Archive for December, 2012

Entrepreneurial Lessons Learned: Twinkie, Twinkie, Little Cake How I Wonder What’s Your Fate


As the song goes the bankruptcy of the Hostess Brands, Inc. brings to mind how many companies today rest on their laurels. Many companies have forgotten how to compete because rapid growth has gotten in the way. Kalson (2012) noted how the Hostess company blamed the company’s problems on its unions and dispelled the idea bad corporate decisions, financial shenanigans, outdated strategy, and inept management could have caused the problems.

The Hostess brand emerged from a troubled history at Continental Bakeries. Interstate Bakeries later bought Continental pursuing its strategy of growth by acquisition and mergers. Interstate had a history of run ins with its workers and focused on rapid growth instead of its products and people. For example, in 1982 Interstate Bakeries raided an over funded pension fund to pay off debt on its inefficient plants (“Hostess Brands, Inc.,” 2012).

The Continental merger brought new enzyme technology to the company allowing its products to have a longer shelf life, lowering delivery costs, and improving profitability. Continental like Interstate engaged in an acquisition strategy. Similarly, the company had disputes with its workers and in 2000  lost a suit in San Francisco brought by 19 black workers claiming racial discrimination (“Hostess Brands, Inc.,” 2012).

Again in 2004 the government probed the company’s worker’s compensation reserves and problems with a new financial system the company installed. In 2004 the company filed for bankruptcy still under investigation for how it set its worker’s compensation reserves. In 2009 the company emerged from bankruptcy and relocated to Kansas City only to file for bankruptcy again in 2012 (“Hostess Brands, Inc.,” 2012).

The lesson learned is growth through acquisitions often is a poor strategy leading to financial difficulty if not managed carefully. An entrepreneur would do better by focusing on products and people to grow organically. Entrepreneurs should learn from the Hostess story, acquisitions and mergers often leads to discord between workers and management, and financial problems. Duplication of duties is costly without a plan to remove these costs. A company’s business strategy can become blurred, and the company can lose its focus on its vision and how it best serves its customers.

Kalson (2012) noted how Hostess sold its soul to private equity firms, hedge funds,  and investors while amassing over $1 billion dollars of debt. Acquisitions seemingly erase the competition, but can also serve as the deathbed of a company. Entrepreneurs should think about losing their Twinkies before entering such a strategy.

Entrepreneurs should understand both sides of this strategy before committing to it. If you want to know more about the pros and cons of different strategies contact us to learn more.

References

Hostess Brands, Inc. (2012). Hoovers Academic. Retrieved from http://subscriber.hoovers.com.ezproxy.apollolibrary.com/H/company360/history.html?companyId=15324000000000

Kalson, S. (2012). When all else fails, blame the union hostess gives the twinkie defense a whole new meaning Pittsburgh Post – Gazette. Retrieved from http://search.proquest.com/docview/1220357399?accountid=35812

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The Entrepreneurial Journey


Errico (2010) shared the following story about the Great Hill:

Before time was time, there was a Great Hill.
And on the Great Hill there lived the Yolks.
The Yolks spent their entire lives climbing the Great Hill, trying to reach the top.
Some Yolks climbed fast.
Some Yolks climbed slowly.
One Yolk in particular was a very slow climber. He was different than the rest of the Yolks.
When he climbed, all the other Yolks passed him.
It was hard for him to watch them pass by.
He felt like the worst climber in the world.
Some Yolks made fun of him as they passed.
Others didn’t.
Some Yolks wanted to help him climb but he didn’t let them.
It was hard for him to climb. It was even harder when it rained because the ground got slippery. Sometimes it seemed like it was only raining on him.
But it wasn’t.
There were times when he felt like he wasn’t moving at all.
But he was.
Then one day he met another Yolk who climbed even slower than he did.
He helped the slower Yolk climb.
“Thank You,” said the slower Yolk.
“You’re Welcome,” said the slow Yolk, “I can’t be of much help to anyone else since I climb so slowly.”
“Slowly?” asked the slower Yolk.
“Well yes. I watch other Yolks pass me all the time.”
“I do not know if you are slow or fast, but I do know that you helped me, and that you are still climbing.”
The slow Yolk said goodbye to the slower Yolk, and kept climbing.
“Still climbing,” he thought to himself.
“That is true.”
And he smiled.
So the Yolk kept climbing. He climbed when it was nice out, he climbed when it rained, and he even climbed when it snowed.
As he kept climbing he got better and better.
Sometimes he would pass other Yolks and sometimes they would pass him.
He had stopped paying attention.
He also noticed that some Yolks were no longer climbing.
When a yolk stops climbing it stays where it is.
Some Yolks stop climbing because they are happy with how far they have gone.
Others stop climbing because they don’t want to climb anymore.
The Yolks that had stopped climbing did not like to be passed, and they made it harder to get by.
But the Yolk kept climbing, right over them!
There were still times when the Yolk thought he was climbing an impossible hill, but he kept climbing.
Always, always, climbing.
Do you think he made the top ?

