Risky Business
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Who's Crazy Enough To Have Started A Business In 2008?
Continue reading… 1 CommentAs it turns out, tons of people. The Kauffman Foundation just released the latest results in its annual Index Of Entrepreneurial Activity. According to the Index, in 2008 an average of 0.32 percent of American adults started businesses each month. That's higher than the 0.28 percent, 0.29 percent, and 0.27 percent from 1997 to 1999--when the economy was booming. It's true that a lot of people hadn't felt the recession yet for much of 2008. But in 2002--a year of recession following 9/11--the number of people starting a business each month went up 0.29 percent, from 0.26 percent in 2001. It continued to increase to 0.30 percent in 2003.
The bad news, however, concerns the type of businesses being created.
Entrepreneurship rates increased only for low-income types of businesses and not for high-income types, which may be early signs of how the recession is impacting firm formation," said study author Robert Fairlie, professor of economics and the director of the Master's program in Applied Economics and Finance at the University of California, Santa Cruz.
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Craiglist Killer Reaction Might Lead To Government Crackdown
Continue reading… 1 CommentWhen the news of the so-called "Craigslist Killer" broke, I speculated that we'd see renewed efforts by state officials to regulate online classifieds. Here's the first significant example: the Illinois attorney general sent a letter to Craigslist earlier this week demanding that the site shut down all erotic services ads (HT: Radley Balko).
So is this a serious attempt to confront this criminal issue, or just a quick and easy to scapegoat the problem?
Well, over at Techdirt, they make a convincing argument about why it's odd to single out Craigslist for these crimes, or even the Internet at all.
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Amidst Swine Flu Mayhem, Remember Benefits Of Immigration
Continue reading… 1 CommentThe swine flu outbreak has given immigration opponents a new threat to harp upon as a reason to close the borders.
It's quite debatable we should even count the swine flu as a cost of an open immigration policy (which, to be clear, the US does not have). But I'll let other people carry on that debate. Instead, I'd like to point to more empirical evidence about the benefits more immigration brings to the American entrepreneurial sector. (See previous evidence here.)
The National Bureau of Economic Research has a new working paper by Jennifer Hunt, an economist at McGill University.
Using the 2003 National Survey of College Graduates, I show that immigrants who originally entered the United States on temporary work visas or on student/trainee visas... are more likely than natives to start a successful company, suggesting that immigrants have a niche in startups based on technical knowledge from master's and doctoral degrees.
We often hear about immigrants "taking jobs" form Americans, but rarely do we hear about the jobs they create.
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Lithuania's Economy In Major Decline
Continue reading… 0 CommentsWhy am I blogging about Lithuania? Because I could have easily included it in my list of ten countries that might be the next big failures.
Formerly a Baltic Tiger, Lithuania's economy shrunk by 12 percent in the first quarter. Read more here.
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The Most Influential Films--A Story Of Unsung Heroes
Continue reading… 0 CommentsVia Marginal Revolution, check out this list of the 10 most influential movies of the last ten years. I could quibble with some entries on this list--Coraline, for example, came out just a few months ago, so it seems more than a bit premature to talk about its influence. But overall, this list does seem to get at the origins of some of the imagery, narrative structures, and plot devices that we see over and over in recent films.
While the list has some big blockbusters like The Matrix, and some critical successes like Traffic, it has at least one movie that I recall being generally panned upon release (Polar Express), and even one that was not an outright bomb--2004's Sky Captain And The World Of Tomorrow. It only grossed $57 million worldwide, with a $70 million budget. But its influence has been undeniable, and has led to major commercial success--for other people. The idea of making a movie with the actors being the only "real" component, and computer-generating the rest, was first seen in Sky Captain, but (arguably) perfected in Sin City and Zack Snyder's 300, the latter of which grossed almost $500 million.
So what does this have to do with entrepreneurship?
