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October 31, 2007 |
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How do venture capitalists look at deals? Read first-hand how one VC evaluates about the proposals he receives at Gaebler Venture's blog site.
When somebody sends me a business plan or gives me their elevator pitch, I quickly run it through a mental filter to see if it's a HomeRun. If it is a HomeRun business concept, I'm interested. If not, I'll quickly move on to other things.It usually takes me 15 to 30 seconds max to figure it out....
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The leaders of America’s small- and mid-sized businesses (SME's) are working long hours, concerned about keeping up with the latest technology. The UPS Business Monitor - United States shows they also think the economy and healthcare reform are the nation's most pressing problems. About two-thirds of the companies surveyed have sales between $250,000 and $5 million, with the remaining third between $5 million - $50 million.
Some highlights from this survey:
- SME executives work an average of 53 hours a week, with one-third (34%) working 60 hours or more.
- 59% say their top technology worry is just keeping up with the pace of technological change, although 53% also worry about Internet security breaches.
- Cell phones are clearly considered the most-needed technology device.
- The respondents are evenly split when asked if they expect difficulty in the future finding skilled employees.
- And the group clearly believes political leaders should be paying the most attention to sustaining economic growth, changing the healthcare system, and securing future energy supplies, in that order.
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October 30, 2007 |
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Want to find your next opportunity? Look to the future and spot the next big change. After all, change creates disruptions and gaps in markets, and it is these gaps and disruptions that create some of the best opportunity. After that it is all a matter of timing and execution.
I love the fact that my father and his partners (octogenarians all) still keep their eyes off into the horizon. Dad sent along a copy of Futurists "Top 10 Forecasts for 2008 and Beyond." (You can order their full report as a pdf download here).
Here is a summary of their top ten:
1. The world will have a billion millionaires by 2025.2. Fashion will go wired as technologies and tastes converge to revolutionize the textile industry.
3. The threat of another cold war with China, Russia, or both could replace terrorism as the chief foreign-policy concern of the United States.
4. Counterfeiting of currency will proliferate, driving the move toward a cashless society.
5. The earth is on the verge of a significant extinction event.
6. Water will be in the twenty-first century what oil was in the twentieth century.
7. World population by 2050 may grow larger than previously expected, due in part to healthier, longer-living people.
8. The number of Africans imperiled by floods will grow 70-fold by 2080.
9. Rising prices for natural resources could lead to a full-scale rush to develop the Arctic.
10. More decisions will be made by nonhuman entities.
More wealth, more people, less water to drink, no cash, and a scarier world. All of these will be creating opportunities for traditional entrepreneurs. But, they will also call upon a greater role of social entrepreneurs as governments are increasingly showing their inability and even incompetence in dealing with many of our problems.
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October 29, 2007 |
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An interesting post from ImmigrationRoad.com:
While immigration reform is going nowhere on Capital Hill, leaving many highly-skilled but frustrated workers wondering whether they've made a mistake by coming to the U.S., the European Union has timely unveiled an ambitious plan to lure millions of skilled professionals to the continent. The EU-wide "Blue Card" program, named after EU's blue flag, is designed to attract the best and the brightest to its member nations by offering a standardized system and many benefits.Facing an estimated shortfall of 20-million workers in the next 20 years, the European Commission wants to fix it early. One way, obviously, is to invite more immigrants. However, the United States, Canada and Australia have been the top destinations of the world's talent, with Europe falling far behind.
Yes, we need to get control of our borders. But I am afraid that we have taken our eye off of the importance of immigration in this economy. Immigration and entrepreneurial economies have always gone hand-in-hand. In addition to a "blue card" idea from the EU, the US also needs another card (let's color it a "red card" for urgent) to support the flow of legitimate entrepreneurs looking for the freedom this country offers to business owners.
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October 26, 2007 |
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I am pleased to announce that Belmont University is a finalist for the National Model Undergraduate Program awarded by the United States Association of Small Business and Entrepreneurship (USASBE). USASBE is the main academic association for entrepreneurship education, with over 800 members from around the US. This is highly prestigious award and an amazing honor given the short history of our program.
Past winners of the undergraduate award include such nationally recognized programs as Babson College, Syracuse University, University of Iowa, the University of Arizona, Miami University (Ohio), University of St. Thomas, University of Nebraska, Baylor University, Ball State University and University of Illinois - Chicago.
Go Bruins!
