habits of successful young entrepreneurs…

3. Getting involved with business plan competitions, business incubators, and networking groups
I never got involved with a business plan competition or business incubators but networking really was critical to our success. We did not get too many responses by just going to a networking event as attendees. We did the morning breakfast meetings, the business card exchange sessions, and the evening seminars - all the in the hope of finding the right people - investors, partners, employees, customers - who could help us. Where we actually got the most bang for our time was from targeted networking and delivering our own seminars.

Targeted networking - we approached the Business Development Bank of Canada, a federal government initiative, looking for help. They put us on to a consultant who connected us to another consultant. The final consultant ended up playing a significant role in guiding us towards success. We only got to him by knowing what we were looking for and asking the people around us. If you don’t have a sense of who you need chances are you won’t find the right people.

Delivering our own seminars - we made a partnership with Chapters / Indigo which is the Barnes & Noble equivalent in Canada. We delivered free seminars for people on entrepreneurship. There was never a business model behind it - the goal was to give back to the community and help other aspiring business owners. We ended up meeting a number of people who would become partners and employees in new businesses that we launched. It is always much better to be a guest speaker at an event than to be an attendee. After your presentation opportunities open up as people come to you with ideas on how you can work together.

4. Selling web-based software subscriptions to reduce the upfront cost to clients
We had two companies that sold web-based software. One of the things we found was that big companies were more willing to spend on something that can be put on the desktop than just a web subscription. This led us to make a thin desktop product with its own browser that connected to the Internet. We also found that customers were not willing to put their private information into a website vs. a desktop product. These perceptions are changing though as more companies move to the web. Finally, while it was great to have a monthly subscription at $50 / month, when you’re starting up a business you need cash flow so we offered pricing options and tried to push the $500 / year option.

5. Using word of mouth and viral marketing over traditional advertising
As a small business, it’s hard to afford traditional advertising campaigns. We tried to encourage our customers to tell their colleagues and recommend our company. What also worked well for us was getting media exposure. If you can convince a newspaper to run a story about you, they do a lot of the work of convincing your target market to buy from you. You get the extra exposure and it looks great to highlight on your home page. The only advertising dollars we spent were on pay per click marketing with Google AdWords. We were selling $500 to $1,000 software so it paid off to spend $0.30 / click to get a targeted lead. The beauty of the system is that you can measure the results and if it doesn’t pay off you can stop immediately.

What has your experience been with networking groups, web-based software, and viral / word of mouth marketing?

Evan Carmichael

Late last year BusinessWeek issued a special report on young entrepreneurs Young, Fearless, and Smart in which they reveal some of the habits and strategies successful young entrepreneurs are using to grow their companies. On the list are:

1. Going offshore for inexpensive software development
2. Telecommuting to work for owners and staff
3. Getting involved with business plan competitions, business incubators, and networking groups
4. Selling web-based software subscriptions to reduce the upfront cost to clients
5. Using word of mouth and viral marketing over traditional advertising

Here are my experiences with these 5 habits:

1. Going Offshore

I have been involved with two software companies. At the first one my partners did all the programming themselves and did not have to hire additional developers before making a deal with a large California based company. With the second business we hired a few months after launching. We were very concerned about hiring overseas and what might happen to our code. We were happy to outsource graphics design and other smaller work but not the “guts” of what our company would be selling. For my current business I once hired a writer from India to write some articles for the website. I was impressed with the pricing, the speed, and the responsiveness… but not with the quality of writing. It just was not good enough to meet our quality standards. Overall I have not had great experiences with offshoring but would consider it again if the right opportunity came along.

2. Telecommuting

I have hired some staff that telecommutes and others who work in the office. I have always found the interaction and energy levels to be higher when your staff comes in to work with you. It is much easier to bounce ideas off of each other and ensure people are working when they are sitting next to you. It is far easier for people to get distracted and focus on other projects when they are working from home. To be successful at telecommuting I’ve found that you need to pay by results. It can be hard to track employee hours when they work from home but you can measure results. The people I have on staff now who telecommute know that to get paid, they need to accomplish certain results. There is definitely a trade off when you opt for telecommuting and it does not work for every business but it can fit certain industries and lifestyles.

Tomorrow I will continue with the other 3 habits of successful young entrepreneurs.

What has your experiences been with offshoring and telecommuting? Do you have any stories you can share - pro or con?

Evan Carmichael

Hello everyone, my name is Evan Carmichael and I’m looking forward to kick-starting the new YE blog. With regular updates that highlight issues facing young entrepreneurs we’re looking to make this blog an engaging, interactive resource for YE visitors and members.

The first post I wanted to put up was about colleges and universities “teaching” entrepreneurship. According to BusinessWeek, the number of entrepreneurs younger than 30 has increased by nearly 30 percent every year since 2004.

Many of the “experts” attribute the growth to the increase in programs that colleges and universities are putting together to teach students how to run their own businesses. In the 1980s there were only 270 courses available while there are over 5,000 available today. Purdue University, for example, offers a certificate of entrepreneurship and innovation. Since Purdue created the program in 2005 they have graduated over 600 students and there is currently a wait list to get in.

Others feel that the power of the Internet has opened up new opportunities for young entrepreneurs that did not exist before. We’re now able to do our market research, connect with potential clients, and sell our products or services to an international market at a fraction of the cost and from the convenience of our homes.

What do you think? Can colleges and universities “teach” us how to be entrepreneurs?

Evan Carmichael