Many attend business schools to learn entrepreneurship but fail to have a profitable business. In this segment, keynote speaker, SBA award-winning radio/podcast host, and McGraw-Hill bestselling author Jim Beach talks about teaching entrepreneurship beyond theories, a method that made him a number one business professor for twelve straight semesters. Jim touches on setting up systems, reducing risks, and the true role of creativity and innovation in your entrepreneurial path. He also gives tips on when to quit your job in favor of running your business. Discover what is missing from your entrepreneur education in this episode.
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Entrepreneurship Beyond Theories With Jim Beach
I’m excited to have a very different guest that I met at the Mass Media Mastermind. He’s different in the sense that we’re going to talk about entrepreneurship a little bit and what you think it is and what it is. My guest is Jim Beach. Jim has started businesses and taught entrepreneurship around the world. At the tender age of 25, he founded the American Computer Experience and grew the company with no capital infusion to $12 million in annual revenue and to over 700 employees. They resided and operated in 39 states and three countries.
Jim has taught entrepreneurship at Georgia State University for nine years and is ranked number one in the business school for twelve straight semesters. Jim’s first book, the School for Startups was published by McGraw-Hill in June of 2011 and went onto nine of the bestsellers list. He’s been featured in a UPS commercial and CNN called him the Simon Cowell of small business. Corporations like Wells Fargo, Toshiba, UPS and SunTrust have all hired him to be a speaker and consultant. I’m excited to be a guest on his award-winning radio show that is nationally syndicated on 24 stations. Welcome, Jim. Are you easy? Are you mean? What does all this mean?
I was not easy by any stretch of the imagination. I was doing things that no one else was doing, starting a business every semester, real money, real things, real products. It was also validated this way. The program went from 6 to 250 while I was there. You don’t do that to get an easy A. We were doing some pretty cool things. I was the only professor that would take a new chair and go down to the lobby of the building and cut the chair open with a chainsaw during class to see if it’s been built my specifications or not. Not everyone does that.
You told me a pretty cool story about those companies you started every quarter. You did this every time you started a new class. You did it right along with them.
Not right along with them. They did it right along with me. The bet was I had three and a half months to start a profitable company, repay all the startup capital, get cashflow positive and they got to choose the country and the industry that I would start the business. The very first semester they chose Pakistan and furniture. I had three months to build a profitable Pakistani furniture company. If you go to my LinkedIn profile I love to get connect with all of you. Scroll to the bottom, almost of the companies that I’ve worked with and you will see pictures of the chairs there. Juliet, you were the one who said that they were ugly as I remember.
They are $3,000 chairs that the market validated.
I’m stunned. Honestly, you should have paid me $3,000 to take them off your hands. It’s not that they’re ugly. It’s that they’re not my taste. How’s that?
They are very Colorado ski-lodge-esque.
A lot of people would find that nice. I thought they were more like desert rug-ish because a lot of them are made out of rugs, weren’t they?
Santa Fe, they would look great and they’ll be architecture anything like that. They were 100-year-old Persian rugs that were then cut up and used as the fabric on a new chair. It would be a traditional American size shape chair. A Queen Victoria type of chair or a George Washington armchair with a high back that would come out on the sides. It was an incredible look. It was a very busy fabric which is probably what you didn’t like. It looks like an oriental rug made into a chair which is what it was. The rug was 100 years old, gorgeous, subtle, soft fabric. It had been walked on for 100 years. It would look great next to a dry stack stone fireplace and a brown distressed leather sofa at 6,000 altitude with snow outside. It was designed for that market.
You can tell Jim is also an interior designer. It was a project like that that you did every single quarter and you had to make them profitable by the end of the quarter. When you told me the story, what I loved about it is many of our college classes are theory and you put that all into practice right in front of their eyes.
I don’t know any theory. I don’t know the academic stuff. I didn’t teach that. That’s why the class was so well received.
The average person jumps into entrepreneurship and they think that it looks like Shark Tank. What does it look like?93% of businesses are copies of other people's businesses. Click To Tweet
Even on Shark Tank, it looks very stereotypical. We’ve come up with the pattern that you have to fit and if the pattern doesn’t fit the mold, the media probably changes the business and gives us the pattern whether we want it or not. 99% of Americans would say that entrepreneurship has a risk component to it that it’s risky. You putting it all on the line that houses double mortgage and living in the car. That story sells well. How many times have we heard that Tyler Perry wrote his first movie from his car? There’s a creativity component to it. It’s new, creative, innovative and shocking. It’s something that hasn’t been done before and that’s certainly part of the story. There’s a passion component. Steve Jobs’ Stanford graduation speech is one of the most Googled YouTube out there where he’s talking about how important passion is and that should be part of the formula. Those three things are systematically baked into it. That is one of the big problems. My thesis is very simple. The creativity has nothing to do with entrepreneurship. 93% of businesses are copies of other people’s businesses. I can almost always show that. You find me business and I can probably find someone who is doing it before you.