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October 25, 2007 |
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The SBA announced today some updates on small business in the US economy. One of these updates is another indication of the importance of small business as the employment engine of our economy. The updated data shows that the nation had an estimated 26.8 million small businesses, of which 6.1 million were employer firms. Although the total number is steady from their previous report, the number of entrepreneurial firms with employees is up from 5.9 million figure released earlier in the year.
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Recent reports from the SBA find that entrepreneurial firms are now over 50% of the GDP, and have created about 78% of all new jobs every single year for the past twenty years.
A new study released by the SBA gives some insight into the role of growing entrepreneurial firms in the economy. Bruce Kirchhoff of the New Jersey Institute of Technology and Brian Headd of the Office of Advocacy of the SBA authored the working paper, entitled Small Business Growth: Searching for Stylized Facts.
Using census and other public data, the study examines how firms started, grew, merged, declined, survived, and closed from 1992 to 2002. The authors' analysis determined that:
- Firm survival four year survival rates were consistently at about 50 percent. This was consistent during the ten year time frame of the study. This is consistent with recent studies using other data bases, and should finally put a stake in the heart of the urban myth that only 10-20% of firms survive. What is sad is how many scholars, business media types, and "experts" still perpetuate the failure rate myth.
- Industries that grew in employment did not necessarily have higher rates of fast growers but industries
with high rates of fast growers tended to have high rates of decliners. About 35 percent of employer (private sector, nonfarm, single-establishment) firms had no employment change from one year to the next, about 11
percent closed each year, about 25 percent shrank in employment each year and about 28 percent grew in
employment each year. This finding reinforces the breath of the entrepreneurial strength in our economy. Rather than depend on a few firms in a few industry sectors, this entrepreneurial economy is very diverse and widely dispersed.
- Fast growing firms (defined as having a 50 percent or more increase in annual employment with at least a five-employee increase) were only 3% of all firms. Given the burn-out rate of fast growing firms, this finding is reassuring to me. My experience is that slow and steady is want leads to long-term survival in business. As fun as things like the Inc 500 can be to watch, these may not be the firms we need to focus on for our long-term economic development.
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October 23, 2007 |
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Amy Lynch has an interesting post at her site about Generation Y workers (or as I call them the Entrepreneurial Generation). She is a consultant on Generation Y -- yes, it seems we need consultants on this generation....
Millennials grew up during an era of extreme informality. Polite behavior and face-to-face skills are not a given with this group. Even when they want to be polite, be a valuable employee or provide customer service, they may not know how. Furthermore, they grew up communicating by computer, so they may miss the nuances of your body language or tone of voice that could tell them when they're doing something that isn't up to standard.So the question is, how do you distinguish Millennials who have no interest in or incentive to work (and whom you cannot continue to employ, at least not at this stage of their lives) from those who are simply behaving Gen-Yishly and need coaching rather than firing?
(Thanks to my colleague -- and fellow Kentucky Wildcat fan -- Lori LaBleu for passing this along).
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One of the latest polls from the NFIB Research Foundation found that the Internet (16% of respondents) and word-of-mouth (15% of respondents) are the most common promotional strategies used my small business owners. My concern with these two strategies is that many entrepreneurs seem to view them as passive strategies -- an approach of "if we build it, they will come." Nothing could be further from the truth.
Word of Mouth
My favorite question to ask an entrepreneur who plans to use word of mouth to build their business is this: What is the last business that you could not wait to talk about with friends, family and even strangers. Most of the time they start to squirm in their chair, finally admitting that they can't remember a specific example. Word of mouth rarely just happens. Spontaneous word of mouth is a rare event, indeed. Successful word of mouth promotion usually requires that we actively find ways to get customers to talk about a business in a positive way.
Here are the most reliable ways to encourage word of mouth:
- Motivate customers to talk about you through excellence in customer service. Customer service is not what it used to be, so if you can create an exceptional experience people will tend to talk about it. The service must be consistent, genuine, and enthusiastic.
- Create incentives to spread the word through a referral "thank you" program. Offer customers a future discount or send them a small thank you gift, such as a gift card, for each new customer they send your way.
- Ask your customer to "sell" for you. Although it is not as common and not always reliable, there are businesses that early adopter customers want to see succeed so that they can keep buying from that business. This most often happens when you fill a niche that has not been addressed in the market, thus creating a high level of pent up demand. It is a business that clearly gets early customers excited. In this case, ask them to spread the word. Let them know that you can't succeed without their help bringing in new customers.
