The Entrepreneurial Mind

I have noted many times in my postings that if we want to support and foster entrepreneurs, we should provide education and get the government out of the way. However, this article at StartupJournal shows that the devil is in the details.

In the U.S. we equate providing education to entrepreneurs as a relatively voluntary act. Sure, some banks may from time to time "strongly suggest" a client take a class or visit with an SBDC counselor to assure that they have thought through their plans carefully. But, generally education is a free choice. If an entrepreneur wants to have a better chance of success, we encourage education, but that is as far as we go. They are free to launch their businesses under their own terms. The market will be the judge.

However, this is not how it works in much of Europe, where the apprentice system and strict and complex licensing creates huge barriers for business formation and growth. "Germany still requires 41 professions, from well diggers to chimney sweeps, to pass exams to get a 'Meisterbrief,' or master certificate, before they start a business. Its origins go back to late-19th-century regulations under which only Meisterbrief holders could teach apprentices. When the Nazis came to power in the 1930s, they extended that rule to the self-employed." While the intent is to educate and train, the bureaucratic approach violates the second cardinal rule of fostering entrepreneurship which is to get the government out of the way.

Not only do these laws inhibit entrepreneurs in starting businesses, they limit the growth of small businesses by restricting the ability to add staff. "Across the Continent, businesses are calling for change. 'We should be able to employ people with the right skills and the wrong papers,' says Mark Andries, a labor consultant for the Flemish Employers Association in Belgium. 'Employers should be allowed and encouraged to give on-the-job training to people without degrees, but the unions don't want that.'"

There is a movement in the U.S. to certify entrepreneurship education programs. While on the surface this is not a bad idea, we must be careful not to let this become the first step in requiring all entrepreneurs to attend a certified entrepreneurship program before being granted a business license. Farfetched? Not really, when you consider that many in this movement are enamored with the "European Way." What makes our economic system so strong is the freedoms it offers. We don't need the government to take away such freedoms under the pretense of "knowing what's best for us."

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Carnival of the Capitalists is up and running at new dog old trick. Check it out!

Posted by Jeff Cornwall at 01:30 PM | Permalink

Because I believe in the power of free enterprise and the good it can create for a society, I get discouraged when reading about collusion between large corporations and government to limit or even eliminate competitive markets. Such is the case in the story told in an article in Forbes by Scott Woolley about the radio broadcast industry.

"For decades the radio industry has crushed incipient competitors by wielding raw political muscle and arguments that are at once apocalyptic and apocryphal. Radio station owners, who formed the National Association of Broadcasters in 1923, have won laws and regulations that have banned, crippled or massively delayed every major new competitive technology since the first threat emerged in 1934: FM radio."

While television and the recording industry have been transformed by the digital age, radio broadcasting has used its duplicitous relationship with politicians of both parties to freeze out new technologies and the entrepreneurs that have tried to make an entry into "their" market.

It now appears that satellite radio may have persevered long enough to have some chance of breaking through the eighty year anti-competitive, anti-entrepreneurial government/corporate blockade. XM and Sirius may create the crack in the armor that will finally let the competitive marketplace work in this industry. If they succeed, watch the floodgates of innovation open. Devices that create convergence with digital networks, super cell phones that provide information like real time traffic reports, internet radio that really works, and replay devices like that work like TiVo for radio are just some of the innovations on the horizon.

However, the fight for entrepreneurial competition in radio broadcasting is far from being won. "If you can't compete, get a bill to outlaw the competition. The NAB may yet win this battle." Sadly, there are numerous other instances of corporations and entire industries that try to stifle the very economic freedom that gave them birth. And there is no shortage of politicians from both parties eager to help.

As a footnote, this piece also is a good example of why it is so difficult for large corporations to "become entrepreneurial." While wonderful new opportunities for innovation are springing up all around them, innovations that could lead this industry to new heights, all the broadcast giants see are threats and their strategy is to protect the status quo at any cost.

