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Amanda Kramer: Welcome to the Leeds Business Insights Podcast, featuring expert analysis to help you stand out from the herd. My name is Amanda Kramer. We are thrilled to be discussing early-stage entrepreneurship with Leeds adjunct professor, Erick Mueller.

Erick Mueller is the Executive Director of the Deming Center for Entrepreneurship, and adjunct professor of strategy, entrepreneurship, and operations at the Leeds School of Business. He leads a Global Seminar each summer, Entrepreneurship & Empowerment in South Africa, helping disadvantaged businesses in the Townships. Mueller also helps with the Veterans Entrepreneurship Program, helping disabled military veterans start businesses, and volunteers, travels to, and helps people in rural Colorado start and grow their businesses and create jobs. A lifelong entrepreneur, Mueller is dedicated to helping new entrepreneurs and business owners start and grow their businesses.

Join us as we discuss making the transition to starting and developing your own business. Welcome, Erick. And thank you so much for being here today.

Erick Mueller: Thank you so much, Amanda. It's a pleasure to be here. I'm excited for a lively chat.

Kramer: Me, too. Well, let's start here, Erick. With the Great Resignation and COVID, we've seen an increase in entrepreneurship. Tell us what the entrepreneurship landscape looks like from a high level right now. And share any statistics you might have that might ground us in the conversation.

Mueller: Yeah, you bet you know. To be direct, there's never been a more exciting time to start a venture. We saw nearly 158,000 new business filings in 2021. And that's a new yearly record for the state of Colorado. And that's up around 15% from previous years. Now, also know, we saw a number of businesses close throughout this time as well, as to be expected during these volatile times. And there was about 40,000 ventures that were dissolved as well. But what we're seeing is some of the businesses that, maybe, didn't have a solid of a foundation are dissolving, while new and innovative ventures are starting to fill the gap and really driving economic development in our state.

Kramer: Those statistics are really interesting. And the numbers are much bigger than I would have expected. Let's say someone listening has decided that they want to quit their job and solve a problem that they've identified. A lot of people have been doing so, as we just discussed, whether consulting from home or pursuing entrepreneurial ventures. How do you even start the process of going from corporate employee, let's say, to running your own business?

Mueller: Yeah. You know it's a great question. And there are a lot of different paths that people can take from a traditional job to starting their own venture, but I'd share there are a number of key steps that I've observed in making that transition. And you know the first step is to really answer some key questions about the business that you want to start. So, for example, who would buy my product or service? What is the growth potential? Who else is doing this? And who are my competitors? So, doing some planning and answering some key questions to really determine the possibility of the ideas is step one.

The second step, then, is to develop a framework for how you're better or different than everybody else that's offering your product or service. So, for example, if you're going to create a chocolate chip cookie company, what is unique or different about your concept versus everybody else that is doing something similar?

And then the next key step—and is really important—is go talk to 100 people. So, you have a framework of your idea. You understand roughly what it is and how it's better or different. Get out there and talk to 100 people and ask them just a few questions, such as, what do you like about my idea? What could be better? And then who else do you recommend I chat with to learn more about this concept?

Kramer: Absolutely. That information is really helpful to ground us in terms of the tangible next steps. As we think more qualitatively, are there considerations that you would recommend people make as they make a transition from a stable job to an entrepreneurial venture which may be new for them.

Mueller: You know there are few things that come to mind. One is it's not an exclusive path. I highly recommend folks to start a side hustle, to start. Continue to work at your current position. Continue to have the healthcare, the structure, and the foundation of a steady paycheck, etc. But on the side, maybe, some nights, some weekends, slowly start developing your ideas. Start talking to some people. Maybe, create a prototype and get feedback on it. And then, maybe, a few weeks or a few months down the road, run a small little pilot. Maybe, you sell five of something.

I think it's a misconception that people are like, "I have to quit my job. I'm not going to have healthcare. I'm going to invest all my money and get a fourth mortgage on my house. I'm going to start a venture." While certainly some people do that, I don't recommend that. So, you can simply just start a side hustle, start learning incrementally about your venture. And then, maybe, six months down the road, the venture is going so well, maybe, go part-time at your current job. And then, a year down the road, it's going so great. Then, maybe, you quit your current job and you're full-time in your venture. But this could happen weeks, or months, or even years down the road. And it doesn't have to be "I quit my job today and I start my venture."

