Risky Business
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Is a Small-Business Recession on the Way?
Continue reading… 3 CommentsLast month, I speculated that pessimism among small-business owners in surveys about the economy might be driven more by perception than reality. Well, the latest Discover Small Business Watch survey released today (but not yet online) does not get us much closer to figuring out the true cause of the bad feelings, but it does show that the pessimism is only deepening.
The economy is getting worse, according to 79 percent of small-business owners polled in the survey. That's up from 71 percent last month and reverses a previous decline. Even more worrisome is that while the number of businesses experiencing cash-flow problems had also fallen in May, it has increased now, from 39 percent to 42 percent.
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Making Graphic Designers Come to You
Continue reading… 4 CommentsNeed graphic design for your website or a new logo for your company? Maybe your business has other artistic needs, but you don't want to shell out the money to contract an artist. A new website, crowdSPRING, may be your answer. It applies the Web 2.0 treatment to commercial graphic design.
As the buyer of art, you create a profile on the website about the kind of project you want and how much you're willing to pay. Then artists, who also have profiles on the site, will submit their best cracks at your project (actual work, not proposals), and you can choose the one you like and "award" the designer the money you said you'd pay. Payment is held in escrow by crowdSPRING until the deal is done. Here's how the site describes the process:
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Best of the Small-Biz Blogosphere, June 27
Continue reading… 2 CommentsAside from a few odd choices (What Women Want), Businesspundit has a good list of the 50 Best Business Movies Ever. Perhaps it was too recent to be up for consideration, but I would add to this list the summer's best movie so far, Iron Man—a brilliant portrayal of one entrepreneur and the entrepreneurial spirit.
Young Go Getter has a Q&A with Jake Nickell, the founder of one of the more successful online start-ups in recent memory, Threadless.com.
The Wall Street Journal's Independent Street has a guide for how a business owner should shop for health insurance.
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More Regulation, Fewer Entrepreneurs
Continue reading… 0 CommentsHow much does politics really matter to entrepreneurs? What policies create conditions for them to succeed—and which cause them to fail or not even try? A recent study by Silvia Ardagna of Harvard University and Annamaria Lusardi of Dartmouth College goes through the data and suggests that a high level of regulations matters a whole lot—in a bad way.
Ardagna and Lusardi looked at a massive survey (the Global Entrepreneurship Monitor) from 2001 and 2002 that measured entrepreneurial activity among 150,000 individuals in 37 countries, ranging from the United States to France to India. What makes the study especially interesting is that it distinguishes between people who start their own businesses because they want to (opportunity entrepreneurs) and people who have to work for themselves because they have no other prospects (necessity entrepreneurs).
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Why Wal-Mart Can Be Good for Small Business
Continue reading… 8 CommentsThe Washington Post yesterday reported on how the conventional wisdom that Wal-Mart is the bane of small mom-and-pop businesses is being shattered in the wake of a new Wal-Mart opening in Landover Hills, Md., a close-in Washington suburb in Prince George's County, Md.
The article cites research showing that in urban areas Wal-Mart has not driven out small competing businesses, as it often has in rural and more distant suburban areas. It seems that Wal-Mart can drive up the amount of customer traffic in an area, which can actually benefit neighboring businesses, even if they are in direct competition with Wal-Mart.
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Only Fools Rush Into Business Partnerships
Continue reading… 1 CommentJeff Cornwall, who directs the Center for Entrepreneurship at Belmont University in Nashville, published a column yesterday on how entrepreneurs should go about picking a business partner. That's a subject I've written about here, and also I recently talked with Nigel Nicholson on the issue of family business partnerships and how they can break down if families aren't careful. Cornwall adds some insight into this matter, especially on questions that potential business partners should ask each other:
• Do you share the same vision for the business? Do you share the same aspirations for the business in terms of its size?
• Are you all going to make the same level of commitment of time to the business? What are your work habits and work ethic? How much time off do you plan to take each day, each week, each year?
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Best of the Smallbiz Blogosphere: June 20, 2008
Continue reading… 0 CommentsRecent blog posts that are worth a read:
The 25 Best Apps for entrepreneurs to grow their business.
Business Pundit has more on how entrepreneurs are working to solve energy problems.
Duct Tape Marketing on how to use Amazon.com to publicize your stuff.
Business Opportunities on how the high price of oil is actually a good thing for entrepreneurs.
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Why Climate Change Legislation Matters for Small Business
Continue reading… 2 CommentsSo cap-and-trade legislation has died in the Senate. But it's going to be resurrected when a new administration moves into the White House. In the meantime, this is an issue of critical importance to small business and entrepreneurs.
1. There's no consensus on exactly how much a cap on emissions would cost the economy. But one thing is for sure: The bigger a firm is, the less that cost is going to hurt. Tim Carney—the best writer out there chronicling the ways that big business uses government regulation to encumber competitors—has written extensively about how Enron supported climate change legislation because its executives knew it would hurt smaller competitors' bottom lines much more than Enron's.