- Creating a "buzz campaign." It is possible to mimic word of mouth by getting friends, family and employees to actively create a "buzz" about your business. In effect, they try to prime the pump by word of mouth. We see this being used quite a bit in the entertainment industry. Many fan groups are actively enlisted to get the word out about an artist. This can also be done through a user group, who in exchange for free service, support and education, can become a "sales force" for your business.
The Internet
Web pages do not work like the Yellow Pages. They are not localized to a particular market, and they are not structured by those advertising to assure that people will see them within specific categories of businesses. Many entrepreneurs are shocked at how hard it can be to find their own website using common search engines. Just because you put up a cool website does not mean that your intended customers will be able to find it. Given the high cost of even a simple website, it is important to have a strategy to help potential customers find your site.
There are two strategies that can drive people to a website:
- One approach is to pay to get traffic. This is a pull strategy, where you use search engine optimization or other techniques to attract people to your site. This is done through several means. While this can work, it can also become very expensive and it not always very reliable. You can end up paying for visits to your site that are not potential customers. Think of it like TV ads -- most people who view them will never buy your product. By getting enough people to your site you increase the number of real customers who are part of that traffic.
- More common for small business owners is to use more targeted means to drive people to your site. This is a push strategy, where you put the address on your business cards, on brochures, or in other media ads to encourage them to go to your site to get more information or to place an order.
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October 22, 2007 |
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I have written before about the risks of going into business with friends. But what if you find yourself becoming friends with employees you hire in your business? This is the question that one of our student entrepreneurs asked while we were chatting in my office the other day. He had observed other young entrepreneurs becoming buddies with his employees and wasn't so sure that was a good practice.
In a small business becoming friends with employees is natural. A small group of people working closely with each other toward common goals often develop friendships. You all suffer together through the trials and travails of start-up and early growth, which can create strong bonds. We know that facing common adversity is powerful for building teams. Such camaraderie can be a critical element in building a strong culture in the business and in creating loyalty among your staff.
But it is important for the entrepreneur to keep certain boundaries as such friendships develop.
No matter how strong the team becomes, the entrepreneur is the one person who is ultimately responsible for the outcomes of the business -- the one who personally has everything on the line. Hard decisions will have to be made at critical points in the growth of the business. And no matter how hard it may be, the entrepreneur must make the best decision for the future of the business even if it may not be in the best personal interest of all the individual employees.
Although employees can become intensely committed to your business, they are never as invested in the business as the entrepreneur. At some point to them it is just a job. Even if they become your friends, their loyalty will have its limits and at some point their self-interest will kick in. While the entrepreneur has no real ability to exercise a better option if one comes along, any and every employee does.
There are certain things you should never share with your employees, even if they have also become your friends. Because they become your friends you may feel that you can share with them your deepest fears about the business. This is a mistake. First and foremost you are their leader. It is your job to communicate confidence and commitment to the vision, even when times are tough. You need to be what I call their emotional shock absorber through the tough times. They will know when things are not going well. Your confidence and commitment will be what can keep them on task doing what needs to get done to make it through rocky times. If you share your fears and doubts as you might with a good friend, you run the real risk of creating a climate of hopelessness and defeat in your company.
To understand what friendships between employees and entrepreneurs are all about, we have to understand the root of friendships in business. Some are true friendships -- they transcend and outlive the limits of the business relationship. I wrote a while back about such a true friendship between my father and his mentor. While their friendship began through work, it endured for many decades after their work life together had ended.
Some friendships at work are more instrumental in nature. Being your friend is part of the whole package of employment or some other business relationship. At its core it is a friendship tied by economic bonds.
The difficult aspect of friendships in business is that you never know which type is which. Is it a true friendship or an instrumental one? Most entrepreneurs who have been through an exit, be it through a sale or through closing a business, talk about how very quiet the phone can get after they exit the business. Many comment how much more open their social calendars become.
The good news is that those who remain friends are people who are truly your friends. One entrepreneur told me how surprised he was as to who these true friends were. They were not the people who had seemed so intensely connected to them when they were in their business. Rather, it was people who had seemed a bit more on the periphery. So we may never really know which are merely instrumental until the economic nature of the friendship is severed.
