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No matter how experienced an entrepreneur you are or how solid your business idea is, there will always be factors outside your control. If you pick a strong industry with good growth potential, that can eliminate one major source of anxiety that’s outside your sphere of influence. But picking a winning industry is not as simple as it sounds. The most head-smackingly obvious sign of a strong industry is vibrant and consistent growth in total revenue, but that alone is not enough of an indicator. “What you’re really looking for is an industry that’s growing faster than the general economy,” says George Van Horn, a senior analyst at the market research firm IBISWorld , which provided research instrumental to selecting Inc.’s Best Industries 2010 . He suggests looking for “an industry that’s taking business away from another industry.” Other important factors include how much the industry is regulated, whether it is dominated by a handful of extremely large companies, and the steepness of the financial barrier to entry. You will also want to consider whether there are any geographic opportunities to set up shop where the field is less saturated. No single factor should be considered a deal breaker, though. In fact, you can sometimes turn around a seemingly disadvantageous metric like a high barrier to entry so that it’s in your best interest. If you can finagle the funds to enter the field, “that increases the likelihood that you can operate your business successfully without having lots of new competitors,” Van Horn says. In addition to perusing the market research, you want to hit the pavement to gather anecdotal evidence of an industry’s well being and future from trade associations. When checking out an industry, “meet with people who are already involved in the space and see what they think of [your] concept and whether it has legs,” says Rex Falkenrath, the regional director of the Miller Business Innovation Center, a business incubator based in Sandy, Utah. He adds that he would try to get a sense of “how [your] business concept can be differentiated from what everybody else is doing.” The conventional wisdom in entrepreneurial circles is to get in on the ground floor. But what if the industry you are entering is too young to even have a trade association? Falkenrath recommends scoping out the Internet for clues about the industry’s prospects, but Eric Von Hippel, a professor of technological innovation at Massachusetts Institute of Technology, has a more specific suggestion. “Many new companies are most effectively founded by people who are users, because they have a direct understanding of what’s up,” Von Hippel says. “Watch the activity in the user community and the early pioneer user companies and how rapid the growth is and then jump in.” He gives the examples of the heart-lung machine and the skateboard , which were invented by frustrated surgeons and bored kids, respectively. However, jumping into an industry early is not for everyone. “The timing as to when to get into an industry is really a function of what someone’s risk tolerance might be,” Van Horn says. “Getting in at the earliest stages of an industry emerging into growth has the best potential reward, but it also has more start-up risks involved.” Some entrepreneurs have gone so far as to seek out mature and declining industries in which to launch their ventures. Falkenrath ran one such business supplying automotive engine parts until 2008. The trouble is, when you’re in a moldering industry, there’s less room for error. “If you get to the market when it’s [in] early growth, you can probably even be stupid about it and make a buck,” says Falkenrath, “but as soon as it matures, you better be better than stupid; otherwise, an opportunity is going to slip away from you very fast.” Another way to measure the health of your industry or the demand for your product is by reaching out to consumers directly. To help businesses get a sense of how successful their products or services might be, Anne Beall queries groups of thousands of consumers to find out: “is this something you’re interested in? How likely are you to actually buy it? What needs does it really fulfill, if any?” The president of Beall Research & Training, a market research firm in Chicago, then subdivides the multitude of responses by gender, income, race, and geographic region, among other factors, to figure out the size and identity of the target market. “If you are a new business and you do not have a lot of money to do market research, you need to talk to every single person you’ve ever met about your idea and whether this is something that they would purchase,” Beall says. Rather than tap the crowd of consumers, some companies keep track of hot trends and industries via a network of in-the-know experts. For example, Trendwatching.com, a London-based consumer trend monitor, has 600 trend watchers in more than 100 countries, with the aim of keeping an eye on opportunities around the world. As Chris Turner, the company’s head of research and analysis, puts it, “If you’re a U.S.-based entrepreneur, you want to keep a constant eye on innovations coming from the rest of the world; while the U.S. remains a formidable market, the sources for ideas and inspiration are truly global now.” Eric Von Hippel – Business – Massachusetts Institute of Technology – Innovation – Entrepreneur