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Lowering Health Costs for the Self-Employed
Continue reading… 6 CommentsLooks as if I might have spoken too soon about the bipartisan possibilities of allowing health insurance to be purchased across state lines. While Barack Obama does approvingly write in The Audacity of Hope of letting consumers buy health insurance beyond just what's offered in their states, his plan would do this with strings attached.
Obama would allow the national sale of only private insurance plans that go through his "National Health Insurance Exchange." That means that the insurance plans would have to accept federal government controls on what to cover and how much to charge.
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Hacking Through Legal Red Tape Might Require Help
Continue reading… 0 CommentsI've blogged about licensing laws that can pose significant barriers to entrepreneurship. But licensing laws are just one example of the jungles of legal red tape that entrepreneurs have to bushwhack through in order to get their businesses going. A lack of knowledge about these laws might be enough to deter many potential entrepreneurs. How many have been deterred—and the resulting cost to our economy—is hard to say.
I just found out that the Institute for Justice, which I mentioned as an organization that has successfully defended entrepreneurs against anticompetitive licensing laws, has resources that go beyond litigation to help with red tape. In the Chicago metro area, the Institute for Justice has set up the IJ Clinic, which assists clients—many of whom are low-income, inner-city small businesses—with figuring out "the legal intricacies" that come with being an entrepreneur.
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Fewer Employees, Higher Health Insurance Costs
Continue reading… 3 CommentsI've written about how one of the biggest problems small-business owners have to deal with is buying health insurance for their employees when the costs are rising so dramatically. The National Association for the Self-Employed released the results of a survey today that gives us some more hard data on the issue. The survey is based on a sample of 4,000 "micro-businesses"—those with 10 or fewer employees—so it tells us about only the smallest of small businesses.
The results drive home how much more expensive it is for small businesses to pay insurance premiums—median costs rose from 3.7 percent of a business's total revenue to 5.5 percent. But they also offer some surprising statistics that aren't so negative—some of the smallest firms of this already small group actually saw a greater increase in access to health insurance than other firms. In 2005, 13.8 percent of businesses with under $50,000 in gross sales offered health insurance in 2005. Now that number is up to 40 percent.
The share of micro-business owners who have health insurance for themselves grew from 54.9 percent in 2005 to 67 percent in 2008. Some of that increase, however, might have been made possible for micro-businesses by cutting back on health spending for their employees. The proportion of respondents who buy coverage for their full-time employees dramatically fell from 46.2 percent to 18.6 percent.
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Photolimn: Entrepreneur Uses Chinese Connection
Continue reading… 5 CommentsI was recently told about a very interesting online business called Photolimn.com. The entrepreneur behind this website is a guy from Southern California named Jim Bowler, who graduated from George Washington University in 2004. Like a lot of college graduates, Bowler decided to travel abroad in his first year out in the "real world," but unlike a lot of them, he went to work in China. While there, he decided to spruce up his room with a painting, so he met some local artists. Those interactions led to relationships that he retained when he came back to the United States in May 2007 and that he has used to start his business. The idea is that you submit a photo to the website, and for a fee you get back a painted version of that photo created by a Chinese artist. The results are pretty cool. Bowler also tells me that the number of orders he was receiving went way up after he paid for some ads on Facebook.
Bowler's business an example of how globalization and other broad trends aren't just things that small-business people and entrepreneurs read about in the newspaper. Thanks to better communication tools and other factors, they actually can ride those waves.
Bowler told me that while he was living in China, he noticed just how entrepreneurial people were there, defying the stereotype of attitudes in communist countries. "It's similar to the U.S. where a lot of people are starting small businesses," he told me. Years under communism have actually shaped this attitude, he said. When you know what it's like to live without capitalism, you appreciate it when you have access to it. Instead of just looking at these amazing changes and thinking, "that's interesting," Bowler built entrepreneurial relationships. He not only works with the artists he met in China but also with a number of studios throughout the country, several of which he found online. One might guess that it takes a lot of capital for a small business to go global. In Bowler's case, ingenuity was much more important.
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Best of the Small-Biz Blogosphere: Friday the 13th Edition
Continue reading… 0 CommentsDawn Rivers Baker has more thoughts about Generation Y and entrepreneurship.
Robb Mandelbaum tells you what you need to know about McCain's speech on small business earlier this week.
Karl Palachuk on the recession that isn't.
Tim Berry on the importance of sales forecasts.
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A Health Idea Entrepreneurs Love
Continue reading… 0 CommentsOn Monday, I was in a room in the Grand Hyatt in downtown Washington, D.C., with over 700 small-business people from across the country, most of whom were very concerned about the impact of the rising costs of healthcare on their businesses. This was at the 2008 National Small Business Summit, held by the National Federation of Independent Businesses, where a panel on healthcare featured Democratic Sens. Ron Wyden of Oregon and Blanche Lincoln of Arkansas, Republican Rep. Charles Boustany of Louisiana, and Stuart Butler of the Heritage Foundation.