Posted by Jeff Cornwall at 06:05 AM | Permalink

Q2 of 2004 saw significant economic growth in two key areas: consumer spending and business investment. Entrepreneurs blazed the trail in the current economic expansion, and now the other major segments are following this lead.

"The Bureau of Economic Analysis (BEA) announced today that the gross domestic product (GDP) grew at a seasonally-adjusted annual rate of 2.8 percent during the 2nd quarter of 2004. Major contributors to growth during the 2nd quarter were consumer spending and business investment. Over the past year, GDP has increased by 4.7 percent. Average quarterly growth during the 1990s was 3.3 percent.

* A wider trade deficit (the difference between exports and imports) subtracted more than a percentage point from overall growth and offset the upward revisions to consumer spending and business investment."

Source: Congressional Joint Economic Committee

Posted by Jeff Cornwall at 12:50 PM | Permalink

Focus.

Many of the entrepreneurs I have helped over the years have heard this word from me time after time. In fact, when you visit my office you see a picture of an island golf green with that single word at the bottom. Be clear about what you are in business for, and stick to it. Scattered strategies rarely work well for start-ups.

StartupJournal.com offers some more insight into the importance of focus in this artcle by Bob Rosner.

"Once each of these companies established a core mission, that mission became the driver of all operations. It was promulgated in corporate communications; it became the basis of employee promotions and evaluations; it guides corporate goals, objectives and strategies. Obviously, these companies haven't turned their backs on other areas: they all value customers, employees, product quality and innovation. But by making one area their primary focus, they've given clear, unifying direction to the organization."

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In my post yesterday I talked about the "Big Two" issues for entrepreneurs in this election: taxes and health care. Anita Campbell offers more evidence that these are indeed the "Big Two". Of these two issues, taxes seems to clearly be the most burning issue for entrepreneurs this election accroding to this report. Over at NFIB there is a news release reinforcing their assertion that Health Care is the biggest single issue. Neither of these are truly scientific surveys (one is based on blog traffic and one on a sample of membership), but both ring true with other surveys. Which is the top issue for small businesses and entrepreneurs is debatable, but the fact that these two issues are at the top of "Main Street's" mind seems to be very clear.

Posted by Jeff Cornwall at 07:45 AM | Permalink

Entrepreneur magazine has come out with a comparison of Bush versus Kerry when it comes to the issues facing entrepreneurs.

The favorable comments about Kerry tend to be specific governmental programs that attack specific issues with more government and governmental programs. "Kerry, former chairman of the Senate Committee on Small Business and Entrepreneurship, believes the president has largely ignored entrepreneurs, in favor of large companies, and that the economy remains weak. Kerry proposes a raft of specific, targeted initiatives focused on small business."

"Bush believes his broader macroeconomic policies have steered the economy into safe waters and will ultimately benefit entrepreneurial companies." Get the economy on track and get out of the way, is the Bush message.

Most research supports less governmental involvement in the details of our economy when it comes to helping small businesses grow. In fact, this has been studied in economies all over the world. The consistent conclusion is always to offer education to entrepreneurs and then get the government out of their way.

Relating to the two issues that according to recent surveys are most important to entrepreneurs, health care and taxes, there are very clear differences between to two candidates.

Health Care

"Bush has advocated allowing small employers to band together and buy insurance through trade organizations, an idea known as "association health plans," or AHPs. The White House has also supported the use of medical savings accounts (MSAs), in which employers contribute a set amount of money toward employees' health care, and then employees cover the rest, up to a certain amount."

"Kerry is touting a different health-care plan, a broader initiative that would make Washington responsible for insuring the uninsured and would subsidize many small companies, giving them refundable tax credits of up to 50 percent for health insurance they buy for their workers....Kerry's plan is broader than Bush's and would likely insure more workers; however, it also promises to be much more expensive."

Your choice? If you want to solve health care with a big, new, expensive government program vote for Kerry.

Taxes

"Bush plans to make permanent his 2001 and 2003 tax cuts, worth some $1.3 trillion, a move he says will keep the economy growing. Bush also wants to make permanent his cut on corporate dividends and the estate tax, which is scheduled to expire in less than a decade."

