The reading level for this article is Novice
The Entrepreneurs’ Chronicle
Issue Three | Sunday May 4, 2003
Subscribers: 9166
Editor: Ryan P. Allis,
Publisher: www.zeromillion.com
Sponsors: Center for Entrepreneurship & Technology Venturing, The Entrepreneurs’ Coalition
"The only place where success comes before work is in the dictionary" – Vidal Sassoon, entrepreneur
:: CONTENTS
1. Message from the Editor: On This Third Issue
2. How to Understand Your Customers
3. The Best and Worst Things About Being an Entrepreneur
4. Distinguished Entrepreneur Interview with Christy Shafer, CEO of Inspire Pharmaceuticals
This newsletter may be read online at http://www.zeromillion.com/echronicle/may03.html
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Section One
Message from the Editor
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Welcome to the third issue of The Entrepreneurs’ Chronicle. This newsletter will contain articles on topics related to entrepreneurship, interviews with entrepreneurs, and reviews of books appropriate for the entrepreneur. It is published the first week of every month and brought to you by www.zeromillion.com, the Entrepreneurs’ Coalition, and the Center for Entrepreneurship & Technology Venturing at the University of North Carolina at Chapel Hill.
This month’s issue begins with an excerpt from an article from the Business 101 series at www.zeromillion.com entitled, "How to Understand Your Customers." Following this is an article on the best and worst things about being an entrepreneur as stated by six successful entrepreneurs. Finally, the newsletter concludes with our second Distinguished Entrepreneur Interview. Christy Shafer, CEO of Inspire Pharmaceuticals, a North Carolina company that discovers and develops new drugs to treat diseases characterized by deficiencies in the body’s defense mechanisms.
If you have any comments, suggestions, or would like to contribute content to be published in the newsletter or online, I encourage you to contact me at allisr@kenan-flagler.unc.edu. Please do feel free to forward this newsletter on to your colleagues and associates. On behalf of the zeromillion.com team I thank you for being a subscriber.
Yours entrepreneurially,
Ryan P. Allis, founder
http://www.zeromillion.com
Business & Entrepreneurship Resource
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Section Two
How to Understand Your Customers
Contributed by YoungEntrepreneur.com
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Understanding one’s customers is so important that large corporations spend hundreds of millions annually on market research. Although such formal research is important, a small firm can usually avoid this expense. Typically, the owner or manager of a small concern knows the customers personally. From this foundation, understanding of your customers can be built by a systematic effort. A comprehensive system for understanding is what Rudyard Kipling called his six honest serving men. “Their names are What and Why and When and How and Where and Who.”
What
A seller characterizes what customers are buying as goods and services – toothpaste, drills, video games. cars. . . But understanding of buyers starts with the realization that they purchase benefits as well as products. Consumers don’t select toothpaste. Instead. some will pay for a decay preventive. Some seek pleasant taste. Others want bright teeth. Or perhaps any formula at a bargain price will do.
Similarly, industrial purchasing agents are not really interested in drills. They want holes. They insist on quality appropriate for their purposes, reliable delivery when needed, safe operation, and reasonable prices.
Video games are fun. They are bought for home entertainment, family togetherness, development of personal dexterity, introduction to computers, among other satisfactions. Commercial customers include arcades, pizza parlors, and assorted enterprises. They benefit from a potential source of income, a means of attracting buyers to their premises, or perhaps a competitive move.
Similarly, cars are visible evidence of a person’s wealth, reflection of life style, a private cabin for romance. Or they represent receipts from leases, means to pursue an occupation. . . Some people even buy cars for transportation.
You must find out, from their point of view, what customers are buying. The common names of products mean as little to them as the chemical names on the label of a proprietary drug. (A sick person’s real need is safe. speedy relief.) Understanding your customers enables you to profit by providing what buyers seeks – satisfaction.
Products change, but basic benefits like personal hygiene, attractiveness, safety, entertainment, and privacy endure. So do commercial purposes such as quests for competitive superiority or profitability.
Successful manufacturers and service establishments produce benefits for which customers are willing to pay. Successful wholesalers and retailers select offerings of such demanded benefits that they can resell at a profit. Successful businesspeople, in other words. understand the reason for their customers’ buying decisions.
Why
The reason that customers buy is logical from their point of view. Understanding customers derives from this fundamental premise. Don’t argue with taste.
Everybody is unique. Each person has individual pressures and criteria. Moreover, perceptions differ. The astute businessperson deduces and accepts the buying logic of customers and serves them accordingly.
To learn why customers buy can be quite difficult.
Some buyers hide their true motivations. In many cases the reasons are obscure to the buyers themselves. Most purchase decisions are multi-causal. Often, conflicts abound. A car buyer may want the roominess of a large vehicle and the fuel economy of a subcompact. The resolution of such mutually exclusive desires is usually indeterminate.
Sometimes the reasons why customers buy are trivial. If customers feel indifferent toward a product or store, the selection is apt to be happenstance. Perhaps several rival offerings meet all the conditions that a purchaser deems important. Consequently, minor factors govern. This explains the rationale of the consumer who chose a $ 22,000 car because its upholstery was most attractive. The point: Pay attention to details. They may be crucial to customers.