At the end of our discussion my advice to the student entrepreneur was that it was okay to become friendly with employees, but to maintain certain limits. It is alright to socialize, but remember that you are the owner and the boss 24 hours a day, seven days a week. It is not unlike the parent/child relationship as the child moves into early adulthood. While parent and child find their relationship can evolve more and more into one of friendship, their remains a certain boundary based on their familial relationship. Friendships with your employees need to also have these boundaries.
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Max McGee, entrepreneur and former Green Bay Packer, passed away after a accident at his home this past weekend.
Max McGee was an unexpected hero of the first Super Bowl (although at that time it wasn't yet dubbed the Super Bowl). He was a back-up player who had no expectations of playing. The story he told was that he spent most of the night before the game partying with old friends in New Orleans. But play he did, catching a pass from Bart Starr to score the first touchdown ever in Super Bowl game.
Max was a successful entrepreneur and angel investor. He was one of the founding investors in the company that created the Chi Chi's chain of Mexican restaurants. He was also a generous philanthropist. He and his wife created the Max McGee National Research Center for Juvenile Diabetes to help raise money for diabetes research.
Rest in peace, Max.
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October 21, 2007 |
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My column in today's Tennessean examines the transition that entrepreneurs eventually face when moving from bookkeeper to controller, and for some entrepreneurial firms that grow large enough, from controller to CFO.
Entrepreneurs who experience significant growth in their businesses may eventually hear this advice, be it from their CPA, their banker, or other entrepreneurs. Financial management in a growing business can become strained. Eventually, the time will come when the entrepreneur needs to upgrade the team. But, what exactly does a controller do in a business? And how do you know when you need one?
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October 20, 2007 |
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Baby Boomers and Millennials are two generations that are over-represented in the ranks of entrepreneurs. The Boomers in Canada seem to be no exception to this phenomena. From an IPSOS poll of Canadian boomers:
[S]ome Boomer entrepreneurs intend to operate their business until they die (15%). Further, one in five (21%) intend on running their business for more than ten years into their so-called retirement, while four in ten (38%) intend to do so for somewhere between six and ten years. Just 16% say that they will engage in this activity for less than five years.
And what drives these graying Canadian?
...Boomers are wishing to stay active in their retirement years, with four in ten (40%) indicating that the need to keep occupied was the reason why they intended to or have started their own business. Other reasons include fulfilling a life-long dream (29%), needing the money (26%), or just a general inclination between themselves and their partners to start their own business.
Nice to see my fellow boomers to the North are jumping on the entrepreneurial bank wagon, ey?
(Thanks to Ben Cunningham for passing this poll along).
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October 19, 2007 |
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As I mentioned in an earlier post this week, we were privileged to have Dr. Michael Morris and Dr. Arthur Brooks (both from Syracuse University) on our campus this week. During their campus-wide address they talked about the emerging field of Social Entrepreneurship.
Social Entrepreneurship involves any organization, profit or non-profit, that has a social mission. Syracuse is one of the schools that already offers coursework. Belmont is planning to role out a full undergraduate minor in Social Entrepreneurship next fall (pending a few more approval steps).
Mike Morris stressed that it is important to keep in mind that entrepreneurship is entrepreneurship no matter what the organizational context. I could not agree more. Our program will have students taking a wide array of our standard entrepreneurship classes. We will be using the social entrepreneurship classes as a vehicle to interject experiential and service learning.
He outlined a few key facts on the growth of non-profits in the US:
- From 1996 to 2007 numbers of 501(c)(3) nonprofit organizations registered with the IRS grew from 1.09 to 1.48 million.- The nonprofit sector has emerged as a vitally important element in the overall fabric of society (Verma et al., 2005).
- However, NPO failure rates are also up
Arthur Brooks went on to give a working definition of social entrepreneurship:
Process of creating value by bringing together a unique package of resources to exploit an opportunity, in pursuit of high social returns.
He pointed out that while there are about 1.5 million non-profits, there are about 9 million grassroots social enterprises that are not organized as a formal non-profit. He believes that this is reflective of American society. Continued citizen independence requires private solutions to social problems and unmet needs and that social entrepreneurship expresses the American identity.
