A New Way of Doing Business

Conventional wisdom says that entrepreneurs are born, not made, and that the best classroom is the office, workshop or factory.

But don’t tell that to Kathleen Godwin, partner in a small San Pedro-based apparel manufacturing company, who has come to the USC campus this night to hear a lecture on garment production costs.

She and 24 other local garment makers are participating in the university’s Apparel FastTrac entrepreneurial training, a sort of academic boot camp for business owners trying to grow their firms. In 12 weeks of night school, Godwin will develop a strategic plan for her children’s clothing company, something she’s been too busy to do since starting Quintessence in the early 1990s.

“I wish I’d taken this class four years ago,” said Godwin, 34, an artist and designer with no formal business training. “I’d be in a very different place now.”

Looking for a road map for a new economy that no longer guarantees lifetime employment, Americans are crowding into classes on how to start or grow their own firms--and challenging the notion that entrepreneurship can’t be taught. From grammar school to graduate school and beyond, a nationwide surge in entrepreneurial education is changing the way Americans are preparing themselves for work.

Entrepreneurial studies, a lonely academic outpost at a handful of colleges 20 years ago, has become one of the hottest fields in business education. More than 1,000 post-secondary schools offer at least one course on starting or running a small business, with classes oversubscribed at the nation’s most prestigious university programs.

“I need more money and instructors,” said Nancy Humphries, director of entrepreneurship programs at Cornell University. “We have a long way to go before we satisfy [student] demand.”

Programs to vault welfare recipients and the unemployed into self-employment are altering traditional notions of job training. Meanwhile, philanthropies like the Ewing Marion Kauffman Foundation have launched efforts to bring entrepreneurial education to the masses.

Even Junior Achievement, once an after-school shop class for budding capitalists, has revamped its curriculum for a generation of youngsters more interested in building companies than spice racks. In the process, Junior Achievement has become the fastest-growing nonprofit in the country, with more than 2.8 million participants.

“It’s nothing short of a revolution in education,” said Robert Ronstadt, who teaches entrepreneurship at Pepperdine University. “It reflects a fundamental shift in our economy and our culture.”

Launching Start-Ups at Frenzied Pace

If the 1960s were the age of Aquarius and the ‘80s the decade of greed, the late ‘90s have usurped some traits of both to spawn the age of the entrepreneur.

Americans are launching start-ups at a frenzied pace, spurred by corporate downsizing, outsourcing, low-cost technology and a bustling economy. About 3.5 million new enterprises--from basement workshops to manufacturing plants--were formed in 1995, according to a survey by the Washington-based National Federation of Independent Businesses. New business incorporations have doubled over the last 20 years.

Empire builders like Microsoft Corp.’s Bill Gates and Virgin Group founder Richard Branson have supplanted scavengers like Carl Icahn and Michael Milken as the movers and shakers of our times. Small business publications are flourishing, while TV shows like “Money Hunt” and “Small Business 2000” celebrate the virtues of plucky entrepreneurs. In a 1994 Gallup poll, seven in 10 high school students surveyed said they’d be interested in starting companies.

“It doesn’t take too many billionaires like Bill Gates to get the message out that entrepreneurship is better than the lottery,” said Scott Kunkel, director of the Family Business Institute at the University of San Diego. “But there’s an ethical component as well. We’re seeing kids who want to build something of value for society.”

Small wonder that more Americans are looking for guidance on how to join the ranks of the self-employed. But can entrepreneurship really be taught?

Educators say the answer is yes--and no.

Although schools would love to claim that Entrepreneurship 101 could turn any risk-averse sluggard into the next Ted Turner, it just ain’t so, said Russ Leatherby, founding director of the Ralph W. Leatherby Center for Entrepreneurship and Business Ethics at Chapman University in Orange.

“We get asked all the time whether you can teach this stuff or whether you’re born with it,” Leatherby said. “The simple answer is that personal characteristics like innovation, perseverance and creativity you’re born with.”

What education can do, Leatherby and others say, is provide motivated entrepreneurs with a supportive environment, business tools and a process to fix problems before they sink the business.

More than half of start-ups disappear within four years, according to statistics from the U.S. Small Business Administration. Many of those failures will be started by bright people with good products who simply don’t have a handle on basics like cash flow.

