Risky Business
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Best of the Small Business Blogosphere
Continue reading… 3 CommentsSome interesting small biz and entrepreneur stories:
- Ben Jones on why sales volume is king for small business, especially with today's economy.
- Jeff Cornwall on who might be the best presidential candidate for entrepreneurs.
- The Big Idea Blog on a 20-year-old entrepreneur millionaire.
- The Washington Post's Brian Krebs on a tax plan that could jeopardize the privacy of small-business owners.
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Entrepreneurs and Social Responsibility
Continue reading… 1 CommentWe often hear about entrepreneurship in the for-profit sector and how it differs from entrepreneurship in the nonprofit sector. They are often seen as two different universes with their own rules: The for-profit world is the one run by capitalists for whom the bottom line comes before everything else, and the nonprofit world is run by do-gooders for whom helping people comes before everything else.
But that dichotomy isn't always evident in the real world where entrepreneurs work. Via the Kauffman Foundation's great new Growthology blog, I found this essay from start-up guru Paul Graham. His basic point is that the most successful start-ups have found that benevolent and charitable actions are in themselves ways to make money and further the bottom line.
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The How of Going Global
Continue reading… 1 CommentI've written previously about how more U.S. small businesses are trying to develop an international presence for a number of reasons, such as a weaker dollar, better communication technology, or higher incomes abroad. It's easy to think of why small businesses are doing this, but how is a lot more difficult. There's no easy path for even well-established and successful small businesses to navigate to get their services or products abroad. That article touched on using consultants to figure out all the complexities of opening an office abroad.
But yesterday I checked out a conference of small-business CEOs from around the country hosted by the U.S. Pan-Asian Chamber of Commerce and I heard some different ideas. Tanniru Rao is a former professor of marketing who started his own market research firm, Market Probe Inc. He explained at the conference how he found that he needed to have a presence abroad so his firm of 250 employees could compete with the top market researchers who can have thousands of employees. But he said that rather than trying to directly set up his own operations in places like China, acquiring pre-existing firms in those places was "the best way" to go. He said they decided to keep local management in place because he not only got a foothold, but also acquired "seasoned local talent." That makes the transition much faster than doing it yourself, he said.
Laurel Delaney has the best blog around on the subject of small business going global.
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Small Business Shows Resilience
Continue reading… 2 CommentsThe new Discover Small Business Watch survey results were released today, and they are the most powerful piece of evidence yet that U.S. small businesses are adapting to the credit crunch and slower economy. This month's survey is encouraging compared with April's: a decrease in the number of small businesses reporting cash-flow problems, a decrease in the number of business owners who think the overall economy is getting worse, and an increase in the number who think their personal business conditions will get better. All of those indicators had gone in the wrong direction last month, so it's good to see that slide coming to a halt.
But let's be clear: Adaptation does not mean elimination. These numbers by no means suggest that small-business people think they're out of the woods. Look at that last indicator—the percentage who think their own business conditions will improve in the next six months. That stands at 28 percent in May, which is up from 24 percent in April—but down from 31 percent in January and way down from 43 percent in May 2007.
Perhaps business folks are just being cautious in their assessments. The share reporting cash-flow problems is the best sign of hope. It's at 39 percent now, about the same as the 41 percent from a year ago. If cash-flow problems stay in check, then small-business optimism should continue to rise.
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Entrepreneurs in a Twitter About Social Networking Sites
Continue reading… 9 CommentsBecky McCray over at the Small Biz Survival blog is posting all over the place about how social networking sites like Facebook and Twitter should be an essential part of a small-business person's activities, and she'll be updating this weekend. Her focus is small businesses in small towns, but many of her insights apply to any small business. She explains nicely that the key value of these sites is to bring together information that would otherwise not be exchanged:
Face it; you don't know everything. But you can find people who know about what you are needing to learn right now. When you are building friendships on Twitter, you probably don't ever think about the fact that @susanreynolds is a jewelry artist, or that @mikeg1 knows about home schooling. But if you aren't reaching out, you'll never have the chance to ask, "Who here can help me with writing a magazine query letter?" (That would be @sheilas!)
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Minimum-Wage Debate Continues
Continue reading… 6 CommentsOne of the fiercest debates affecting small business in recent years has been about the minimum wage. Congress upped the federal minimum wage last year, following several increases on the state level.
Some of the most prominent small-business advocacy groups, including the National Small Business Association (.pdf) and the National Federation of Independent Businesses, have protested minimum-wage increases, saying they do economic harm to small firms. A common response from minimum-wage supporters is that higher wages mean more money in the hands of consumers, which in turn means more consumer spending and thus more revenue for employers.
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The Last Frontier of Low Taxes
Continue reading… 3 CommentsIt is not every day that you read in the Wall Street Journal about why we need more taxes. But now that E-commerce is booming and increasingly crowding out the quaint little notion of actually going to a store, Lee Gomes writes about why we should "cheer on" states like New York and Texas in their recent efforts to push toward Internet sales taxes [subscription required].
Many Web users surely will be annoyed by a tax. It's common to see the Internet as a refuge from the quotidian annoyances of the real world, among them death and taxes. But cyberspace is grounded in the real world, as are schools and parks and streets. If you doubt that, the next time your house is on fire, try calling Jeff Bezos.