The Great Hill story highlights the entrepreneurial journey. Often entrepreneurs climb slowly to get to the top of the hill, but must persist to reach the top. Entrepreneurship is about persistence and keeping focused on the end goal (to reach the top of the hill). Some entrepreneurs climb more slowly than others, but the challenge is in the journey to the top.

Entrepreneurs recognize others want to trounce them and say, “I told you so,” but filter out the negativity and keep moving on the journey despite the odds against them. Few entrepreneurs are on the fast track, but advance at their own pace. Successful entrepreneurs preserve their passion by settling at a comfortable pace instead of racing to the top of the hill.

Most important, successful entrepreneurs do not let the competition intimidate them. Successful entrepreneurs want to help others succeed in their journey. The key is to keep moving toward the top of the hill no matter what position the entrepreneur is in at a given time.

As the entrepreneur approaches the top of the hill he or she notices other entrepreneurs quitting or conceding on their journey. The successful entrepreneur just keeps going no matter what the pace. The successful entrepreneur knows his or her limits and works within them.

Think about the Great Hill story! How do you describe your entrepreneurial journey? Are you working within your limits at a comfortable pace or are you trying to race to the top of the hill? If you want to get to the top of the hill and avoid stalling before getting there, let us help you find a comfortable pace and help you work within your limits. Learn more.

References

Errico, D. (2010, December 7). The great hill. Free Children Stories. Retrieved from http://www.freechildrenstories.com/story_details.php?st_id=156

 

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The Bill Bland story: An adventure in entrepreneurship


Matas (2010) shared a story about Bill Bland, a serial entrepreneur, who never worried about change. Bland grew up in Lake Geneva, Wisconsin where he started his first venture, a bicycle shop. By the age of 17 Bland  owned the first Schwinn bicycle dealership in town.  Everyone Bland grew up with could see his entrepreneurial spirit as he found himself just as comfortable with an Allen wrench in his hand as with a harmonica in his mouth or even a paintbrush. Bland had an interest in music and painting at an early age and would tap his talent at any age.

Bland and his first wife moved to San Francisco during the Haight-Ashbury District hippie era to start a sign shop. In 1970 Bland sold the sign shop to move to the old mining town of Jerome to start a new shop concentrating on making root beer, candles, and incense.  Residents of Jerome to this day still refer to the old Bland House. The business did not produce much income, but allowed Bland to study in Phoenix to become a luthier, one who makes stringed instruments (Matas, 2010).

In 1971 Bland and his family moved to Tucson to open Mingus Music on Fourth Avenue. Carolyn Cooper joined Mingus Music in 1973 to help repair guitars.  In 1973 Bland left his wife and formed a partnership with Carolyn Cooper called Guitar Workshop, which lasted 12 years. The shop sponsored Music on the Mountain  in Summerhaven in which Bland performed on guitar and harmonica (Matas, 2010).

Many years after Cooper had left the shop she noted how Bland affected the way she lived her life because of his pro-activity in creating his own life and not waiting for life to come to him (Matas, 2010). Bland’s story shows many traits typical of entrepreneurs including focusing on new opportunities, not worrying about failing, and continually moving forward to something new. Bland’s story highlights how entrepreneurs focus on what they are passionate about and do not let anything stand in the way.

Entrepreneurs have a certain rebelliousness to do tasks their own way and not stick with convention. Entrepreneurs are always willing to learn new tasks within their area of interest. Serial entrepreneurs are always searching for new ideas to exploit opportunities and make a life for themselves. Entrepreneurs learn by doing and take an active role in their communities. Entrepreneurs are comfortable trying different ideas, but routine stymies them.

Not all entrepreneurs find the big prize, but they enjoy the chase! Do you want to find out if you have what it takes to enjoy the life of an entrepreneur? You can learn more about if you have the right skills by clicking here.

References

Matas, K. (2010). Life stories: Parkinson’s merely meant a shift in life for entrepreneur, McClatchy – Tribune Business News. Retrieved from http://search.proquest.com/docview/758062344?accountid=35812

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