To fill this knowledge gap, groups as varied as universities, foundations, government agencies and business development centers are rolling out programs for a new generation of entrepreneurs eager to increase their odds for success.

“The idea of the lone wolf entrepreneur will always be a part of American lore,” said Dan O’Brien of the Entrepreneurial Education Foundation in Denver. “The reality is we’re seeing a new crop of entrepreneurs who are more professional, more calculated. Instead of just plunging ahead, they’re more prone to seek out training and education.”

Bringing the Real World to Campuses

The trend is clearly evident on college campuses, where some students are hatching new ventures as part of their homework.

In 1971, only 16 four-year colleges and graduate business programs offered courses in entrepreneurship. Today there are about 400, a number that has increased by one-third in the last 10 years, says Karl Vesper, a University of Washington professor of business administration who’s been tracking the trend. That figure tops 1,000 when community colleges are added to the mix, according to Jerome Katz, associate professor of management and entrepreneurship at Saint Louis University.

The major difference between these programs and traditional business education is the intrusion of the real world on campus. Faculty, adjuncts and guest lecturers are more likely to have met a payroll than to have tenure. Top-ranked schools like USC and UCLA stress internships, business plans and other unstructured projects that require more than analysis of pat case studies and theory.

With virtually all of the nation’s new jobs being created by small businesses, universities had no choice but to adapt their business curriculum to fit the times, says Alfred Osborne Jr., director of the Harold Price Center for Entrepreneurial Studies at UCLA.

“We were missing the boat by preparing students to become middle managers at large companies,” Osborne said. “Our students and alumni led us to the water.”

For some students, like UCLA alumna Suzanne Lowe, campus becomes the springboard for launching a first business after graduation. Her women’s golf apparel company started out on paper as a class assignment. Today, Santa Monica-based Mizanne Inc. is 4 years old and boasts annual sales in excess of $1 million.

Lowe is the exception.

Although results vary from program to program, the majority of students who take college-level entrepreneurship courses won’t start a business for several years--if at all.

That’s not necessarily a bad outcome, says Cornell’s Humphries.

Students who realize they’re not cut out for business ownership will save time and investors’ money. Instead, their skills will help fuel the “intrapreneurship” movement at large companies or give them a leg up at small firms where they’re most likely to find work.

“Start-ups aren’t the only measure of success,” Humphries said. “We’re preparing kids for the new economy.”

These changes aren’t confined to business schools. The patrician Eastman School of Music in Rochester, N.Y., recently revised its curriculum to teach musical survival skills in an era when coveted orchestra jobs are declining.

“Salaried jobs may be diminishing but opportunities aren’t,” said Doug Dempster, acting associate director for academic affairs at the Eastman School. “We’re trying to encourage students to become more entrepreneurial, to take control of their professional futures.”

Philanthropies like the Ewing Marion Kauffman Foundation likewise are spreading the gospel of entrepreneurship.

Founded by the late pharmaceutical salesman and self-made billionaire for which it’s named, the foundation supports one of the largest non-degree entrepreneurial training programs in the country. The nine-week FastTrac I course helps would-be entrepreneurs figure out whether their business plans are feasible. FastTrac II drills fledgling owners on the basics of operating a start-up.

FastTrac has trained 20,000 entrepreneurs in 39 states and Canada since 1986, and it’s on course to educate 10,000 business owners a year by the turn of the century. More than 150 business development organizations use the curriculum, including USC’s Business Expansion Network, which recently customized the course for apparel entrepreneurs like Godwin.

Teaching the Skills for Survival

Inside a narrow classroom in a shopping center near USC, Godwin and other entrepreneurs scribble frantically as a guest lecturer drills them on the finer points of rag trade profit margins.

“Without the margin, folks, you aren’t going to be in business,” the industry veteran intones. “You’ve got to have a handle on this stuff.”

If there is an urgency to these lessons, it’s because so much is riding on the outcome, says Robin Cornwall, a business analyst with the Business Expansion Network, a university-sponsored economic development project to help small businesses in the Los Angeles area.

“We see a lot of businesses on the knife’s edge,” Cornwall said. “They have come to the end of their founder’s skill set, so they’re either going to grow or disappear. We aim to provide a road map for entrepreneurs to take their business to the next level.”

How effective is this intervention?