We love to think of Zuckerberg and Facebook as being new, but there were several social media platforms that failed before that, Myspace and all of that. There was nothing creative about Facebook. It was perhaps innovative. That’s a huge distinction. I don’t care about creativity but I love a good innovation. If you can do it 2% better, that’s probably going to make a difference. Here’s my favorite example of that. The first business I started, the one that ended up with 700 employees, my competition was at Klar Crest Resort in Connecticut, which looks exactly like the movie Dirty Dancing. Do you remember the resort the Dirty Dancing was at? Add 30 years of abandonment and that’s what it looked like. That’s my competition. On the other hand, I was held at Stanford, MIT, Georgetown, UCLA, Sorbonne, Cambridge and Oxford. Where do you want to send your kid? Stanford or Klar Crest Resort in Connecticut. There’s an innovation. It’s the same thing, just different place.
A lot of people will come into a business and say they are creative. Are they necessarily the people who can run a business? What I’m trying to say are those people who are innovative and idea people, but that doesn’t necessarily mean that they can run a business.
Those have nothing to do with each other. One is fantastic for an arts and crafts booths selling wonderful paintings made out of the bottom of Coca-Cola bottles. The other one makes businesses happen. They are concerned about cashflow, whether employees are going to get paid on Friday and whether trademarks are legal and stuff like that. Those are totally separate skillsets.
I completely agree, which is why many solopreneurs fail because they’re good at the thing they do, but not so much at the business end. My friend Catherine Bell has a program called Do The Numbers and she teaches solopreneurs how to look at their numbers. It’s astonishing how much denial there is inside of a lot of businesses about their numbers.
If the numbers are ugly, they’re not fun to look at. I’ve been there, done that.
When it comes to creativity, there’s definitely that upside. You talked about the innovation but what’s the risk of that?
Risk is bad. It involves people dying, getting hurt, run over by motorcycles and things like that. Risk is something that we should try to avoid as much as possible. When you talk to entrepreneurs who’ve done it 10, 20, 30 times, you find out that they almost always reduce risk or they wouldn’t have started the business in the first place. I do everything I can to reduce risk. I get customers signed up beforehand, get partners to pay, create partnerships with companies that would reduce my costs. I give away equity to a cofounder if they write the website for me. I bring in other people’s money, use your money and instead of my money. There are sorts of ways that we can reduce risk and get it down to the point where I have a very simple rule. It’s interesting that you and I met at Disney and my rule is Disney-based. I’m willing to gamble as much on a new business as I would spend on one week of vacation with my family at Disney, which is about $1,000 a day. I’m willing to gamble $5,000 to $7,000 to see if I can get a business to start. There’s my risk rule. The argument you always hear is, “My business is different. The industry where I am, that’s going to require a lot more money.”
The question is does that extra money that you’re spending create extra revenue? Let me tell you the story of Joey Tatum. He was broke, had $5,000 and he wanted to become a bar and restaurateur. He was getting old. He was 35 and said, “I better start now or it was never going to happen.” He opened a bar with $5,000. Imagine what a dump dive that would be. That bar still has the linoleum floor and the exposed cinder block walls. It used to be a barbershop and the big circles on the ground where the chair used to be are still there. He spent most of the money renovating the bathroom and the first weekend he couldn’t afford a keg in the deposit. He bought six packs. Anyone who bought a beer, he gave them an individual can of beer. He made enough money to stay open until the second weekend. The second weekend he made enough money to stay open until the third weekend. Twenty-one years later, he owns five bars and restaurants in that little college town. He started with $5,000 and now he has everything.
A guy came in five or six years later across the street and spent $3 million building one of those gorgeous things with the brewing equipment and all that brass stuff and everything. The question is very simple, how many beers do you have to sell to recoup your $5,000 investment? How many beers do you have to sell to recoup your $3 million investment? Risk is great for you, but I’m going to do every single thing I can to reduce it and therefore my chances of winning that bet during the semester go up dramatically. I only have to sell two chairs to win the bet.
Who did you sell those to?
The guy I wrote the book with, my coauthor was David Beasley. He is a Bloomberg reporter. He does a lot of ghostwriting. He was ghostwriting a book for an Atlanta-based CEO. He was writing the biography of that person and he was invited to the CEO’s house. The CEO had a favorite chair where he always sat. Guess whose chair it was, Juliet? I think you owe me an apology.