"Kerry, meanwhile, wants to repeal the tax cuts for families making more than $200,000 per year to pay off the deficit and spend more money on health care and other programs. At the same time, Kerry is planning a cut in corporate taxes of roughly 5 percent."

Your choice? If you believe that the key to growth is to raise taxes on successful entrepreneurs (who have created almost all of the new jobs in our economy) and cut taxes for big corporations (which have created no new jobs for decades) vote for Kerry.

Rarely is the choice so clearly delineated between to candidates.

Posted by Jeff Cornwall at 07:20 AM | Permalink

National Dialogue on Entrepreneurship summarizes several reports issued by the National Venture Capital Association (The full reports are available as pdf files at the NVCA site under "Industry Stats and News". Click on the July 27, August 3 and August 9 links).

VCs were increasingly busy investing early stage deals, which means that they are more optimistic going forward. When the economy is poor, VCs focus on later stage deals that have a more proven track record. In Q2 of 2004 VC investment in later stage deals is flat. Where was there money going instead? To early stage deals that have more risk, but more potential return if economic times are thought to be positive going forward. VCs are bullish!

There was also increasing M&A activity for VCs. By liquidating more of their current investments, VCs have more cash to put into early stage ventures. Success with realizing gains from current investments will also attract more new money into their funds, or support the creation of new funds. So not only are VCs bullish, they will have pockets full of cash ready to fund more and more deals.

"All of the data point to continued good news in the VC world. First, VC investments in Q2 2004 reached $5.6 billion, continuing the growth pattern of the past two years. VC firms backed 761 companies—with roughly 30% of them in the early growth stage---during this period. Fundraising by VC funds has been stable, with much of the Q2 2004 fundraising focused on new funds that plan to back early stage companies. Finally, VCs may soon be enjoying the opportunity to exit from some of their earlier investments. Merger and acquisition activity grew again in Q2 2004, marking the fifth straight quarter of growth in the number of firms acquired."

Posted by Jeff Cornwall at 06:07 AM | Permalink

The Young Entrepreneurs Organization (YEO) is a group of "business professionals, all of whom are under 40 years of age and are the owners, founders, co-founders, or controlling shareholders of a company with annual sales of $1 million or more." In many cities, this group represents the leading edge of high growth entrepreneurs. This group is clearly an economic bell-weather.

In a recent poll of their membership, they found that 84 percent were planning on hiring in the next few months, and 11 percent indicated that they plan to hire at least 10 employees this year. Even more see growth in their companies over the next year, with 92 percent expecting sales to grow this year compared to last year.

"Mark Comiso, owner of Sunnyvale, California-based Liquid Digital and president of the YEO Silicon Valley-Bay Area Chapter, is one that fits this trend. 'I've sold one company, started a new one, bought capital equipment, and plan to hire at least two or three more people this year,' explains Comiso. 'Overall, these statistics are a very good quantification of the increased chatter I've heard from the business owners that I know.' Comiso adds, 'I was personally surprised to see that many are hiring -- the number was almost unanimous -- but it is representative of what is going on in our space.'"

This study was reported in the National Dialogue on Entrepreneurship.

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For some of us, it was a sad day. Google went public and left the ranks of privately held companies. While they may believe that they can maintain their culture, over time it will change. They will be owned by large institutional investors who will have it no other way. Their shares will be traded by computer programs that look at short-term numbers, which couldn't care less about Google's unique management style. But, what's done is done.

Red Herring has an interesting piece on the rather clumsy (see, I told you they would have trouble with the rules for public companies) public offering. "On the surface, Google's auction was mired by confusion and complication at every turn, ranging from inconsistent bidding rules from underwriters to concerns that the company would face erratic and irrational bids for its stock."

Although many CEOs yearning to go public were hopeful that Google could break the control of the investment bankers, alas, it really didn't work very well. The market does not have some deep pool of individual investors being blocked out of the IPO process.