Kramer: I think it's so helpful for you to address that misconception. We may see entrepreneurs on TV, for example, who have mortgaged their house for the fourth time and they're all in, but there are steps that you can take prior to that to set yourself up for success. That's really helpful. This naturally leads into one of your areas of expertise, which is founder identity. Can you talk to us more about what founder identity is and how you can determine what yours is?

Mueller: Yeah, that's an interesting question. I'll start by saying there's a lot out of academic research on this. To me, it's really about being ruthlessly honest with yourself about, what are you really good at? What do you excel at? Also, what are you not so good at? What are some of the weak spots that you need to fill the gap with? And from that really clear understanding of how you can contribute to an organization, what your passions are, maybe you read marketing magazines all day every day and that's what you'd love to do, then that should be your identity within your business, is leading the sales and marketing side.

And then fill the gaps from there. Bring in folks that could help with the technical side. Maybe, you have a board of advisors that can help with the financial side. Be creative in terms of filling the gaps around the different parts of your business. But to me, I think very practically about this. Do the hard work to understand, really, your strengths and your weaknesses and what your passions are within the business. And leverage that as your identity in your venture to be able to grow from there.

Kramer: Thank you for that. And what I'm hearing is that, even though you may have a great idea and decide to move forward with a venture, you don't need to go it alone. There's a huge benefit to determining what your strengths are, and then surrounding yourself with others who can fill in the gaps.

Mueller: Yeah, I couldn't agree more with that. What are the most common pitfalls that I see when people are really jumping in to starting their venture? They don't ask for help. And at one level, we certainly can understand that. We want to really chart this new path on our own. We want to take this challenge on by our self. I've been guilty of that in my ventures in the past as well, for sure. But I learned pretty quickly that asking for help is one of the most courageous things you could do and one of the best things that you can do for your venture.

And it can be as simple as, initially, friends and family helping you chart your financial projections or helping you with a product design or helping to create a prototype. But it's a really important—and I call it a skill, really important skill to pause and say, "Hey, I'm not an expert in this area. And I'm going to ask for help, whether it's from my local SBDC or from friends and family or from a mentor to be able to help fill some of the gaps in my business." So, that is a direct takeaway I recommend to everybody, is don't be afraid to ask for help and you know leverage those who really care to help you with your venture and your idea.

Kramer: Thank you very much, Erick. And as we think about one of those pitfalls that you just mentioned, I want to explore with you, what are some of the other main challenges that new entrepreneurs face in starting a business? And how can entrepreneurs best prepare to face those challenges?

Mueller: I think a couple of things I'd share here, it's interesting to note that the number one reason that businesses fail is a lack of product market fit. And what that means is, is that they haven't fully delivered on what customers are excited about or what they need or what they desire. And they don't create enough incremental value for somebody to choose their product over somebody else's. Right? So, for example, the new cookie company that we talked about. Perhaps, the recipe isn't as unique or memorable, or their marketing isn't as good, or they haven't created something that is really truly innovative. So, that's the number one reason that businesses fail, is that they haven't really create enough value and delivered on what customers are really excited to deliver on.

So, the solution to that is you just have to talk to more and more people, learn what their desires are, what their excitements are, and adapt and incorporate that feedback into your product. So, it's important to really work hard at developing a product or a service that fits with what the customers are super excited about.

And one thing that I'll add to that, Amanda, a very, very common pitfall is, notice I said it's what the customers want, what the market wants.

Kramer: Yes.

Mueller:ÌýThe common pitfall I see is that entrepreneurs are only interested in what they think is cool or what they think is valuable. And while that's important, what's more important is that you translate that into what customers see as most valuable. Super important that it's not just about what the founder thinks is super exciting. It's what the customer thinks is super exciting.

And the second reason that companies don't make it is running out of cash. And my solution that I would suggest is be creative in how you fund your business. In our business, Funovation, we create amusement attractions for theme parks. But one example of creatively financing your venture is to do it through customer money. Can you get a down payment ahead of time? Can you do, maybe, some pre-sells? Can you have a payment plan where they pay before you ship, and then they pay the rest of it after you ship? Think really creatively about how you resource your business.

