By Nick Ortner
The Entrepreneurial Actuaries Section (EAS) was well-represented at the Oct. 2013 SOA Annual Meeting in San Diego with two sponsored sessions. Related material can be found at the Annual Meeting site on www.soa.org.
Session #90 – Tuesday, Oct. 22: Women and Minorities in Entrepreneurship (Panel Discussion)
Alyson Francisco was our first presenter. Currently the Kimbrough Professor of Business & Economics and director of the Center for Women in Business at Salem College (Winston-Salem, N.C.) and previously having served in multiple executive level roles in the private sector, Alyson focused on the following five “macro” factors pertaining to entrepreneurship:
Entrepreneurship, Broader View
Textbooks may define entrepreneurship as “the monetization and commercialization of ideas and innovations through starting a new business.” A similar definition exists for “intrapreneurship” or “corporate entrepreneurship.” While scholars may separate the field into two buckets, a third one is emerging:
- “High growth” opportunities―Exchanging capital investment (e.g., venture capital) for high financial returns, with disruptive innovation that leads to industry formation, job creation, and economic growth;
- Small business start-ups―The investment is generally personal and the goal is to make a living; and,
- Social/political opportunities―Commonly through not-for-profit models but a hybrid model has also emerged, where entrepreneurs start socially desirable institutions (in the form of foundations and endowments) from profit set-asides from the “mother ship.”
But what is entrepreneurship, really? It’s a mindset and there are many ways to turn ideas and passion into value. Alyson prefers to teach that it is less about the size of the investment or magnitude of return, and more about fulfillment in the pursuit of your ambitions.
Characteristics Of The Entrepreneur
Many important characteristics may help define the entrepreneurial mindset, and Alyson suggested seven:
- Independent and confident―Trust their own instincts and are “confident in being independent”;
- Passionate―Entrepreneurs are intellectually curious and constantly learning, asking questions, reading and researching;
- Strong sense of ownership―Self-accountable to outcomes that leave things in better shape than when they first encountered them;
- Gregarious and strong relationship builders―There’s comfort in collaborating and being supported by others;
- Dedicated―Set goals that they hold to, with tenacity and purpose;
- Optimistic―Maintain a positive outlook, viewing setbacks as lessons to learn and improve from; and
- Comfortable taking risks―Not preoccupied with security and understand the risk-reward trade-off.
Paths To Entrepreneurship
Alyson focused on four paths:
- Serial/Portfolio Entrepreneurs: Representing less than 20 percent of U.S. start-ups, they go through a series of ventures and/or are involved in multiple ventures simultaneously. The thrill of start-up and pre-launch drives them, rather than daily management of a business. They are constantly hunting for the next opportunity, often creating financial movement and many jobs in their wake;
- Small Business/Home-Based Entrepreneurs: Representing more than 80 percent of start-up ventures, they marry specific skills and experience to their entrepreneurial passions. With advancements in technology that have made it possible to do business regardless of proximity or location to the customer, start-up and distribution capital requirements may be low;
- Corporate Entrepreneurs, also referred to as "intrapreneurs": Underneath an existing firm or corporation, they generate profitable business expansion through innovation and risk-taking. Corporate bureaucracy and risk aversion may be obstacles, so success in this role typically needs senior management commitment to move projects forward, champions to help open doors and lend credibility, collaboration with cross-functional expertise in the firm, as well as defined milestones and metrics to measure and demonstrate progress; and
- Not-for-Profit Entrepreneurs: Many professionals, especially later in life, are turning to these ventures to exercise their entrepreneurial passions and help make the world a better place. Such ventures typically focus on educational, religious, or charitable goals and enjoy a tax-exempt status. Non-profit businesses can be profitable—they just cannot disburse the profits to owners or shareholders. Such ventures serve an admirable cause while allowing the entrepreneurial team to make a living.