Syracuse University has a fascinating social entrepreneurship that it integrated into their curriculum called the South Side Entrepreneurial Connect Project:
Syracuse University is located directly east of the economically and socially depressed South Side of Syracuse, New York. The South Side has been hurt more severely than any other area in the region by the systemic decline of the Greater Syracuse economy over the past two decades. Many factors contribute to the severe cycle of economic and social depression on Syracuse's South Side. Similarly, a host of factors require substantive attention if the cycle is to be broken and the South Side is to experience a renaissance. These factors range from housing to education, and from economic well-being to human and social support services. Its residents have referred to the area as an "economic desert."And yet, we believe that significant change is possible, that there are valuable assets on which to build, and that the key to sustainable economic development is entrepreneurship. On balance, larger companies within the Syracuse metro area are not likely to expand significantly in the coming years, and few established firms are likely to relocate operations to the area given the region’s contemporary tax, regulatory, labor, and operating cost environment. This set of conclusions is even truer when it comes to Syracuse's South Side. As a result, the solution rests with organic development through the creation and growth of entrepreneurial firms on the South Side. Entrepreneurship is the key to empowerment.
I am excited to see the launch of our new program become a reality next fall. Hopefully we can develop programs that have a similar impact.
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October 18, 2007 |
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The Tax Foundation has released its latest ranking of State Tax Climate. Wyoming tops the list this year as the most business tax-friendly state, followed by South Dakota. At the bottom of the list are Rhode Island and New Jersey.
You can read the full report here or see a summary of the state rankings for the past several years here.
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We had the pleasure to welcome Dr. Michael Morris and Dr. Arthur Brooks (both from Syracuse University) to our campus yesterday. It was part of the kick-off for our new major in Social Entrepreneurship here at Belmont that is scheduled to begin next fall.
Arthur Brooks may be a familiar name to many of you. His latest book, Who Really Cares: The Surprising Truth About Compassionate Conservatism, has gotten a lot of attention in the press. He gave a morning talk titled Giving in an Entrepreneurial Culture based on the research behind this book. Here are some highlights from his talk:
- Americans gave $295 billion in 2006, with 75% of this amount coming from private individuals
- 75% of American families give to charity and 50% volunteer their time
- Per capita, Americans give 3.7 times more than the French, 7.1 times more than the Germans, and 14.3 times more than Italians
- His research suggests that Americans give more because they are rich, but also that in giving more we become richer. He estimates that for every dollar Americans give they become 3.75 dollars richer.
- Givers are much happier than non-givers. It seems that there are physiological responses to being charitable that result from giving. In fact, we are hard-wired to give to others and when we do give it makes us happier, healthier and richer.
He summarized his findings by dispelling the four common myths about giving:
Myth #1: Giving makes us poorer
Giving is not the zero sum that so many assume. Those who give become richer over time.
Myth #2: People are naturally selfish
As mentioned above, we seem to be hard-wired to give. It is not natural for humans to be selfish. Rather, it is natural to give to others.
Myth #3: Giving is a luxury
The working poor give the highest percentage of their income of all income brackets. Second come the rich. The stingiest are the upper middle class.
Myth #4: An entrepreneurial nation can afford to forgo service
In fact service is part of what seems to have built our entrepreneurial culture and economy. One of my favorite essays on this was the 1998 article by George Gilder, The Soul of Silicon.
There has been quite a bit of controversy over who Dr. Brooks found actually gives the most. It seems that conservative Americans give much more than liberal Americans. The myth that conservative capitalists are greedy could not be any further from the truth.
I will write another post before the end of the week on the talk on social entrepreneurship that Drs. Morris and Brooks gave to our campus.
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October 16, 2007 |
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There is The National Venture Capital Association has issued two recent reports that offer mixed news from the venture capital world.
One report shows good news regarding exits for VC backed deals (mostly though mergers and acquisitions):
Sixty-seven venture-backed mergers and acquisitions were completed in the third quarter of 2007, 34 of which had disclosed values totaling $7.7 billion, according to the Exit Poll report by Thomson Financial and the National Venture Capital Association (NVCA). This dollar volume represents a 104 percent increase from the same quarter last year when 41 disclosed deals accounted for $3.8 billion in value. Additionally, the average disclosed acquisition value was at its highest level since the fourth quarter of 2000. The venture-backed IPO market had 12 offerings for $945.2 million in 3Q 2007, a slight increase from the same quarter last year when $934.2 million was raised from 8 offerings.