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Is the Economy Killing Small Business?
Continue reading… 1 CommentAs I've written about previously, no one has quite figured out just to what extent the broader problems in the economy are affecting small businesses. That's why it's important to pay attention when news like this comes out:
More owners and managers of small food and beverage businesses indicated, during the first quarter of 2008, that they are planning to increase hiring during the next 12 months and expect an increase in employees versus their 2007 statistics, according to the latest Small Business Research Board (SBRB) study released here [Buffalo Grove, Ill.] today. . . . Of the owners and managers responding to the nationwide quarterly SBRB poll cosponsored by International Profit Associates, 44 percent said they plan to increase hiring over the next 12 months. This was an increase of 28 points from the 16 percent who said, during the fourth quarter of 2007, that they were planning to increase hiring. Concerning the total number of employees, 41 percent of the respondents expect their statistics in 2008 to increase from 2007. Only 8 percent thought they would have fewer employees in the coming year.
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Employee Free Choice Act: From Beltway to Main Street
Continue reading… 21 CommentsIf you have a real thing for wonky Beltway policy debates, then you know about the Employee Free Choice Act, a bill hailed by the left as an essential step to rolling back poverty and decried by the right as an affront to healthy capitalism. The bill passed in the House but stalled in the Senate last summer, but now people outside Washington are going to hear more about this issue as states are going to consider passing their own version. The Small Business & Entrepreneurship Council recently announced that any state that enacts something like the Free Choice Act will get negative points in the SBE Council's yearly index of how healthy the climate in certain states is for small businesses and entrepreneurs to thrive.
The Employee Free Choice Act would allow employees to vote on whether or not to unionize with an open system of signing cards, as opposed to the secret-ballot process that is the status quo. It sounds arcane, but the basic debate when it comes to small business is this: Is a process that would effectively increase union members a good thing? The SBE Council gives some reasons to think not:
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The Accidental Entrepreneur
Continue reading… 2 CommentsCorrected on 5/22/08: An earlier version of this post incorrectly identified the Institute for Justice.
How much do entrepreneurs need to fear regulation? It turns out that you can be punished for being an entrepreneur inadvertently. This is an unbelievable story out of the Miami area:
A man who said he thought he was just helping a woman in need is accused of running an illegal taxi service. Miami-Dade County's Consumer Services Department has slapped Rosco O'Neil with $2,000 worth of fines, but O'Neil claims he is falsely accused.
Hat tip: Antiplanner blog.
Miami's established taxicab services have less competition to worry about because there's a law against unregistered taxi services. That makes it expensive for new entrepreneurs to get their feet in the door. But that's not true everywhere. For example, in Denver, a small group of cabdrivers was able to found a cab company by getting the state licensing laws overturned in court. The Institute for Justice, the public-interest law firm that represented them in that case, keeps track of many of the other instances around the country where established businesses benefit from local regulations that nip start-up businesses in the bud.
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Rising Food Prices Hammer Small Business
Continue reading… 2 CommentsLast Thursday, the House Committee on Small Business held a hearing on how the rise in food prices is hitting small businesses. Most interesting, I thought, were two witnesses who tried to give the perspectives of the small-businesspeople probably most affected by these prices: bakers and restaurant owners. Frank Formica spoke on behalf of the American Bakers Association and discussed how the experience at his own bakery in Atlantic City demonstrates some of the pressures:
The price of baker's flour had been fairly stable for well over 20 years at 14 cents a pound. As of September 2007, the price of flour began to steadily increase until it reached a peak of over 60 cents a pound in March. Today the price of flour is 40 cents. What does this mean to Formica's? A year ago we paid $7,000 a week (or $364,000 a year) for flour, but today that number has escalated to $20,000 per week ($1,040,000 a year).... Last year, Formica's successfully marketed our products to distributors and school food program manufacturers representing over 267 school districts on the East Coast. Formica's invested over $500,000 in capital investment improvements, including equipment and facilities, to support the increased volume in business. As the price of commodities escalated, especially for flour, the price point necessary to produce the products became unacceptable to school budgets, and subsequently the schools canceled the program. As a result, I had to lay off many employees and try to recoup costs associated with this lost contract which I and my employees had counted on.
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Venture Capital—Nice if You Can Get It
Continue reading… 1 CommentHow is the economy treating venture capitalists? PricewaterhouseCoopers and the National Venture Capital Association analyze quarterly data on venture capital activity, and their report (.pdf) on the first quarter of the year is looking slightly negative. Seed and early stage investing was down 17 percent in the first quarter, falling to $1.7 billion via 330 deals.
But how much is this decline affecting small-businesspeople? There's a false conception that venture capital and start-up entrepreneurialism always go hand-in-hand. That's one of the myths Scott Shane of Case Western Reserve University goes after in his informative book The Illusions of Entrepreneurship, published earlier this year. Among other things, he says that the odds of a typical start-up getting seed-stage venture capital funding are about 1 in 4,000—lower than the odds of fatally slipping in your shower (1 in 2,232). But those odds might get even worse if this first-quarter contraction continues.
Jeff Cornwall over at Entrepreneurial Mind has some more thoughts on the report.