Sorry, you should send me a free chair to give it a try. Everybody talks about passion. I have clients or potential clients who tell me they’re passionate about something. Does passion necessarily translate into a business?
I’m passionate about a lot of stuff too. I got married many years ago and I’m passionate about that. I’m a horrible Christian. I would like to say I’m a little bit passionate about religion but I’m a bad Christian. I got a tiny bit of passion for religion and I got those four kids. I’m super passionate about them. I love my kids. I love taking my kids to Disney and I love woodworking. I’m a woodworker. I could show some things that I built. I haven’t listed anything that’s related to work yet. However, I am very passionate about my lifestyle. I get to do what I want, when I want, where I want, wearing what I want. My commute is twelve feet. I get to go to soccer practice and ballet practice. If I want to work all night, I work all night. If I want to play all day by going to ballet practice with my four-year-old daughter, I do. That lifestyle is absolutely perfect. Everyone is jealous of my lifestyle. My male friends who have those job things are always very jealous of me. I’m passionate about freedom, the lifestyle and the opportunity. I will buy and sell anything that’s mostly legal and moral if I can make money doing it. I have sold lots of stuff that I don’t like. We have sold a lot of products that we don’t use.
I still get up anxious to go to work. I still get up anxious to go sell that stuff because the more stuff I sell, the more woodworking classes that I get to go and attend. I’ve heard apparently there’s a word for people that are passionate about stuff. There’s a word for that. I think materialistic might be the word. It’s a big word. You might want to check me on that, but that word has a negative connotation and denotation. That’s what you’re passionate about, stuff. I’ve sold purses and leather jackets. I’ve sold lots of stuff that I don’t care about. It allows me to do what I care about, which is going to soccer practice. As soon as this is over, I’m going to soccer practice with my eight-year-old boy. Why limit yourself to what you’re passionate about. If I could only do what I’m passionate about, I would be making crappy furniture for a living. I’m not good at woodworking. I love it but I’m not good at it. I do what I can do well and that allows me to do more woodworking classes. If I start a business that I like and it’s successful, I can go to Disney more. The more successful I am, the more freedom I have, which is the ultimate goal in the first place. I don’t care if I sell 12,000 widgets, I just want 12,000 units of personal freedom.
Back when I sold real estate, I wasn’t crazy about it, but I could do the same things. I could pick my kids up from school. I could take them to school. I could do all those things that people with jobs can’t. I get it.
If we take all of that, entrepreneurship doesn’t have to be creative. You can copy, borrow or steal someone else’s idea. Read Inc. magazine and do what someone in Denver is doing. Do it differently, a little bit better. You see their model, do it a little different. Don’t steal anyone’s copyrights, trademarks or patents but copying is pretty excess or normal in the entrepreneurial world. 93% of businesses are copies of existing businesses. The data comes from the London School of Economics. One of my favorite things about entrepreneurs is I know that if I were to call five entrepreneurs and say, “I saw you on YouTube and what you’re doing is cool. I’m thinking of starting a business. I’ll be honest with you, it’s competitive but I live 2,000 miles away from you. I’d love for you to tell me about your business. I’m impressed with what you’re doing. Will you tell me what you’re doing?” I believe 95% of entrepreneurs will talk your ear off and you’ll have to shut them up. They’ll tell you everything and then you do it 1% better and you’re off and running. Creativity is awesome but let’s throw it out. That means that I’m not limited to my new ideas, I don’t sit around and wait for God to throw a creativity lightning bolt at me.
I’m going to open up a magazine and copy. I’m not going to spend a whole bunch of money, which means I don’t use this delay argument anymore. “I can’t start a business right now. My boys are about to go off to college and now is not a good time for me financially.” Instead of saying that you’re not going to go on vacation this summer. I don’t care what you’re passionate about. When you remove these three lies or myths, anyone can be an entrepreneur because your reason to sit on the sofa, I destroyed. Your reason for inactivity, I eliminated. Your reason for inertia, I smashed underneath the rock. Your remote control, I threw it away.
The other thing too is I’m more than willing as an entrepreneur to tell people what I do because chances are you could replicate it. You could do exactly the same thing, but if you’re not me, it’s not going to come across the same way. It’s also the personality behind it to a certain extent. You’re teaching all of these high-level people entrepreneurship. What do you think that one piece is that’s most important?
Keeping your eye on cashflow is certainly supercritical and something that I’m obsessed with since I’ve gotten into cashflow issues before. I had some cashflow problems there like $8 million of problems.
Who hasn’t had those, but I’ve never had $8 million? I feel for you.