Often the best clues are the customers’ actions. Shrewd businesspeople respect what people say, but pay special attention to what people do. More important than why customers buy is why former customers have taken their patronage elsewhere and why qualified buyers are not buying. What is now keeping them from buying?
Can this obstacle be surmounted? Businesspeople monitor competitive offerings and buyers’ reactions to infer clues. Informal conversations may also reveal some reasons. Special offers may overcome resistance and boost profits.
All the time the manager must be careful to retain the company’s regular customers. For instance, a specialty dress shop may try to widen its patronage through a new line at bargain prices. This move could disturb the store’s usual patrons. They may take their trade to another store that caters exclusively to their social class.
Many of the dresses were bought for special occasions when projection of a genteel image was important to the customer. Understanding of customers includes awareness of the time of the purchase and use of the merchandise.
For the When, Where, and Who, read the complete article online at http://www.zeromillion.com/business/sales-marketing/understanding-customers.html
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Section Three
The Best & Worst Things About Being an Entrepreneur
by Ryan P. Allis
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According to InvestorForce co-founder Colin Wahl, the worst thing about being an entrepreneur is the loneliness. He says, "You are on your own and nobody supports you because it’s hard for them to see what you see and feel the excitement that you feel in the early stages."
I would have to agree with Colin on this point. It can indeed be lonely sometimes. One can also become de-motivated after working so hard and so long on something for which the reward may be months or years away or perhaps never to come at all.
KendallTodd, Inc. CEO Todd Ballenger says that the worst thing about being an entrepreneur is that you often work 80 hours a week as an entrepreneur to avoid working 40 hours a week as an employee. Posed with the same question, Inspire Pharmaceuticals CEO Christy Shafer says the worst thing is that you are constantly busy and stressed out and have less time for family. Best Friends Pet Care founder Randy Myer says that the worst thing is the impact on your health and your family.
With cash flow problems, having to lay people off, working eighty hour weeks, the possibility of not ever being paid for your work, and loneliness, why in the world would anyone want to be an entrepreneur? An extra-terrestrial coming to this planet for the first time would surely choose the safety and security of a job in Corporate America. Or would she?
Before we can be sure, there is another side of the coin we must examine. Along with the negative, there are a number of positive things that go along with being an entrepreneur. While being an entrepreneur is not for everyone, let’s examine the upside before you make your final decision.
So what is the positive side? Well, first you have freedom. You have the opportunity to use all your skills. Significant financial reward goes to he who succeeds. You have control over your destiny and will never have to worry you or your family’s financial security. Respect comes from your peers. You have the recognition of being a visionary. You have provided hundreds or thousands of people with jobs and they respect and thank you. You have provided value and efficiency to a market and improved the standard of living of many. Finally, there is no worry about being laid off or not being able to take care of yourself after the value of your 401(k) plan evaporates.
MCNC Chairman Dave Rizzo says, "You have control over your destiny, your calendar, and the vision is yours." Christy Shafer adds, "You are constantly challenged and have fun." Colin Wahl notes, "You have much more control of your own destiny and your entire life!’ Randy Myer states, "The best part is the rewards — financial and psychological."
So what will you choose? Well, in the end this lies with you. However, do remember that we only live once. If you have a good idea, the trust in yourself to execute, a basic knowledge of business, can bring together a good team, feel you are at the right stage in your life, and believe you can afford the risk, I’d highly recommend going for it. But you must get going and start moving.
There is a certain law of inertia that I often reference. A body in motion remains in motion. And while in motion finds new people and acquires new knowledge that it would not have come in contact with if it was not moving. Once you begin on a quest, that quest will lead you to things unbeknownst to you at the beginning. Once you start on your quest, many new events and pieces of knowledge will fall into place. Inertia will take effect as new knowledge and possibilities create a snowball effect up the learning curve as you come closer and closer to your goal. Therefore one should not wait until all the traffic signals are green before he starts his journey.
In the end, it may take awhile to reap the benefits of being an entrepreneur. And you may experience much of the downside along the way. But if you get moving today and are adaptive, persuasive, self-confident, and a visionary, and have perseverance, have a bias towards action, and can inspire others with your leadership, you may just be able to enjoy this upside. As Colin Wahl says, “Go for it, it’s an incredible chance of a lifetime – as the saying goes, better to have tried and lost than never to have tried at all! The riskiest thing to do is not to try&ldots;then the chance of success is zero. The downside: even if things don’t work out you will gain amazing experience that will help you even if you end up having to go back to working for someone else.”
So what is the final decision? Will our alien friend decide to be an entrepreneur or an employee? Well, after thinking things over, she decides that she’d be better off applying for a few scholarships, going to school, working on her English and business knowledge, making some contacts, developing some business plans while interning at a company in the field she is interested in, and then venturing off on her own. Smart alien.