And then the third reason that companies don't make it is the wrong team, not having the correct people on the bus, so to speak. So, it's super important that you have folks that fill all the core elements of the business—somebody that markets, somebody that does product design, somebody that really loves finance. Now, that's going to be difficult at the beginning because it's just you. But as you grow your venture, it's super important to make sure you have the right team.

Kramer: Thank you, Erick, for walking us through those three main pitfalls and some of the potential solutions for them as well. Thinking more about something you just said there, when we were talking about the pitfalls, from an entrepreneur's perspective, thinking about funding their business, how would an entrepreneur decide the best funding modality for them and whether taking an investment makes sense?

Mueller: So, super interesting question about how to really fund your business as you get going, and I'll just answer it by saying just be super creative in thinking about how to do that. You know a couple of quick examples. One is, I mentioned earlier, think of your customers. They can help you fund your business by either putting a down payment ahead of time or maybe doing a crowdfunding campaign or something to that effect. A second creative idea is to ask your vendors. Perhaps, they could give, you know, 120 days to pay your bills, which is four months of additional cash flow that's available to you. Be creative in thinking about how to resource your business right from the beginning.

The second thing I'd mentioned in terms of on this path of, maybe, raising funds and raising money in your business, I always recommend a pause and really confirm that that's the path that you want to take, because raising money is a full-time job. And a lot of times, spending that time and energy just focused on solving problems within your business and, maybe, working with partners to help market your product or other creative solutions can be better time spent than spending all of your time raising capital. The best time to raise money is when you've really determined that you have a product that people are super excited about. You've created the product. It's repeatable. And you're ready to grow.Ìý

But typically, I don't recommend that before that time. One, because you won't get as favorable terms as you're raising money. And two, is that there's just a lot more risk involved if you haven't verified that you have the right product market fit.

Kramer: Those are some great consideration points for our listeners. Thank you for laying that out there, Erick. Now, I'm going to ask you to put on your investor hat. And from an investor perspective, what makes a business investable?

Mueller: Yeah. A great question. And it's a super simple answer from my personal experience. And it's all about the people. And perhaps, a lot of folks have heard that saying that investors invest in people and not ideas. And that is absolutely the case. And specifically, what I look for when I'm looking at potential businesses in terms of the people is, one, that it's a complimentary team, that you have a team that fills all the gaps in terms of marketing and operations and product development, etc. But two, and most important, is you can feel the energy. They're excited. They're passionate. And it's almost like oxygen to them to really run and operate this business, because from that place, they will figure out solutions to problems that arise. And that passion and excitement will get them through the challenging times. Those are the teams that are really investible and typically are on the path to success.

Kramer: That is really interesting, but I think many entrepreneurs are thinking about their slide deck and how can they make sure that everything's laid out clearly when, really, it's boiling down at a very foundational level to the people, the team, and the passion.

Mueller: Yeah. And maybe, to add to that, so a question that folks may be asking is, well, how do I determine what is that idea or concept that will really drive my passion and drive my excitement? There are some practical steps to help guide each of us into what is it that our passion and excitement is. And ultimately, how can we monetize that passion, right? How can we take what we love to do in the world and build a business around it?

And then the second thing that I would share is be deliberate in uncovering what that passion is for you in terms of what venture you'd be excited to create. There are a lot of self-assessment tools out there. You can journal. You can talk to friends and family and say, what do I geek out of? And from that exploration, something magical happens. There's a common thread that rises to the top. And then excitement continues to grow, as you talk more about that area in your life that you want to build a venture around.

And then from that foundation, you can go through the process of, what are the problems within this area? How can I create a solution to that? How can I build a venture about this?

Kramer: Thank you. And Erick, you mentioned a form. Is that a resource that you would be able to share here on the podcast?

Mueller: So, yes, there are a lot of resources available out there. I might suggest one key resource being Googling Deming Center for Entrepreneurship, and just searching for that. On our website, we have a tremendous amount of resources. And from there, feel free to send us an email. Specifically, if you're looking for a specific resource around ideation or around business planning or about raising funds, we'd be happy to help. I'll also share some other resources for everybody that is like, "I have an idea, but I don't know where to start." I'd recommend your local SBDC, which is your small business development center. Your local chamber has great resources around how to take your idea and move forward, as well as your local economic development office.

And then I would share that we're happy to help. The Leeds School of Business has tremendous resources for our community. The Deming Center has specific resources for how to take an idea, act on it, grow your business, etc. So, we'd be happy to be a resource for folks that are passionate about an idea and they want to take action on it.