Current Trends In Entrepreneurship
Over the past 20 years in particular, small businesses have been the fastest and largest segment of entrepreneurial activity for two reasons: Technology developments have made the typical cost of entry low, and the economic recession that triggered many employers to ask their employees to do twice the amount of work for the same pay or lose their jobs. Accordingly, people have tried to figure out how to make a living on their own. A myriad of valuable entrepreneurial and demographics statistics from the Kauffman Index of Entrepreneurial Activity and Bureau of Labor Statistics point out the fact that entrepreneurial growth is strong, particularly in the age 45+ demographic, women-owned, minority-owned, and minority women-owned businesses.
Challenges For Women And Minorities
Social perceptions―that business is a “man’s field”―present hurdles for women and minorities. Sheryl Sandberg’s book, Lean In: Women, Work and the Will to Lead has helped to spotlight this issue and how women and men may change the current trajectory. Warren Buffet has also opined that the key to continued U.S. economic success hinges on tapping into the under-utilized talents of women and minorities. Sources to increase knowledge, provide guidance to start a business, and hone skills may include local colleges and any number of on-line sources such as Seth Godin’s Alternative MBA.
Building financial and social capital looms as another challenge. The aforementioned social perception means that attracting investors at a reasonable rate of interest is typically easier to come by for men. Additionally, narrower networks may limit the ability to raise capital and other resources critical for business success. Numerous affinity groups exist for business owners to help overcome these hurdles such as Women 2.0, Ladies Who Launch, Goldman Sachs’ 10,000 Women, Walker’s Legacy, local Chambers of Commerce and local colleges.
Life balance and time commitments are also challenges: starting your own business often demands your full time and attention. But as with most things in life, prioritizing is easier when the upside exceeds the downside. Wife/husband teams in startup ventures, husbands picking up slack in the home, and/or reliance on trusted family may help diminish the challenges.
Stephen Galvan followed Alyson. Stephen’s current role is principal and owner of Galvan & Associates (IT and Management Consulting Services), with prior management experience in both the private sector and in various senior leadership roles at the White House U.S. Office of Management and Budget and the U.S. Small Business Administration (SBA), where he held the number two leadership position in the administration of President George W. Bush. Stephen built off of Alyson’s presentation and shared some of his experience as an entrepreneur and as a high ranking government administrator. He focused on four issues:
Stephen raised a variety of provocative questions and issues, running the gamut of:
- Ideas (Do you have a product or a service?);
- Passions (Do you want to run day-to-day business operations? Do you want to be doing expert actuarial work? Is it independence you are looking for?);
- Networks and connections (Establishing relationships with customers and partners; keeping customers and acquiring new ones; finding good people who represent you; identifying partners who are reliable and help spread performance and financial risk); and
- Obtaining capital.
Managing And Operating A Business
Stephen addressed several important issues pertaining to managing and operating a business:
- What is the “fire in my belly"―Recognize that long hours may need to be endured not necessarily serving as a subject matter expert, consulting, or otherwise following my passion, but in executing the daily functions of a business;
- Capital and funds to cover costs are a perpetual issue that cannot be ignored;
- Sufficient assurance must exist that clients will demand my product or service exists so that sustaining a business is possible; and
- Stick to “critical missions” such as selling and executing but don't lose sight of resource areas that are also critical for sustained success such as legal, accounting, tax advice, infrastructure, and facilities, including reliable and cost-effective systems to administer the business.
Small Business Funding Programs
Stephen mentioned a variety of funding programs for entrepreneurs to investigate and potentially tap into:
- Small Business Set-Asides: 8(a) Program, WBE, Hubzone, SDVOB, Native American;
- Available Loan Programs: 7(a) Loan, 504, Disaster Loan;
- Business Assistance: BusinessUSA.gov, SBDC (Small Business Development Centers), SCORE, PTAC, WBC (Women Business Center);
- State/Local Gov’ts: Minority Business Enterprise/Women Business Enterprise (MBE/WBE) programs; and
- Private Industry Firms: vendor diversity representatives and registrations.
