Online Site Support Notebook: Benjamin Franklin, Entrepreneur
www.benfranklin300.org/etc_article_entrepreneur.htm (From the Benjamin Franklin Tercentenary web site)
Franklin was the youngest son and fifteenth child born to his working-class father and he only attended school for two years -- but he made enough money to retire from active business by the age of 42.
How did he do it?
Well, it wasn't by patenting his most famous invention, the lightning rod. In fact, Franklin didn't patent any of his inventions or scientific discoveries, since he believed that everyone should be able to freely benefit from scientific progress. In his autobiography, he explained:"As we enjoy great advantages from the invention of others, we should be glad of an opportunity to serve others by any invention of ours, and this we should do freely and generously." In this way, he was sort of an eighteenth century open-source advocate.
Many people have tried to learn Franklin's secrets to success from his bestseller,"The Way to Wealth," which is still in print and has gone through more than thirteen hundred editions. The book compiles famous sayings such as,"A penny saved is a penny earned," and"Early to bed and early to rise, makes a man healthy, wealthy, and wise." But although Franklin admired thrift and frugality all his life, he was only human and often found these ideals hard to live up to. He admitted in a letter to a friend, written at the end of his life, that although"frugality is an enriching virtue," it was also"a virtue I could never acquire in myself." But the next sentence points to one of the tricks we can learn from Franklin. He continues,"I was lucky enough to find it [frugality] in a wife, who thereby became a fortune to me." As a teenager, Franklin had made friends with people who combined equal amounts of charisma with unreliability, but after being burned a few times, he made sure that the people in his life, from business partners to friends, embodied the qualities of industry, frugality, and dependability that he looked up to.
That's one of Franklin's tips for success, but to find the rest, we need to analyze his career as a printer. Despite his later fame as a scientist and diplomat, Franklin actually thought of himself first and foremost as a printer, all the way up to the end of his life. He was without a doubt one of the most successful printers of his time in America -- and he provided an example of entrepreneurship we can learn from even today.
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Franklin was ambitious, hardworking, and trustworthy. Printing is an industry with high capitalization costs, so Franklin needed support to get set up on his own. His honesty and ambition won him the confidence of friends with the resources to fund a print shop, and his diligence and work ethic made the business a success. In his autobiography, Franklin noted that he often worked past 11 p.m. to get a job done, and that if necessary, he would stay overnight to redo it. In a town the size of Philadelphia, people quickly noticed this extra effort, and Franklin's growing reputation lured customers away from his rivals.
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Franklin was image conscious. Walter Isaacson, a Franklin biographer and former chairman of CNN, calls Ben Franklin"the country's first unabashed public relations expert." Franklin knew how useful a good reputation was, and cheerfully explained in his autobiography that he"took care not only to be in reality industrious and frugal, but to avoid all appearances of the contrary." He then goes on to describe his carefully cultivated image,"I drest plainly; I was seen at no Places of idle Diversion; I never went out a-fishing or shooting; ... and to show that I was not above my Business, I sometimes brought home the Paper I purchas'd at the Stores, thro' the Streets on a Wheelbarrow." By the end of the paragraph, Franklin's competitor and former boss has been driven out of business and is reduced to"very poor Circumstances." Franklin not only was hard-working and down-to-earth, he also made sure that everyone knew it, and as a result, he gained credibility and customers.
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Franklin knew the value of networking. Even as a young tradesman, Franklin sought to improve himself and his community. He organized weekly meetings of a small group of other tradesmen and artisans, called a Junto. At their weekly meetings they asked how they"may be serviceable to mankind? to their country, to their friends, or to themselves?" In between establishing a university, hospital, lending library, militia, firefighting brigade, learned society, and insurance company, Franklin and his fellow Junto members sent plenty of business each other's way.