On Wednesday of this week, Flickr and Hunch co-founder Caterina Fake wrote a provocatively titled blog suggesting that wanna-be entrepreneurs should drop out of college. She based this opinion on the amount of successful companies founded by drop-outs, including Facebook , Twitter , Apple and Microsoft , as well as the drop-outs she finds herself investing in as an angel. But should education play such an insignificant role in entrepreneurship? The answer is not as simple as some think. Sponsor As with many blogs by intellectual authors, the comments they elicit are often as good, if not better reads that the original post itself. As for Fake’s post about dropping out of college, this is certainly the case. The notably civil discussion ignited in the comments by Fake’s intentionally comment-baiting title and post are some of the most interesting perspectives on entrepreneurial education I’ve yet to read. “College works on the factory model, and is in many ways not suited to training entrepreneurs… Entrepreneurship works on the apprenticeship model.” – Caterina Fake A commenter by the name of “Anonymous Coward” pokes holes in Fake’s argument about successful companies founded by drop-outs with an exhausting list of companies founded by college grads (some even with masters and doctoral degrees). Some of these companies include Adobe , Cisco , Sun , Google and Intel , all of which are fairly high-tech companies likely benefiting from their founders’ educations. Another reader, David Whiteman, rebukes the Jobs/Gates/Zuckerberg/Williams argument by pointing out that “they became successful entrepreneurs after they dropped out but that doesn’t imply causation.” One of the sentiments largely agreed upon by the commenters is that there are valuable lessons learned and resources gained by attending college, and that it shouldn’t be avoided all together. Whether Fake intends to say that entrepreneurs should either drop out or avoid college altogether is unclear, but most agree that being a drop-out may indeed be a good strategy. Instead of ignoring college and starting a company, the best solution may be to attend college, learn the early basic lessons, gain access to resources and contacts, and begin the early stages of your company while still enrolled. Then, if the company takes off, leave school. If it doesn’t, then you didn’t drop out for nothing and you can continue your education and even attempt another company. Aside from the argument for or against attending college, there is an interesting point Fake brings up about college that got me thinking: “College works on the factory model, and is in many ways not suited to training entrepreneurs. You put in a student and out comes a scholar,” she says. “Entrepreneurship works on the apprenticeship model.” While I think this is largely true among most universities, I also believe this trend is changing. Steve Blank argued recently that business schools need to evolve or branch into entrepreneurial schools. Most business programs prepare students for Fortune 500 companies with traditional business practices, which are still practical lessons for students looking to go down that road. But a student looking to found a startup has different needs. Some schools are doing more than others to provide entrepreneurial training. One school whose name I continually hear as the alma mater of new startup founders is Babson College , which topped Entrepreneur Magazine’s list of the top programs in the nation. Others aren’t doing so well keeping up. Some of the startup-minded people in my area criticize the local universities for their paltry entrepreneurial efforts, and other business schools are stuck in their old ways of teaching more traditional business practices. Can true entrepreneurial education work in the current university system? Will these colleges start losing students to smaller schools with highly focused entrepreneurial programs? These are some of the more deep-thought questions derived from this discussion, and the answers could change over time. Right now, I don’t think entrepreneurial training is working as well as it could in the current college system, but there are things to be taken advantage of. Entrepreneurs can potentially make the system work for them by attending college for the resources and contacts and founding their companies while still enrolled. As Steve Blank pointed out, TechStars , Y Combinator and other incubators are the early stages of true entrepreneurial education systems. These could one day grow up into full blown specialty schools, challenging the more traditional business schools that are slow to change. As for whether to go to college, avoid it or drop out, I think one commenter on Fake’s blog, who goes by Stephen, summed up the college question best. “About the only thing that you cannot (okay you can, but at your own peril) do, is nothing,” says Stephen. “So, drop out of college – or don’t …. but get after something, cause it’s all up for grabs – and quite frankly I’m thrilled about that.” Photo by Flickr user Herkie . Discuss