"Mr. Hornik says that if the auction process had truly been a success - where the auction determines how much people are willing to pay for shares - Google's price would not have jumped on its first day of trading. He adds that Google would have been no better or worse off if it had used the traditional IPO process, and questions whether the auction process might have alienated institutional investors from investing in the future."

Posted by Jeff Cornwall at 08:50 AM | Permalink

As our fall semester starts it seems that I cannot take a few steps without bumping into another student entrepreneur. Om Malik blogs about more reports on this amazing social phenomenon. The recent theory by cynics on many campuses was that this trend would come to an abrupt end when the job market picked back up. Well the job market is back up, but entrepreneurial activities on campuses across the country continue to explode.

Entrepreneurship on college campuses is not a passing social trend born out of necessity. It is a fundamental transformation that could shape the American socio-economic system for years to come.

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Carnival of the Capitalists is over at Mobile Technology Weblog this week.

Posted by Jeff Cornwall at 07:27 AM | Permalink

"Entrepreneurial confidence increased 13% in the second quarter of 2004 as compared to the first quarter of 2004 and an impressive 33% from the same quarter a year ago, according to the Entrepreneurial Confidence Index (ECI) from vFinance, Inc." This dramatic improvement in entrepreneur's confidence was reported at BusinessWire. This data can be tied to increases in financing and can be linked to the improvement in the household job survey this year. Entrepreneur confidence leads to a willingness to assume the risks associated with more debt and higher payrolls. Let the good times roll!

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Small business is benefiting from defense related contracts, as seen in this Department of Defense release.

"Prime contract awards during fiscal 2003 to U.S. small business concerns totaled $42.0 billion, compared with $33.3 billion for 2002. Defense awards to all U.S. business firms totaled $187.5 billion during 2003, compared with $157.1 billion during 2002. Of the $187.5 billion awarded by the DoD to all U.S. business concerns during 2003, 22.4% of the awards were made to small business concerns, versus 21.2% in fiscal 2002. The increase is attributed to greater small business participation in acquisitions related to ships, services, construction, commercial items, and other major hard goods."

This article was highlighted by the National Dialogue of Entrepreneurship.

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The Congressional Joint Economic Committee has released state by state job statistics for July.

Here are the highlights of this report:

* "Over the past year (since July 2003), the unemployment rate has fallen in 49 states and all 4 regions of the United States. 35 states have unemployment rates at or below the national unemployment rate of 5.5 percent.

* Non-farm payroll employment increased in 28 states in July. The states with the largest payroll job gains during July were Maryland (+11,800), Massachusetts (+11,600), Washington (+8,600), North Carolina (+8,200), and Wisconsin (+7,000)."

Find the complete report here.

Posted by Jeff Cornwall at 05:25 AM | Permalink

I will be taking a break for the next week. My only goal is to make time slow down, if just for a few days. I'll be back on August 23rd. I encourage you to browse through the archives for this site or go to some of my favorite sites listed under "On The Links".

Am I going away? Nope. Just hanging out at home. Will I be checking in? Nope. I'll be playing some golf (surprise!), hanging around home with my wife, bumming around Nashville, enjoying our new porch, and just resting.

There is a great article at StartupJournal that illustrates just how important such time off can be.

One of the benefits of life in academics is that it has natural rhythms. At the end of every term I turn in my grades, finally get my desk cleaned off, tidy up all those e-mails, and catch up on any loose ends. Then, if I am smart, I can get away for a week or two. I do have my share of e-mails, voice mails, and snail mail when I return, but it's not too bad as the students also get away.

When you have a chance to take a break--do it. Make time slow down. See you on the 23rd.

Posted by Jeff Cornwall at 03:48 PM | Permalink

From the Congressional Joint Economic Committee:

"A new Congressional Budget Office (CBO) report produced at the request of Congressional Democrats confirms that tax cuts since 2001 increased the share of federal income taxes paid by the highest earners while decreasing the tax share of lower- and middle-income groups. The CBO analysis, Effective Tax Rates Under Current Law, 2001 to 2014, shows that the income tax remains highly progressive, with the top 5 percent of earners paying more than half of all federal income taxes.