Federal Government As Customer
Stephen also highlighted recently posted and available actuarial and subject matter expert opportunities from FedBizOpps (Federal Business Opportunities, www.fbo.gov), to draw attention to the various agencies and offices that may be seeking such expertise. Stephen also touched upon the requirements that experts/vendors may have to meet in order to successfully land such opportunities posted/listed.
Before Stephen and Alyson answered follow-up questions from the audience. The presentation closed with a number of important conclusions:
- Consider your motivations to start the business;
- Managing operations and delivery are key;
- Don’t forget the government market―federal, state and local;
- Funding and business start-ups―Be aware of government and industry set-aside programs and business counseling, as part of the many resources and programs available to plan, start and operate your business; and
- Relationships―Develop them not just with potential customers, but also potential business partners and experts to help with your business.
Session #173 – Wednesday, Oct. 23: The Tools, Technology, Trials and Tribulations of Managing from Afar (Panel Discussion, co-sponsored with the Technology Section)
Jenna Fariss (consulting actuary with Actuarial Management Resources) was moderator and presenter. Andrew Chan (actuarial system consultant with ALG), and Paul Ramirez (senior actuarial associate with Allstate Benefits) were presenters.
This presentation focused on the technological challenges that arise from working and managing remotely. The presenters highlighted technological solutions available to optimize such arrangements and discussed nine topics:
- The group described situations that require working remotely, such as consulting on-site and out of the office; having a presence in multiple offices; home; on the road (hotel, airport, other); conventions/meetings. Although there are similarities, each situation is unique.
The group highlighted the advantages and disadvantages of remote work, and raised important questions, such as:
- Do you feel as much a part of the team?
- Do you miss and/or need face time?
- Are you able to still adequately manage others?
- Are you more or less efficient?
- Does working remotely intensify technological problems?
The panelist discussed the upside, downside, difficulties, and pricing of, and options for, Remote Desktop and Virtual Private Networks (VPN):
- Remote Desktop―Allows remote viewing and control of another computer via the Internet, with discussion of the LogMeIn and TeamViewer options; and
- VPN―Extends a private LAN network across the Internet, again with discussion of options (LogMeIn Hamachi and TeamViewer).
- A discussion of Trello (Project Management Software) and its characteristics (assignments and reminders, organization and lists, archiving, and costs) followed.
The group directed its attention to the topic of data storage. There are four options to consider:
- DropBox; and
- Voicemail represents another important technology to successful virtual work and management. Google’s Voice Over Internet Protocol (VOIP) service (Google Voice) was the next important topic in the discussion. The group discussed Google Voice’s characteristics and capabilities.
The group then discussed the following products and services:
- Video Conferencing;
- SkyDrive Online Storage; and
- Excel co-editing.
- An analysis of Office 365 and Microsoft Cloud Solutions was next on the list. The group first dove more deeply into Office 365 and how it was built, its characteristics, and its uses. Office 365 served as the launching point for a discussion of potential Microsoft Cloud solutions (Office 365, Dynamics CRM Online, Azure, and Intune).
- The remainder of the session was devoted to Prezi (Cloud-based presentation software) to highlight requirements and characteristics, available products (e.g., WebEx, GoToMeeting, and Skype), and additional alternatives to consider.
- The presenters discussed the possibility of additional networking and education opportunities, including creation of a LinkedIn group and a section-sponsored workshop.
Additional Demonstrations Of EAS Leadership
EAS’s involvement was not limited to these two well-received sessions. We also want to acknowledge and congratulate the following council members and council friends for their direct participation as both presenters and social gathering organizers for other meeting sessions, as listed below in Annual Meeting chronological order:
|Ian Duncan||SOA Health Research Overview;|
|Larry Stern||Professionalism in the Everyday Life of an Actuary;|
|Pauline Reimer||EAS & Technology Networking Reception;|
|Thomas Totten||Pension Section Breakfast: Sound Bites on SOA Research; and|
|Kevin Pledge||RGA Innovation in Action: Looking Toward the Future.|
Nick Ortner, FSA, MAAA, is product development manager-Group Markets for National Guardian Life Insurance Company in Madison, WI. He may be reached at email@example.com or 608.443.5280.