By 27, I was $8 million in personal debt. I want to point out that takes a lot of skill. That the average person could not in those five short years accumulate $8 million of debt. It takes a certain skill to accomplish that.
That’s almost like the person who says they have a credit score of 400 that took some work.
My credit score is worse than that. At one point, I walked away from 24 car leases simultaneously. Apparently, they don’t like that.
What did you learn from that? What’s the important conclusion from that?
Monitor your cashflow, pay attention to cash, cash is king, those things. I am obsessed with bootstrapping and obsessed with figuring out a model that makes sense on the cheapest dollar. Sometimes it might take longer. It might not be as good, but I’m willing to take those sacrifices if I can get it up cheaper and reduce the risk. I have gotten the letter from the bank that says you and your pregnant wife need to move out of that house and leave all the stuff. When you get that letter, it’s not fun to go and tell your pregnant wife that you’re moving out of the house. I don’t want that anymore.
Was that your first wife or your current wife?
My first one.Don't sit around and wait for God to throw a creativity lightning bolt at you. Go to YouTube. Click To Tweet
I’m just establishing why you may not have her anymore.
That had nothing to do with that.
We can’t get into that, maybe another time.
The second wife is the wife I got caught stealing from.
We have to get into that. What’s that all about?
I wanted to fund a business. I went to her and said, “Can I have some money to fund a business?” She said, “No.” I went behind her back and took $100,000 out of our life insurance without telling her and didn’t tell her for six months. She found out without me being honest and telling her. The entire investment went to zero but she forgave me.
That’s a story. I bet there aren’t many people out there who can say that.
It’s not good. That’s a bad boy story. Are we clear on that? Did I paint it right?
You had an MBA experiment that you did in your class. What was that?
That was the bets that we’ve been talking about. The bet for the chairs, the leather, the beef and all of that. That was what I did in my MBA class.
What other products did you do? You do something in India. Was that one of your projects?
I’ve done a lot of stuff in India. I have taught at IIT Mumbai every year. IIT Mumbai is the most difficult university in the world to get into. It’s the number one university in India and I’ve been honored to go there for the last couple of years, every January, February to teach. I’ve enjoyed that. I also work with an Indian organization here in Atlanta called TiE which stands for The Indus Entrepreneurs. It’s the TiE Chamber of Commerce all around the world. They have a chapter in almost every big city in the world. I work with that organization extensively. I particularly help coach their high school business plan competition team. In the last few years, we’ve come in first place twice and third place twice. One year we didn’t come in the top three. In five years, to be number one, number three and not so good, that’s better than any other city. We’re knocking it there.
Can you teach people entrepreneurship? My son graduated from business school nine months ago and when I talk to him, I feel like he knows nothing about business. What the heck did I spend all that money for?
I do believe that you can teach some basics of entrepreneurship, the cash management, the creativity and a whole bunch of stuff. The question is, can you teach the personality traits that are required to be an entrepreneur? For example, the wherewithal to laugh off 99 rejections and finally only sell the 100th person that you ask out. That’s why I was such a good entrepreneur. In my teens I asked hundreds of girls out and never got a date until I was 27. I had decades of noes. That was what led to my strong entrepreneurial personality. I’m very persistent. One thousand noes don’t discourage me at all.
When you were 27, you were $8 million in debt.
I was wrong there. I was already married with a kid by that one.
You were not dateable for most pretentious women.
I don’t like the pretentious woman. I have a rule there that I’d like to offer up. Can I offer up some pretentious women rules? First of all, if your Starbucks order is more than five words, you are undateable.
I agree if you go to Starbucks.
Secondly, if your profession ends in ess you are also undateable, hostess, waitress actress, stewardess, princess. I did date a princess but that’s totally a separate story.
A real one?
No, I’m making that up, Juliet, come on.
I don’t know that. I could see you seeking one out in India or something.
No, I’m very happily married now. I’m happy.
I’m glad you’re happy. What’s the role in all these multiple income streams?
I love some multiple income streams. I made a bet with my wife that she could start a business in one semester. This is romantic.
Is she one of your students?
Yeah, but we knew each other for a long time. Our daddies went to medical school together in the ’50s. The families had known each other for 65 years. She was not an eighteen-year-old student. She was a student in her late twenties getting her MBA. She was already a homeowner and she was 29. It was moral-ish. She wasn’t my student at the time. We dated after she was my student.If you want to set up your business with lesser capital and reduced risk, be willing to make sacrifices. Click To Tweet
Now that you’re clarifying, she didn’t get an A?
She got an A. That still does.
Back to multiple income streams.