However, the other shows a slow down in funding to support new deals:
Fifty-nine venture capital firms raised $6.0 billion dollars in the third quarter of 2007 according to Thomson Financial and the National Venture Capital Association (NVCA). This quarter's figures represented a decline in the number of funds and dollars raised from the second quarter of 2007 when 83 funds raised $9.0 billion. In the first three quarters of 2007, venture capital firms raised $20.7 billion or approximately 79 percent of the volume raised in the same period of 2006.
Given the over-hang in funding right now this is not a disaster, but if this continues it will mean tighter money for high-growth firms for the next few years.
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October 15, 2007 |
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Research continues to clearly show that there are three critical areas of public policy that support and foster entrepreneurial economic development:
1- Lower tax rates and a simple tax system
2- Minimal regulatory hurdles for new businesses to start and fewer regulations effecting operating small businesses.
3- Strong protection of private property rights.
All of these factors are part of the The World Bank's annual Doing Business report. The 2008 version finds that the top five countries for ease of doing business are:
1- Singapore
2- New Zealand
3- United States
4- Hong Kong
5- Denmark
In terms of progress from last year, "Eastern Europe and the former Soviet Union have surpassed East Asia in the ease of doing business."
You can read a detailed overview of the report here.
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October 14, 2007 |
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Nathan Giffith begins a scary story at LockeSmith blog courtesy of the Progressives in our midst:
I've decided what I'm going to be for Halloween: a Progressive! I'll scare... well, I probably won't scare anyone. In fact, it would probably help me blend in a great deal more than I usually do.... The point is, Progressives ought to scare us a great deal more than they do.
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October 11, 2007 |
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Adam Smith blog writes about a new program that allows people to make direct microfinance loans. The program is called Kiva. From their website:
Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.
Why participate in such a project? Tom Clougherty at Adam Smith explains it this way:
The great thing about microfinance is that it is based on the philosophy of the hand-up rather than the handout. As I wrote for the GI: "Microfinance is not a top-down solution to poverty, it is a bottom-up approach that aims to empower the poor, harnessing their individual aspirations and abilities and creating an environment in which they can realize the true benefits of the market economy." That's why microfinance has been so successful where traditional aid has failed to make an impact.
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October 10, 2007 |
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For those of you in the Middle Tennessee area, I will be giving a talk today on the new book that I co-authored with Mike Naughton, Bringing Your Business to Life: The Four Virtues that Will Help You Build a Better Business--and a Better Life, which is part of our Good Entrepreneur Project. The book is scheduled to be released next summer.
I will be talking at Christ Church Cathedral in downtown Nashville at 6:30 p.m.
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October 09, 2007 |
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A new survey released by UPS finds that most of America's small and mid-sized businesses have failed to explore the significant growth opportunities offered by an increasingly global economy. Specifically, 67 percent of the nation's small-to-mid-sized enterprises (SMEs) are still relying solely on the U.S. economy. This figure is surprisingly low given the increasing ease of importing and exporting in today's economy.
Of the 33 percent reported participating in any cross-border trade, 15 percent are importers, nine percent exporters, and nine percent do both.
Survey respondents cite many reasons for not engaging in international trade, including a perception that it is too risky, a lack of knowledge about international markets, unfamiliarity with customs regulations and disinterest in expanding business beyond U.S. borders.
Among businesses that either import or export, 45 percent perceive global trade as a benefit while 18 percent see it as a disadvantage. 52 percent say global expansion will help them remain competitive or create an opportunity to increase profits. One out of every four believes that global expansion could lead to competition that will cut into profits.
The results regarding global trade represent the initial findings of a survey that will be released in full later this fall.
UPS Business Monitor has previously released small and medium enterprise studies on businesses in Asia, Latin America, and Europe
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The latest survey of small business owners from the NFIB reveals that small business owners are still cautious about the economy. The optimism index is still below the historic average, although it did improve a bit from last month.
On the employment front, small business owners tried to fill jobs in September, but with little success. Thirteen percent of those responding to the monthly NFIB Small-Business Economic Trends survey increased employment an average of 3.7 workers per firm, but 14 percent had reductions of 3 workers. Three-fourths of the reported payroll jobs were in medical care, education and government, industries not dominated by small firms, where hiring was weak.
Many are still reporting difficulty in attracting qualified workers. A seasonally adjusted 25 percent reported unfilled job openings, unchanged from August, keeping the unemployment rate low.