At the age of thirty, by which time his Pennsylvania Gazette was the most widely read newspaper in the colonies, Franklin campaigned to be made clerk of the Pennsylvania Assembly. This job was so boring that he often whiled away the time by making up mathematical puzzles, but it helped him make valuable connections. He used them to his advantage in bidding for lucrative government printing work. -
Franklin took risks, but only very calculated risks. Job printing was a colonial printer's bread and butter. Franklin, like his peers, could be relatively certain of his income from commissioned work, which included legal forms, contracts, licenses, sermons and pamphlets. But for bigger rewards, printers had to take bigger risks, by acting as publishers. Printing, as we've already noted, is a capital and labor intensive industry, and so a printer who published an entire edition of a book would tie up a lot of capital. If he misjudged his market, he could easily be left with a stack of unsold volumes on his hands. For that reason, printer-publishers tended to produce newspapers, one sheet"broadsides" on topical issues, and annual publications with predictable sales figures, such as almanacs. Franklin published all these types of material, but when his calculations convinced him that his investment in more daring ventures would be returned, he was prepared to take the risk. This resulted in several profitable bestsellers, but sometimes things still went wrong -- for example, when he was left with an edition of the Psalms of David on his hands for two years!
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Franklin came up with solutions that turned potential problems into silver linings. Once an apprentice reached majority (usually at 21), they became journeyman printers, and were free to leave Franklin's shop to set up business on their own, if they could find the seed capital. Rather than risk one of his journeymen finding the backing to become a local competitor, Franklin came up with a basic franchising idea. He provided trusted journeymen with the necessary equipment and materials to set themselves up as his printing partner in another colonial city, where there wasn't yet a printing industry. They paid him back with one-third of their annual profits for the next six years -- and they expanded Franklin's market penetration, creating economies of scale that paved the way for bolder publishing ventures and more competitive pricing.
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Franklin looked at the whole picture, guaranteeing supply, quality product, and distribution. Franklin's involvement in his industry spanned its entire range. His Pennsylvania Gazette and Poor Richard's Almanacs were the most successful publications in the country, in large part due to Franklin's witty conversational writing style. He had taught himself to write well by reading essays from The Spectator, taking notes, and then trying to rewrite the articles from scratch. But Franklin's success didn't derive from good content alone. He and his wife collected cotton rags (the raw material of paper), invested in setting up paper mills, and eventually ran a thriving wholesale paper business. Having tackled supply, Franklin moved on to distribution, spending years lobbying for the top post office job in the colonies. When he finally became deputy postmaster, he invested in increased efficiency, cutting the delivery time from Philadelphia to New York down to a day, and set up the first home-delivery system and the first dead letter office. Franklin also arranged for several of his friends and family to be named regional postmasters, thus expanding his publishing market and boosting his personal income. He was soon at the center of a sophisticated inter-colonial communications network, one of the most dynamic in the world.
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Franklin was inventive -- he thought"out of the box." Franklin came up with America's first political cartoon, and printed Pamela, the first novel published in the colonies. He has also been inducted into the Direct Mail Order Hall of Fame, having pioneered the mail order catalogue as an inventive way to get rid of his back catalogue. However, Franklin also made sure that while he was innovating, he was still covering the more traditional bases to maintain customer comfort. He and Deborah ran a stationer's shop on the side, stocking all sorts of sundries including fine chocolate. Meanwhile, his newspaper devoted ample column space to ever-popular gossip and sensational crimes.
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Franklin identified unmet demands, created an awareness of them, and then often stepped forward to fill them. Franklin saw the world around him in terms of how it could be improved upon, either by enhancing an existing tool, or by inventing a new solution altogether. This translated, in business terms, to not only seeing gaps in the market, but also coming up with creative ways to plug them. For example, Franklin noticed that almost a third of his fellow settlers in Pennsylvania were German-speakers, and promptly launched the Philadelphische Zeitung -- the first newspaper printed in German in the colonies.
He also knew how to communicate his vision to others, often using his press as a vehicle for strategic public relations work. When the Pennsylvania Assembly was debating raising the limits on the amount of paper currency in the colony, Franklin wrote an anonymous pamphlet that swung the tide in favor, A Modest Enquiry into the Nature and Necessity of a Paper-Currency. He was then awarded the lucrative commission to print the currency, having also come up with an ingenious way to thwart counterfeiting by using unique leaf prints. And when Franklin's friend, Dr. Thomas Bond, approached him to suggest that Philadelphia needed a hospital, Franklin immediately came up with the motivating concept of a matching funds donation, and wrote inspiringly in his Gazette about our shared moral duty to help the sick.
Franklin's lifelong search for a better world did not always result in personal profit. Nonetheless,"doing well by doing good" remains the secret to his success, both as entrepreneur, and as human being.