The Denver-based Entrepreneurial Education Foundation, which manages and audits the program for the Kauffman Foundation, says 40% to 55% of FastTrac graduates double their companies’ sales within two years of graduation. More than 70% are still operating within five years of taking the program.

Grateful to be among them is Evelynn Curtiss. She and her husband founded their first World of Life Christian Book Store in South-Central Los Angeles in 1961. But three decades of experience couldn’t help them revive sales lost to recession and the civil unrest of the early ‘90s.

With FastTrac training and technical assistance from USC’s Business Expansion Network, she got a grip on cash flow, upgraded the company computers and overhauled her marketing plan. The family even launched its own line of book bags and other gear emblazoned with the acronym PUSH--Pray Until Something Happens.

Foot traffic has revived to the point that Curtiss has added staff at her two locations. But empty storefronts in the area remind her things might have been different.

“That could have been us,” Curtiss said. “The training gave us new skills and a vision to move forward.”

But what if your students are welfare mothers, addicts or semiliterate?

Diane Lichterman insists that groups like these also can become self-employed given the right kind of education and assistance. Lichterman is the director of the Micro Enterprise Loan Program of Orange County, a Santa Ana-based nonprofit that provides entrepreneurial education and tiny loans to some of the least likely business owners in Southern California.

The program, like 328 others in the United States, is patterned on the storied Grameen Bank of Bangladesh, which has helped spawn thousands of tiny businesses in that impoverished nation. Although results in the West are mixed, the philosophy is the same: that the poor have as much entrepreneurial aptitude as anyone else. All they lack is capital and training.

The process isn’t easy. Lichterman estimates that only a tiny fraction of welfare recipients are ready to make the leap from the dole to self-employment, and even the best qualified “need a lot of hand-holding.” Using $29,000 in seed capital, her organization has helped launch 30 modest businesses since 1994, mostly sole proprietorships performing services such as lawn care and house cleaning.

Still, Lichterman is adamant that entrepreneurship has a place in the nation’s great welfare-to-work experiment. She’s lobbying to get just a small slice of the public money being poured into traditional job-training programs.

“This isn’t magic. It isn’t going to work for everyone,” she said. “But there aren’t going to be enough for all the people who need them. A lot of these folks have some skills. They’re already out there hustling. They just need to learn how to do it in an organized way.”

The notion that entrepreneurship can transform lives and communities has led some organizations to target children. Over the last decade, groups like the Kauffman Foundation and the New York-based National Foundation for Teaching Entrepreneurship have developed programs to help nurture entrepreneurial skills of future business owners well before they hit college.

Summer camps, conferences and after-school activities have proliferated. But the largest business education program is also the oldest--Junior Achievement.

Junior Achievement Goes Into Classrooms

Founded in 1919 and with headquarters in Colorado Springs, Colo., the program was fast becoming irrelevant by the mid-1970s, according to spokesman Ed Grocholski. After-school birdhouse-building sessions that had inspired young capitalists in the 1950s weren’t relevant to a new generation of youngsters, particularly those in the inner cities. So the nonprofit changed course and began taking the curriculum directly into the classroom during school hours.

The lessons begin in kindergarten with basic economic principles such as supply and demand. By high school, participants can learn to write business plans or form their own start-up import-export companies with Junior Achievement members in other countries.

Junior Achievement now is aiming to reach 11 million American children by 2005. About 90,000 Southland students in more than 80 districts participate in the program.

Letting children know the world of work they’ll someday enter will be vastly changed from that of their parents is a main tenet of the program, says Gary Hickman, president of Junior Achievement of Southern California.

“It’s a different world out there today,” he said. “The odds of them working 40 years for a single company are very slim. We’re trying to show them all the options.”

Identical twins Kevin and Keith Hamilton are only 11, but the Junior Achievement participants already are weighing the possibilities. Neither one is yet ready to abandon his dream of playing professional basketball, but the concept of free agency in the business world sounds good.

“After basketball, I’m going to start my own business,” says Keith, a sixth-grader at Audubon Middle School in Los Angeles.

“Because if you work for someone else,” adds Kevin, “they make all the money.”

For information on entrepreneurship programs in Southern California, go to The Times’ Small Business Web site at https://www.latimes.com/smallbiz

* SMALL BUSINESS: Entrepreneurial trends in Southern California. D1, D4-8