* Some analysts cite total effective federal tax rates, as opposed to effective income tax rates, as the best measure of the effects of the tax cuts across income groups. This method can be misleading because it measures the burden of payroll taxes without accounting for the highly progressive Social Security and Medicare benefits to which payroll taxes are linked."

Go here for the full report.

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In a commentary on outsourcing, Edward D. Hess, executive director of the Center for Entrepreneurship and Corporate Growth at Emory University suggests that an alternative is for corporations to become more entrepreneurial. The argument is that outsourcing is only a short-term fix for corporate profits, and not a viable long-term solution. While this part of Hess' essay is correct, his solution is not viable.

I began work on this notion of helping corporations to become more entrepreneurial in the 1980s. We amassed a large data base, we published papers, and I even wrote a book on the topic. Even after I had taken my nine year entrepreneurial "sabbatical" from academics, I came back to continued interest in this notion. So I agreed to several consulting projects and seminars addressing making large corporations more entrepreneurial.

In fact, there is evidence of what makes some large corporations more entrepreneurial than other more "traditional" corporations. The differences cut across many issues. It starts with the culture of the organization, but is also affected by its strategy, structure, communication flows, and control systems. At the heart of the difference in culture and strategy is how the business engages its competitive and general operating environment. The culture of an entrepreneurial organization has a proactive strategy that views the external environment as one that is full of new opportunity. Traditional corporations, on the other hand, have defensive strategies that view the outside world as a series of threats to the core business that need to be thwarted.

So how does a corporation change its culture? Well there in lies the rub. It is difficult to make even small changes in corporate culture, and to make the kind of fundamental changes in culture that are required to become an entrepreneurial organization are generally insurmountable. Very few, if any, corporations have done so effectively, and those that have did so under conditions of imminent failure.

When I worked with large businesses on becoming entrepreneurial, I would explain in detail what changes were needed in culture and what it would take to make these changes. Inevitably, I would get one basic response from top management. "We're not the problem, you just need to make our managers more entrepreneurial." However, just as we have found that the culture in a country predicts how entrepreneurial its citizens are (for example, America compared to just about any country in Europe), so too does the corporate culture impact its employees. In fact, it has a profound impact as corporate culture is much more contained and focused. In a corporation that does everything to stifle entrepreneurial thinking and action through its structure, reward system, strategies, and so forth, telling its managers that they just need to be more entrepreneurial doesn't work.

Mature large corporations will continue to do what they have done for generations. They focus on defensive strategies to hold on to their share of a waning market. Outsourcing is a logical solution. We cannot change this with legislation or false hopes of some miraculous transformation. So what's the solution? Real entrepreneurs building and transforming our economy is the best hope. They have been the only real source of job growth over the past twenty years. And given that employment has seen record levels, they aren't doing such a bad job at this, after all.

Thanks to Bill Hobbs for sending the Hess essay to me.

Posted by Jeff Cornwall at 07:19 AM | Permalink

The Congressional Joint Economic Committee released a summary report on current economic conditions.

"The economic expansion continues to be vibrant, but growth in employment and gross domestic product (GDP) moderated this summer. Much of the moderation in GDP growth was from slower consumer spending after rapid spending earlier this year. The recent economic soft patch is attributed by the Federal Reserve (Fed) 'importantly to the substantial rise in energy prices.' Many, including the Fed, believe that the economy is poised to resume sustained robust growth in jobs and output. Consistent with that belief, recent indicators show rising consumer confidence, vigorous activity in manufacturing and service industries, still-vibrant housing markets, strong business investment, and continued low inflation."

Read the full report here.

Posted by Jeff Cornwall at 07:02 PM | Permalink

Don't think you can compete with the big boys in retail? Assume only the big boxes are left to duke it out? Not so fast!

So says John Carter at StartupJournal about his start-up retail experience. John sees automation, careful and agressive inventory management, and constant change as his competitive weapons. Any small retail entrepreneurs (or those thinking about it) should gain some useful insights from this article.