I gave her a book for Christmas on how to start a business. It was not a random generic book. It was how to start an Amazon sales business. A very particular business, it’s one of the systems that you may hear advertised on TV, radio and some of those systems work. I’m a huge Amazon sales proponent. I think it’s an amazing business. It has zero creativity, almost zero risk, and you can be passionate less about it. She started on December 26th with $500 and she made $56,000 in the first year. That is an awesome new income stream. She’s got one of those job things. On the weekends she does Amazon. Can I tell you about one of our products?
This is a secret. You have to lean in because I don’t want to tell everybody. Remember I told you we sell a lot of stuff we don’t personally use or like?
Yeah, this is not that’s a likely story.
It’s gluten-free, 100% organic sex lube. Do you want some?
I’m so shocked. I don’t even know what to say.
Think about it. Sex lube ends up in the mouth. You don’t necessarily want that gluten in your mouth. For all the vegan sex. The vegan have sex too, don’t they? Can’t vegans have sex?
They can. I don’t know when I see them if you’d necessarily want to? You do have to keep into consideration that you have to swallow that.
It’s gluten organic stuff and non-GMO. Juliet, you get me off on the weirdest tangent. Anyway, she does that still. We have a very successful Amazon business. We come home some days and there are 50 boxes outside of our door of product that we have purchased. We flip the product and send it off to the Amazon warehouse. You buy it and you think you bought it from Amazon, when in fact, you bought it from people like my wife. We did that system. I have multiple streams of income. I do speaking. I do the radio thing. I’m a forehead model. We have multiple income streams.
When you have these multiple income streams, one thing that I hear people say all the time is, “I’ve increased my spending because now I have my job and my income stream.” They do it all the time. They tell me that all the time.
They’ve increased their what?
They’ve increased their spending.
What do you mean?
They’ve got all this money coming in and they’re not budgeting. They’re not putting it away. They’re spending it. When do you know when to stop that and quit your job and live off what you’re making from your income streams?
When you get fired. This is important and I’m glad we have time to discuss this. Do you smoke cigarettes?
You have to. You’ve got to start. All of the entrepreneurs that go through my systems, we all smoke cigarettes. That’s very important. When you get fired, you can stop. Until you get fired from your job because you smoke cigarettes, you get to take a break every hour and go outside and smoke a cigarette. While you’re doing that on the phone and your other hand, you’re doing business. Until your boss figures out that you’re using his time to do business, he fires you because you’re distracted to the point where it’s starting to bother your job. I’m being a little facetious and I’m being a little serious too. You want to do your part-time or until it gets to the point where, “Boss, I’ve got to take tomorrow off. I’m not going on vacation. I’ve got to work tomorrow but I’m taking the day off. I’m sorry.” When that happens eight times, you’re ready to quit.
Keep track of that, people. Tell me about the coauthors on your book.
David Beasley, I already told you about. He’s a Bloomberg reporter and a great writer. He has written several other books as well including the bio on that CEO guy. Chris Hanks has been the head of several significant prestigious entrepreneurship departments. He’s headed the UGA, the University of Georgia Bulldogs’ entrepreneurship department and also the Kennesaw State, which is Georgia’s largest university. It’s exploding in size and popularity. He has been a long-time entrepreneur himself. We’ve been speaking together for many years. He’s a great guy, great entrepreneur.
I know after this X-rated show that people are going to want to reach out to you to find out more about the lube probably. Where do we find you? How do we get ahold of you? How do we listen to you on School for Startups Radio? Do you have a book out?
SchoolForStartupsRadio.com is a good place. Jim Beach is a good place. LinkedIn Jim Beach is a good place. Those are all good.
I want to encourage you like when he says reach out, he means it. He is super generous with his knowledge and even though he makes ugly chairs, he has a lot of knowledge.
You’re welcome. I learned so much here. Thank you so much.
That’s what I’m here for.
- Jim Beach
- School for Startups
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About Jim Beach
Jim has started businesses and has taught entrepreneurship around the world. At the age of 25, Jim founded American Computer Experience and grew the company with no capital infusion to $12 million in annual revenue and to over 700 employees, operating in 39 states and in three countries.
Jim taught entrepreneurship at Georgia State University for nine years and ranked number one in the business school for 12 straight semesters.
Jim Beach’s first book, School for Startups, was published by McGraw-Hill in June 2011 and went to number 9 on the best sellers list. He has been featured in a UPS commercial, CNN called him the “Simon Cowell of small business,” and corporations like Wells Fargo, Toshiba, UPS, and SunTrust have hired him as a speaker and consultant.
His award-winning radio show is nationally syndicated on 24 stations.
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