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Section Four
Excerpts from the Entrepreneur Interview Series
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In collaboration with the Center for Entrepreneurship & Technology Venturing (CETV) at UNC’s Kenan-Flagler Business School, the zeromillion.com team has begun the Distinguished Entrepreneur Interview Series this month. To fit the selection criteria one must currently be or have been a founder, co-founder, or start-up CEO in a company that has done more than $5M in yearly sales. One interview will be published in this section each month.
Below we include the full interview with Inspire Pharmaceutical CEO Christy Shafer:
Christy L. Shaffer, Ph.D., Chief Executive Officer
Inspire Pharmaceuticals, Inc.
Bio: Dr. Shaffer joined Inspire from Burroughs Wellcome, Clinical Research Division, in June 1995 as the first full-time employee. She has held a variety of positions at Inspire including Director of Clinical, VP, Development, and Chief Operating Officer. She was appointed to President and Chief Executive Officer, and became a board member in December 1998 and currently serves as CEO. She has a Ph.D. in pharmacology and studied P2Y receptors at UNC with one of Inspire’s founding scientists. Dr. Shaffer has had extensive experienc e in directing complex drug development processes for innovative products. Under her tenure, Inspire became a publicly traded company in 2000 raising $78 million. More recently the company successfully completed a secondary offering raising another $78 m in a turbulent market. Dr. Shaffer was a finalist for Ernst & Young’s Entrepreneur of the Year in North Carolina for 2001, was given the Council for Entrepreneurship Development Award for Entrepreneurial Excellence in 2001, and was recently named Business Woman of the Year in NC by the Business Advisory Council in Washington, DC. Dr. Shaffer is also on the Board of Directors for the North Carolina Biosciences Organization and the Council for Entrepreneurial Development. She serves on the Business Advisory Board for BioVista Capital and the Kresge Science Advisory Board for Meredith College.
What attributes make a successful entrepreneur?
Ability to lead and motivate others; ability to concisely communicate the idea; ability to execute a plan beyond the idea concept; ability to build the right team.
What do you believe are the necessary elements for a business venture to succeed?
Obviously you have to have technology that works. However, the ability to execute the plan is key. Therefore, having the right team in place and building a ‘can do’ culture within the organization is also very helpful.
How essential do you see an undergraduate degree or MBA being for an entrepreneur?
Not essential at all, although helpful.
What role has academic education played in your own life versus the role of experiential learning and what has been the relative importance of each?
Very helpful in getting the basic training necessary in the field of science. However, the ‘hands-on, real life’ growth experiences are also key to the process.
What are the three most important lessons you have learned about business and entrepreneurship in your lifetime?
Knowing when and how to hire the right people that complement my own skill set (never be afraid to hire someone who knows more than you do in a particular field.
What have been the keys to your success?
All points I raised in above questions. Also, having excellent communication skills and maintaining a positive attitude.
What advice would you give to an aspiring young entrepreneur?
Don’t give up; if you believe you can achieve.
What books would you recommend to aspiring entrepreneurs? Which books have influenced you the most?
Good to Great
Describe some of the biggest challenges or obstacles you’ve have encountered as an entrepreneur? How were these overcome?
Not having initial experience in raising venture capital. It simply had to be learned by doing it!
What memorable mistakes, if any, have you made in business? What did you learn from them and how can they be avoided?
Nothing truly memorable to date but no doubt I will at some point.
What trends and changes do you see occurring in business today? What new technologies and industries will everyone be talking about in twenty years?
More virtual activities; more focus on doing business globally. Enhanced methods of rapid communication.
What are the best and worst things about being an entrepreneur?
Best – you are constantly challenged and have fun
Worst – you are constantly busy and stressed out; less time for family
Would you rank the following attributes in order of greatest to least importance for an entrepreneur, and comment briefly on the importance (or unimportance) or each.
Persistence – 7
A College Degree – 15
Knowledge of Accounting and Finance – 14
Knowledge of Marketing 13
Confidence – 6
Leadership and the Ability to Inspire – 1
Ability to Communicate Effectively – 4
Integrity – 5
Having the Right Advisors – 12
Good Networking Skills – 11
Motivation and Ambition – 9
Having a Good Idea or Plan – 2
Being Able to Build a Solid Team – 3
Being Able to Execute – 8
Having a Bias towards Action – 10
Are there any other thoughts, insights, or advice for aspiring entrepreneurs that you’d like to add?
Persevere and keep the dream.
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This concludes issue three of The Entrepreneurs’ Chronicle. We’ll see you in June. Please do feel free to forward this on to your colleagues and associates. If you are not subscribed and would like to subscribe, please visit http://www.zeromillion.com/echronicle/.
If you would like to contribute content, become involved with the zeromillion.com team, make suggestions, or provide feedback please feel free to contact us at info@zeromillion.com.
This newsletter is published by www.zeromillion.com with support from the Entrepreneurs’ Coalition (www.entrecoalition.org) and the Center for Entrepreneurship & Technology Venturing at the Frank Hawkins Kenan Institute for Private Enterprise at the University of North Carolina at Chapel Hill (www.cetv.unc.edu).
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“The successful person makes a habit of doing what the failing person doesn’t do.” Thomas Edison, inventor and scientist