Kramer: Thank you so much for outlining those resources, Erick. That is great to know and, I'm sure, will be incredibly helpful for many who are listening today. Let's shift focuses a little bit and delve into one of your areas of passion, which is rural entrepreneurship. You're an expert in rural entrepreneurship. And it seems there would be lessons you've learned that apply more broadly to entrepreneurs, such as how to navigate through scarcity or limited resources. Can you tell us about some of these lessons learned?

Mueller: Yeah, you bet, Amanda. Boy, I tell you, I've been so inspired by what our rural entrepreneurs have accomplished. It's been really a lot of fun to work in our rural communities. We have run workshops in our rural communities for the past eight years, helping communities start and grow ventures. And while the entrepreneurial path is very similar no matter what stage you're at or whatever community you live in, they're have been a few things that I've observed in our rural communities that have been extra important in terms of really being successful in building your idea.

The first is leverage technology. This sounds so obvious, but it's especially amazing to observe entrepreneurs who live in a community, say, of 200, and they can grow a global business.

I'd love to share a quick example. One of our entrepreneurs, Bonnie, she runs a ranch in the Eastern Plains, in the Yuma and Holyoke area. And she's really passionate about sharing her excitement for the ranch life with others. So, she came to our workshop with an idea about, "Hey, maybe I could create some kind of dude ranch business. I don't know. I just want to explore this."

Well, fast forward a few years, and not only has she started her dude ranch experience, but this summer, she just shared with me recently, she leveraged technology, social media, marketing messaging. She got it out through her channels. This summer, she's going to be welcoming a family from France to her ranch in a community of 2,000 people. They're going to fly in and they're going to spend a couple of weeks on her ranch, experiencing the Western life. And she was able to do that, again, from rural Colorado in a community of less than 2,000, because she was able to leverage technology.

The second thing that I'd share is ask for help from your community. And be energized by co-creating adventure with them. Starting your business can be a lonely path and can be challenging. And asking for help can, not only help your venture, but add to the fun of this journey.

Another quick story in this regard. I'll never forget James attended one of our workshops in Southeast Colorado. And James is a pastry chef. And he loves waffles. If you were to meet James, you'd be like, "Oh, my gosh, this guy is the waffle king." And he attended one of our workshops. And he was in a bad way, to be honest. He was couch surfing, he didn't have a car. He literally walked to our workshop, and he was looking for kind of a new path for himself.

Well, he attended the workshop. He put out there like, "Hey, I'm a pastry chef. I want to create savory and delicious waffles." Well, it so happens that somebody in the community was a real estate developer. He was creating a co-op kitchen. Next thing you know, James is launching his sweet and savory waffle shop this summer in Southeast Colorado by asking for help, reaching out to his community, and really sharing his passion with others. A lot of people have come together to help him on his journey. And I can't wait to be one of his first customers this summer and get one of his savory waffles.

Kramer: The true entrepreneurial spirit on display, as well as this connectedness within the community—two really important pieces that came to life in your stories.

Every episode, we have an LBIdea or a key takeaway. And I think, Erick, based on what you've shared, the key takeaway here would be, if you're thinking about starting a venture, think about what it is that you would want to get out of the venture, what your true passion is, combined with your skillset, and the impact that you would like to make.

Mueller: Well said, yeah. And I might add, have a bias to action. How many of us know friends or family that have talked about an idea for 20, 30 years? We're at the pub and we're enjoying a drink, "One day, I'm going to start this venture. I'm going to execute on this idea." What I would suggest to everybody and give license to, so to speak, is to just try it. Run a small little pilot. Do a quick little prototype. You don't have to go out and raise $100 million to start. You can start small and learn and adapt and grow from there. So, take those thoughts and those ideas and those excitements and act on it and just try it and run a little pilot and see what you learn.

Kramer: Thank you so much, Erick, for joining us today.

Mueller: It's a pleasure. What a blast.

Kramer: Thank you again for listening to the Leeds Business Insights Podcast. And a special thank you to my guest, Erick Mueller. Don't miss a single episode. Subscribe to Leeds Business Insights wherever you get your podcasts. You can also find more information about our podcast series at leeds.ly/LBIpodcast. We'll see you next time.