The panelists talked about their various ideas for reforming the country's healthcare system. Butler advocates a "connector" that would act as a clearinghouse for health insurance, similar to what was enacted by Mitt Romney in Massachusetts. Lincoln said one central problem in our healthcare system is that it focuses too much on acute care and not enough on chronic care. Wyden discussed the bill he has submitted to Congress that would organize Americans into a national health insurance pool.
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More on Social Networking for Small Business
Continue reading… 1 CommentI was skeptical the other week about the utility that small businesses can get from Twitter. Well, my skepticism has abated slightly after reading this post today from SmallBizMentor. Online shoe retailer Zappos is using Twitter in a creative way to show off the quality of its customer service. Zappos has set up a site that puts together all the times that customers and employees mention Zappos on Twitter (but I'm presuming that it doesn't put everything up there, only positive mentions?). Anyone who visits this site from the Zappos home page can see comments like this one from user "teampoop": "Thanks for the upgraded shipping on my wife's watch. She's stoked."
Twitter definitely involves a time commitment. Obviously, someone at Zappos spends time working on this. But if you have a business heavily connected to the online social world, with customers who would use or be impressed by the feedback you're getting at Twitter, that commitment might be worth making to shore up your brand and make potential customers feel more at ease.
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Best of the Small-Biz Blogosphere for June 6
Continue reading… 2 CommentsMarshall Loeb of WSJ's MarketWatch pokes holes in some of the common myths about starting up.
Scott Shane of Case Western Reserve University lucidly explains what seems obvious but is often ignored: When you start up, you need to pick both a favorable industry, and one in which you have close knowledge of how it works.
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How Entrepreneurial Is Generation Y?
Continue reading… 4 Comments"Kids today!" is the oft-heard complaint from the older generation—that kids today are lazier, more obnoxious, etc., than any previous generation. Well, that tendency might extend to positive traits, too—like being more entrepreneurial. A couple of weeks ago, author Michael Malone got a lot of attention with this Wall Street Journal op-ed about why we're about to enter a brave new world of entrepreneurship. The basic reason is that the generation Y that is in high school and college now and will be running the country soon are more entrepreneurial-minded than previous generations. Malone's supporting statistics:
The most compelling statistic of all? Half of all new college graduates now believe that self-employment is more secure than a full-time job. Today, 80% of the colleges and universities in the U.S. now offer courses on entrepreneurship; 60% of Gen Y business owners consider themselves to be serial entrepreneurs, according to Inc. magazine. Tellingly, 18- to 24-year-olds are starting companies at a faster rate than 35- to 44-year-olds. And 70% of today's high schoolers intend to start their own companies, according to a Gallup poll.
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Small-Business Employment: Not Too Shabby
Continue reading… 1 CommentThis Friday, the Labor Department will release the unemployment numbers for May, which may answer some questions about whether the economy is headed for or in a recession. But we can get a preview—especially if we're interested in hiring by small businesses—by looking at the National Employment Report released today by Automatic Data Processing, a business outsourcing firm that has 500,000 clients in the United States. The interesting finding is that small businesses—defined here as those with fewer than 50 workers—are actually adding jobs, while larger firms are shedding them.
Nonfarm Private Employment Highlights—May Report:
Total employment: +40,000
Small businesses*: +61,000
Medium businesses**: -3,000
Large businesses***: -18,000
Goods-producing sector: -37,000
Service-providing sector: +77,000
*Small businesses represent payrolls with 1-49 employees
**Medium businesses represent payrolls with 50-499 employees
***Large businesses represent payrolls with more than 499 employees
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Small Business and Charitable Giving
Continue reading… 1 CommentHere's another tidbit related to the idea that small businesses and start-ups can do good while doing well, which I blogged about last week. A recent survey from SurePayroll, an online company that handles payroll issues, suggests that more small businesses want to be contributing to charitable activity but don't think they can afford it:
Although many small business owners indicated that they actively support their communities in at least one way, most said they would do even more if economic conditions were better.
"Small business entrepreneurs are often the ones who have formed businesses and established mission statements out of a need they have observed in their communities," said one business owner. "However, their growth and profitability are typically far less than large corporations, limiting their ability to meet social and community needs and still maintain a profit."
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How to Get Media Attention
Continue reading… 6 CommentsEvan Carmichael at the Young Entrepreneur Blog has five secrets for how a start-up can generate PR. I like that these tips aren't very work-intensive. They're fairly simple things that a one-man operation could implement. You don't need to hire a PR agency. I'd emphasize one of his secrets, and then expand on another. Emphasis on this:
Bloggers and reporters are some of the busiest people you could possibly hope to meet. They're actively looking for the most interesting, relevant, and linkable stories out there, preferably before anyone else can run with it. But truthfully, they spend most of their time hacking through the weeds of generic or over-the-top inbound emails, press releases, Facebook messages, Skypes, SMSes, Tweets, and IMs. It's almost a small miracle that anyone can ever get their story told.