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The Office of Advocacy of the SBA has issued a summary of a conference they sponsored on "Entrepreneurship in the 21st Century". There is a fairly short summary that is an interesting read. More detail about the specific presentations at this conference can be found here.

Conference participants (academics and public policy folks) examine the current conditions and obstacles faced by entrepreneurs, and present a fairly accurate picture, although by no means groundbreaking.

Sadly, they take a very academic turn at the end by simply calling for more research to determine public policy options to support entrepreneurship. Much research has already been conducted around the world. This research has consistently concluded that education and breaking down governmental obstacles are the two most important policy initiatives that can help. I fear that this is an attempt to federalize entrepreneurship rather than create the free markets and educated entrepreneurs that can make it continue to flourish. Some would like to advocate for funding more governmental programs rather than advocate for entrepreneurs.

Posted by Jeff Cornwall at 07:35 AM | Permalink

As expected, the Fed increased interest rates today. They are still at historically low levels and helping to make financing accessible for small business. Here is an analysis from Sean M. Davis, Policy Analyst, Congressional Joint Economic Committee:

"There were four noteworthy features of today's monetary policy statement:

* The Fed's monetary policy committee meets three more times this year: September 21, November 10, and December 14."

Here is the full statement from the Federal Reserve.

Posted by Jeff Cornwall at 02:01 PM | Permalink

Inc.com reports on a survey of small business owners:

"(S)mall businesses reported doing well and expressed confidence that the second half of 2004 will be even better, according to a new survey.

"Despite confidence about the future, businesses are still planning on keeping spending under control. More than half of those polled indicated that they will maintain their current level of capital spending, while 15 percent said they would reduce spending from their original budgets. A little more than 30 percent said they intend to raise capital spending."

Since entrepreneurs are the source of most of the current economic growth, this is indeed good news.

Posted by Jeff Cornwall at 06:36 AM | Permalink

Some politicians have touted government supplying access to the Internet to the poor in this country to level the economic playing field a bit. Maybe well intentioned, but most likely doomed to mediocre results and high costs for tax payers, at best. In steps an alternative: the private sector. Paul Chenowith reports on an entrepreneurial solution to providing high speed access to the Internet to the poor at an affordable price.

"Families pay approximately $12 per month for high speed connections via a small window mounted antenna. For the service provider, this is an untapped niche, and having many people connected at lower costs provides a revenue stream that requires less infrastructure investment per customer than hard-wired connections. Donated, self-built, and/or inexpensive computers provide the actual connection. Web sites such as the The Bee Hive provide all sorts of jump-start information for parents and students."

By the way, just so I don't get accused of being partisan, I disagree with both presidential candidates regarding their view on the need for an expanded federal role in education. Education is best left localized and in many cases, privatized.

Posted by Jeff Cornwall at 05:28 AM | Permalink

Hello from New Orleans!

I am down here at a convention of academics known as the Academy of Management. I was shocked to learn this year that of the 17,000 members, ten percent are part of the entrepreneurship division of this august organization. That is amazing to me, given that this is a fairly traditional, corporate-oriented group of faculty. And my own favorite academic group, United States Association of Small Business and Entrepreneurship (USASBE), has grown to almost 800 members.

When a group of academics interested in entrepreneurship got together in the 1980s, we were lucky to get fifty of us together.

It is indeed a new area for business in America.

Posted by Jeff Cornwall at 06:24 AM | Permalink

Check out Hobbs' take on the jobs data I wrote about last Friday. "Today, 139,660,000 Americans have jobs, more than at any time in our nation's history."

Hobbs digs into the data to offer some clarity that needs to be understood if one is to really reflect current economic conditions:

"First, the 32,000 figure has a statistical quirk in it: July is one of two months, the other being January, that the government statisticians simply assume that a certain percentages of businesses fail, and they reduce the jobs-growth estimate by tens of thousands of jobs to account for it....Second, the 32,000 figure reflects only "nonfarm payroll jobs," which....generally misses small businesses, especially newer small businesses, and always misses self-employed people. The real number you should focus on is this one: Total employment in America rose by 629,000 to 139.66 million people in July, based on the government's Household Survey, which is also the data on which the official unemployment rate is based. Unemployment dropped a tenth of a percent in July."