Eighteen percent of firms plan to create new jobs over the next three months, up a point over August numbers, while 9 percent plan reductions, up a point. This produced a seasonally adjusted net 14 percent of owners who plan to create new jobs, down a point from August but very solid. Fifty-seven percent said they hired or tried to hire new workers, up four points from August, but 84 percent of those trying to hire reported few or no qualified applicants.
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October 07, 2007 |
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In my column in today's Tennessean I examine some of the unique challenges of running a business from a home office. Setting boundaries, creating routines, technological considerations, and barking dogs are all a part of the mix.
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October 06, 2007 |
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Nathan Griffith ponders about "markets" at our LockeSmith blog:
We've all heard about "the market" doing this to people, doing that to people…But I labor under the impression that most folk don't have a good conception of the fact that "the market" is shorthand for a much more complicated idea. For example, most people think the market rewards those with money. In fact, the market defines what a good decision is, and then rewards those who make good decisions.
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October 05, 2007 |
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According to our original business plan, I would probably just now be exiting our health care business. But the exit ended up happening about twelve years earlier than we had thought. As carefully as we plan, the same change that creates the opportunity can lead us in unexpected twists and turns.
A great example of this can be found in the story of Chipotle told by its founder Steve Ells in a recent issue of Time.
After two years, I started to have thoughts about opening my own restaurant--a large-scale place, a "fancy" restaurant. But the economic side of the business was daunting. Knowing that many restaurants fail within a few short years of opening, I wanted some sort of backup, so that's where the idea for Chipotle came. It wasn't intended to be my main focus but a cash cow that would help position me to open a full-scale restaurant.
They now have hundreds of restuarants located all across the country. Plans do indeed change....
(Thanks to Sarah Brown for passing this along).
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For years the music industry made its money primarily through the creation of a physical product -- first the record and then the CD. But with the evolution of the digital age, the physical nature of music is fast becoming obsolete. Just at vinyl records hold nostalgic value, soon CDs will be a novel relic of a bygone era.
So is this the death of the music industry? Of course not. Music has been written, performed, and enjoyed for centuries. Music is part of culture. In many ways music as a business is thriving more than ever before. It is a period of fundamental change for this industry.
Those who have a vested interest in the current system of packaging and distribution (that is, the CD) are hurting in a big way. Like many large businesses in a rapidly changing environment, they are stuck. They are the proverbial super tanker that can't change course quickly enough to avert disaster. They are stuck due to their capital and intellectual investments.
So these big companies react to change like we often see in other industries under going fundamental change. Rather than adapt, they attack the change. They try to hold back the forces of change like the little Dutch boy with his finger in the dam trying to hold back the impending flood. How do they respond to the digital age of music? Do they shift their corporate strategy and change their business model to maintain their relevance and competitiveness? No. They sue 14 year old girls for downloading music.
So how will money be made in the new digital era of music? From a post at TechCrunch:
First, other revenue sources can and will be exploited, particularly live music, merchandise and limited edition physical copies of music. The signs are already there - the live music industry is booming this year, and Radiohead is releasing a special edition box set of their new album...simultaneous to the release of their "free" digital album.Second, artists and labels will stop thinking of digital music as a source of revenue and start thinking about it as a way to market their real products. Users will be encouraged (even paid, as radio stations are today) to download, listen to and share music. Passionate users who download music from the Internet and share it with others will become the most important customers, not targets for ridiculous lawsuits.
Just as in an industry that is undergoing fundamental change, there are opportunities. It just takes open minds, creative thinking, and entrepreneurial nimbleness to find them.
(Thanks to Andy Tabar for passing this link along).
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October 04, 2007 |
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The young people now entering the workforce have been called Generation Y. Many of us call them the Entrepreneurial Generation or the "E" Generation due their high rates of business start-up right out of, or even while in school. An article from the Boston Globe argues that the "E" stands for Entitlement just as much as it stands for Entrepreneurial.
They are...the upstarts at the office who put their feet on their desks, voice their opinions frequently and loudly at meetings, and always volunteer -- nay, expect -- to take charge of the most interesting projects. They are smart, brash, even arrogant, and endowed with a commanding sense of entitlement.
Perhaps their entitled attitudes are part of what is making them so entrepreneurial as seen from this quote from that same article.
"They have been groomed, they've been told that they are the best, and they've seen people from this same generation make millions of dollars just before them. They think, 'I want to be the next Google, Amazon, or eBay. After all, these companies were founded by young people. Now it's my turn.'"