Looking for that next booming trend in the tech industry to sink your entrepreneurial teeth into so that you might come up with a great product to receive funding for? Well perhaps you need to look no further than music, as reports show that first quarter investments in 2010 for music tech startups nearly doubled from 2009 and 2008 figures – an upward trend entrepreneurs could take advantage of in the near future. Sponsor Duncan Freeman, author of the site Indie Music Tech and founder of Band Metrics, estimates that around 25 investment deals in the music tech space were inked in the opening months of this year. Compared to 13 and 14 approximate investments in the first quarter of 2008 and 2009 respectively, Q1 2010 is off to a great start with huge early investment growth. Among the largest and most notable deals of the year so far include Spotify ’s undisclosed amount of funding from Founder’s Fund, $20 million which when to startup Guvera , and speaker manufacturer Sonos which received $25 million from Index Ventures. Other well known startups, such as SeatGeek, Songbird, TuneWiki and BlogTalkRadio all received various amounts of VC investment in the first quarter of this year. While there was nearly twice as many investments this year than in 2008, the amounts of those investments were much smaller. Freeman’s estimates put 2008’s 13 first quarter investments at a value of around $90 million, an average of nearly $7 million per investment. This year’s 25 investments managed just around $110 million, or just over $4 million per investment, which is no better an average than from Q1 2009 which saw around $62 million. So while more deals are going down in the music tech industry, only slightly more cash is being doled out. It seems like the market for music startups is slowly warming and gaining traction with investors as companies like Spotify are thriving while others like Lala, which was acquired by Apple, are being snatched up by large corporations. Music could be an interesting industry to watch over the course of 2010 as these Q1 estimates suggest it could be a busy year of investments, so entrepreneurs may want to take a look at how they might provide a valuable service in this sector. Let us know what you think about the music tech space and where you think trends may lead this year by posting a comment below! Chart from Indie Music Tech . Discuss

Do you have what it takes to become a social entrepreneur? This site will let you find the answer to that question, and without you having to invest a single cent at all. Generally speaking, it revolves around a game in which your entrepreneurial skills will be put to the test. All you have to do is join (or log in via Facebook Connect) and let everybody know what you can do. Read more Learn more about Selfport.com in Dataopedia.com Find out how much Selfport.com is worth with Stimator.com

We’ve talked now and then about college programs that are making strides to provide students with entrepreneurial training , but the Harvard Business School (HBS) has so far not come up in our discussions. This might seem odd that one of the top businesses schools in the nation doesn’t gather much attention from things like The Princeton Review’s ranking of entrepreneurial programs , but one HBS grad may have an answer to that puzzle. Sponsor Stu Wall , co-founder of the startup Postabon with an MBA from Harvard, recently wrote about some of the reasons that he thinks cause MBAs to make mistakes when trying to form a startup. The biggest obstacle in their way is that through their years of education, MBA students are taught to meticulously plan their businesses, but nothing can substitute from actually getting your hands dirty. “With three months and ~$10K, we created a bare-minimum website and iPhone app that allowed us to iterate daily based on consumer feedback. No amount of time in Baker Library would have substituted,” writes Wall. “Building a product will allow you to identify a viable strategy, iterate, and prove your team can win. Research, formatting and nicely worded emails are a prerequisite but by no means a differentiator.” Does this mean that no startup ever got funded without a working demo or beta phase product? Probably not, but the point here is that the amount of discovery and business education you give yourself by actually building a product and testing it trumps anything you can learn from a lecture or a book. I would assume that at some point during his Harvard MBA education Wall had some sort of “lab” experience in which he was tasked with actually creating a business, but I can’t be sure. If he did, it may not be likely that the experiments they ran were in the realm of startups, but they could have been. The point is, Wall seemed to learn a lot more about forming a startup simply by doing than he thinks he did from school. Another pitfall he sees with MBA students is that the culture implanted into the minds of most business school students doesn’t jive well with startup culture. By this he means that MBAs spend tens of thousands of dollars on an education as an investment toward a future with a high paying career, but that startup culture is a different kind of road to success than they may have expected. “By the time we’re thinking about career decisions, many have a ‘what will you do for me’ attitude,” writes Wall. “Entrepreneurship is the truest form of meritocracy where ‘credentialing’ counts for nothing. Be humble and cognizant of your weaknesses, and put your passion for idea show (as opposed to your $$ aspirations).” Discuss