What has happened to jobs since January 2001?

-"The unemployment rate has fallen from 6.2 percent in July 2003 to 5.5 percent now.

-"In Jaunary 2001....135,999,000 Americans had jobs. By October of that year, the number of Americans with jobs had slumped to 134,562,000 - as the sudden negative economic impact of the 9/11 attacks combined with the economic slowdown that began almost a year before Bush took office (with the stock market collapse in April 2000) to cause unemployment to surge."

Posted by Jeff Cornwall at 05:35 AM | Permalink

Hobbs also reports that mainstream media, the American City Business Journals, is finally beginning to pick up the Bush administration's new initiative supporting minority economic development. I raised concerns about the deafening silence in the media about this new program on last week.

Posted by Jeff Cornwall at 05:21 AM | Permalink

July employment data has been released. And while the payroll survey of employment announced today did not increase by as much as Wall Street's forecast (32,000 vs. 240,000), unemployment actually was lower than expected (down from 5.6 to 5.5 percent). Why? That often ignored household survey on employment, which measures total employment including entrepreneurial activity, increased by 629,000 in July! The entrepreneurial economy at work!

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Jay Ebben offers some excellent thoughts over at Inc.com on how to properly plan for growth.

"My advice before you consider growth is to consider your business model and how it lends itself to growth. Three areas you especially want to concentrate on are your revenue model, your operational model, and your cash flow model."

If you are planning to ramp up for the expanding economy I strongly suggest you read Jay's advice in full.

Posted by Jeff Cornwall at 07:50 AM | Permalink

Drakeview linked to my recent post "What If?" in which I talked about the need to plan ahead for the possible aftermath from another terrorist attack in their piece about the importance of security programs. They cite a Conference Board survey on security programs in companies of various sizes. Security programs are designed to help businesses plan for the inevitable "bumps in the road" or even "major road blocks and detours" that inevitably get in the way of day-to-day operations of any going concern.

"Security is strongest among "critical-industries" those that typically have to dedicate resources to make sure that their essential products and services are reliable and available - transportation, energy and utilities, financial services, media and telecommunications, information technology, and healthcare. They have a lot of experience with minor recurring service disruptions brought about by weather or natural disaster. They can prepare for a somewhat reliable set of circumstances - hurricanes are going to blow, blizzards are going to fall, forest fires are going to burn. Only the date and duration of these events are unknown."

Small businesses are the least prepared, and the most vulnerable. In addition to the suggestions I raised, they point out that it is possible to purchase insurance to cover such losses. It is not a standard part of business insurance in many cases, but it is probably worth considering adding such coverage, for as we all know, "stuff happens."

Posted by Jeff Cornwall at 07:33 AM | Permalink

Paula Lovell sent me this article about the explosion of students starting businesses while in college. It is happening on almost any campus in the country these days. More evidence that the entrepreneurial economy is alive and well.

One of the first new programs that we opened when I arrived at Belmont is our Student Business Hatchery, which is designed to serve just this kind of entrepreneurial student. It is a two room office that provides the basic business infrastructure to support students running businesses on campus. They have access to computers, a fax machine, a copier, file space, and conference table, and so forth. All resources are shared on a cooperative basis (first come, first served). Any student who has a business up and running (or at least close to up and running) is eligible, no matter what major they are studying. If they believe it could help them in running their business, they fill out a brief application and are admitted to the program. In the first year at our small university we had twenty students representing eleven different businesses (most formally incorporated) in our Hatchery Program.

Due to its success, we will be expanding the Hatchery Program this year to include a second location on campus to serve more developed businesses. This expansion is funded in part by a grant we received from the Coleman Foundation.

Several of the students who operated businesses in the Hatchery last year have graduated and are now working on these ventures full time in the outside world. We continue to offer advising and networking assistance, but they are launched from the Hatchery into their own space. They are beginning to hire employees, buy equipment, etc., helping in their own way to expand the entrepreneurial base to our local economy.