A recent article in the Wall Street Journal examines how employers are changing benefits and perks to meet this new generation of workers.
And family-friendly companies are looking very different today than they did a few years ago. The waning of boomers with their uptight ways, and the rise of the we-want-it-all millennials, are spurring major shifts in employer programs.
Whether they are entrepreneurial, entitled or both, they sure are keeping those of us who teach entrepreneurship busy!
(Thanks to Steve King who writes Small Biz Labs for passing the Globe along).
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October 02, 2007 |
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"Half the American work force is not satisfied with their job, and only a fifth apply a passion towards their career. As this trend trickles to students entering the working world, people continue to pursue a path that leads them further from their true dreams. Pursue the Passion addresses this issue by interviewing people who are propelled by a love for their work."
Who: 4 recent college graduates are on a 3 month, 14,000 mile cross country journey conducting interviews with people who love their work. Come here about their experiences and tour their RV!
What: Pursue the Passion Tour Nashville Stop
When: Friday October 5, 2007 10 AM
Where: Massey Boardroom, 4th Floor Massey Building, Belmont University
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Read my colleague Mark Schenkel's thoughts on the "fat tax" (not a typo) at our blog LockeSmith:
Let me be clear, I am not advocating that politicians seek ways to increase taxes, whether through the creation of new tax code or the revision of old code. I'm just suggesting that the use of a simple tax that encourages all those who are inclined to pursue the creation economic value equally is likely to generate more overall value at the end of the day.
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There is a perception that that small businesses pay much less and are as good to their employees as are large corporations. The latest data from the SBA tells us that the low pay is not exactly true -- small business pay is up to 90% of that paid by large businesses. And the just released list of top small businesses to work in from the Wall Street Journal and the non-profit Winning Workplaces shows that they are at least as good to their employees.
While each company is very different, we encountered some common themes: These small businesses tend to let employees at all levels make key decisions, and they groom their future leaders from within. They offer generous traditional and untraditional benefits (how about a six-week sabbatical?). And they constantly hunt for new ways to improve the employee experience or engage employees.And many share a sizable slice of their profits with employees, teaching them to read company financial statements so they grasp how their job is connected to the success of the organization.
These small businesses set a high standard that any small business owner should aspire to achieve. The article offers compelling profiles for each small business on this list. These offer a road map to help entrepreneurs build truly good cultures for their employees.
If you think your business or one that you come in contact with should be on this list, you can nominate them for the 2008 list here.
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October 01, 2007 |
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For a long time I had one of those cheesey posters on my office wall meant to inspire. This one said "FOCUS," and had a picture of a par three golf hole with an island green.
This poster goes back almost fifteen years. I had it on my office wall in our business. I used it as a visual tool to help keep our managers and employees focused on our vision. There were so many opportunities in those days that it was easy for us to get distracted and even over-stimulated by all of the possible directions we could take our business. Many times I would not even say a word, but just point to that silly poster.
I have also found it useful during my last eleven years teaching. So many start-up entrepreneurs we work with suffer from that same affliction -- lack of focus -- that ends up dooming many start-ups. Why is focus so important? Limited resources is th obvious reason. You can only do so much with the scarce dollars most entrepreneurs have to work with. Spread it too thin and you do nothing very well!
Less obvious is one of the major struggles that all new ventures face. They need to be able to get known in the market and attract customers, or they never can survive. Without focus, entrepreneurs never get above the nose of the competition and fade away due to lack of traction in the market.
Although it has faded and is no longer on the wall, I still have it close by and pull that poster out fairly often. Most of my students and alumni know the importance I place on that one word -- focus.
One of my alums, Erin Anderson, sent along a great article that reinforces the importance of focus in entreprneurial ventures. It was recently written by Wil Schroter of Forbes.com and re-published at Report on Business.
Whatever the exact figures, no one would argue that scores of budding new ventures die on the vine. One of the most common killers: lack of focus.
With precious few resources to expend, hewing to a specific, well-defined vision is critical for start-up companies. When entrepreneurs attack too many problems or chase too many opportunities at one time, they often end up with nothing to show for it.Whatever the exact figures, no one would argue that scores of budding new ventures die on the vine. One of the most common killers: lack of focus.
With precious few resources to expend, hewing to a specific, well-defined vision is critical for start-up companies. When entrepreneurs attack too many problems or chase too many opportunities at one time, they often end up with nothing to show for it.