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This week of economic headlines is courtesy of Sean M. Davis, Policy Analyst, Congressional Joint Economic Committee:

Factory Orders Rise, Services Buoyed

U.S. Auto Sales Heat Up Again in July

U.S. Factories Enter Longest Stretch of Rapid Growth in 30 Years

U.S Factory Growth, Hiring Stay Strong

Consumer Confidence Edges Higher

Wages, Benefits Rise Moderately in 2Q

Home Sales Still Sizzle

All this good news--I wonder if there is any bad economic news.....

European Economies: German Unemployment Rises to 11-Month High

Interesting....its from the land that stifles entrepreneurship.

Posted by Jeff Cornwall at 07:38 AM | Permalink

The National Dialogue on Entrepreneurship highlighted North Carolina's Institute for Rural Entrepreneurship this week. Entrepreneurial development has helped to transform many of North Carolina's rural counties. Economic growth is no longer just found in the state's metropolitan centers. Counties in North Carolina have been pushing for local business development for many years. We benefited from their support in the 1980s as we were first building our company. This program should be a model for other states looking to develop such programs. It is based on education, building support networks, and access to financing. We found they also were helpful in breaking through governmental bureaucracies that were not structured to support new business formation.

Posted by Jeff Cornwall at 08:05 AM | Permalink

I wrote a summary of the Global Entrepreneurship Monitor report on what it concluded about the state of entrepreneurship in the US. TJ's Weblog offers links to the Global Entrepreneurship Monitor report taken from a variety of perspectives from around the world. It is a fascinating perspective on the state of the entrepreneurial economy taken from several countries.

Posted by Jeff Cornwall at 06:57 AM | Permalink

President Bush unveiled a new initiative to support minority entrepreneurship at his address to the National Urban League.. Sadly, it appears that this announcement got lost in the politics of the day by a media uninterested in any of the real substantial public policy differences in this race..

According to the National Dialogue on Entrepreneurship:

"Last week, George W. Bush and John Kerry addressed the annual meeting of the National Urban League (NUL). The speeches received a lot of press coverage that was largely focused on how the sessions might affect the Presidential campaign. Lost in the major media coverage was President Bush's announcement of a new initiative to help spur minority entrepreneurship."

Imagine that.. The media ignored a major substantive initiative introduced by the Bush administration.. What makes this particularly troublesome is that this is a program that tackles the problems of minority economic development with a self-sustaining approach, bringing together existing non-profits with the private sector.. It creates a network to provide education, training, and access to key resources for minority entrepreneurs.. These are the key elements that have proven to work for entrepreneurial economic development.

From the program's web site:

"President Bush on July 23, 2004 announced a new initiative to expand business ownership and entrepreneurship among minorities.. The Administration will undertake a unique association with the National Urban League (NUL) to create an entrepreneurship network. Supported by the Business Roundtable and the Ewing Marion Kauffman Foundation, the NUL network will include one-stop centers for business training, counseling, financing, and contracting.

The U.S. Small Business Administration (SBA), the Department of Commerce's Minority Business Development Agency (MBDA), and other Federal entities will combine their resources to help NUL local offices provide sustainable outreach and incubation of minority enterprise."

Rather than pander to the same old perceptions of entitled victimhood, this program provides hope through dignity and self-reliance.

Posted by Jeff Cornwall at 07:52 AM | Permalink | TrackBacks (3)

NFIB released its report on small business priorities and problems. Here is the list of what they found in their survey:

"The 10 most severe problems for small-business owners in order are:

Health insurance costs were a "critical" issue for 65.6 percent of respondents, the highest percentage for any problem in the survey's 22-year history."

The full report can be downloaded from the NFIB site.

Posted by Jeff Cornwall at 01:07 PM | Permalink

This week's Carnival of the Capitalists has a particularly rich collection of posts. Visit it today at Business Evolutionist.

Posted by Jeff Cornwall at 06:49 AM | Permalink