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Swine Flu: What Business Owners Should Know
Continue reading… 3 CommentsHave you seen people wearing masks during your morning commute the past few days? Fears about the swine flu has caused some people to change their daily habits. I talked to Chris Falkenberg, president of Insite Security, about what the possible pandemic means for the business owner. And yes, walking around in a mask is a complete overreaction.
But, Falkenberg argues, overreaction is not the main problem. Even if the swine flu turns out to another overblown panic, if it inspires your business to develop or improve upon a crisis management plan, then you've put your business in a better position. "If you don't have a crisis management plan, it's time to develop one," says Falkenberg.
Fortunately, crisis plans for more conventional disasters--such as hurricanes or floods--can also provide a modicum of protection in the case of a pandemic, Falkenberg says. So that means that many of the strategies I covered in this article from September about disaster protection would also apply here.
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Filling The Gaps Left By GM's Layoffs
Continue reading… 9 CommentsHere’s one of those stories that’s so good I kick myself for not writing it.
With the auto companies like zombies (except thriving on bailout money instead of braaiinnsss), what's the Steel Belt to do? The politicians behind the bailout of the Big Three say we need to rejuvenate the auto and manufacturing jobs. But, as NPR reports, some entrepreneurs are trying to take Michigan's economy in a new direction.
Without the federal government propping up the auto companies, job losses would be even more massive in Michigan. So the local economy can't survive without the help, right? But, as this report shows, even in the recession, new businesses are popping up to replace the old.
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Who's Getting An Obama Tax Increase?
Continue reading… 1 CommentNot many entrepreneurs will see their taxes go up under Obama's changes, but the ones who do might be the most important to the greater economy. (See my previous post.)
The Washington Post has an interesting look today at exactly who these people are and some of the businesses they run. One of those is Gail Johnson, who runs a chain of preschools and after-school programs. The profit from that business is declared on her personal tax returns, and that pushes her income into the bracket on which Obama plans to increase taxes. Those increases could endanger the workers at her nine campuses, each with 75 employees:
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Small-Business Confidence At Highest Level In Two Years, Survey Finds
Continue reading… 0 CommentsBetter-than-expected economic news as of late might be lifting the spirits of U.S. small businesses. This month's Discover Small Business Watch survey has the highest number of small-business owners expressing confidence about the economy its had in 14 months.
That number doubled over the course of just one month, from 16 percent to 32 percent. The survey's index of overall conditions also increased, up to its highest level since February 2008.
But despite the mostly good news, the survey also saw a slight increase in the number of business owners who rate the economy as fair or poor, up to 91 percent.
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Baconnaise Is The New Entrepreneurial Success Story?
Continue reading… 4 CommentsOn a Daily Show segment this week, correspondent Wyatt Cenac had a message for an arrogant Swedish bureaucrat: any country that could have discovered baconnaise--a sandwich spread that combines two of America's favorite fatty foods--can't be all bad.
It's not just the fake news that is excited about baconaise. ABC dubbed the spread's creators, Justin Esch and Dave Lefkow, "bacontrepreneurs," for creating a $1.4 million business in just a year.
I wouldn't so far to say they're "reinventing" entrepreneurship as ABC does, but they're definitely showing that social media might be the fastest way for a startup to reach high profits today. Their bacon products exploded on Twitter.
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In Great Business Move, Apple Apologizes for "Baby Shaker" Game
Continue reading… 0 CommentsWow. Next time you see a commercial about how savvy and with-the-times Apple is (or hear one of their many fans say as much), remember this:
Baby Shaker appeared on the App Store Monday, and was pulled Wednesday after a media frenzy grew following the discovery of the application by the founder of a shaken baby syndrome foundation.
Apple's statement follows in its entirety:
"This application was deeply offensive and should not have been approved for distribution on the App Store. When we learned of this mistake, the app was removed immediately. We sincerely apologize for this mistake and thank our customers for bringing this to our attention."
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Supreme Court May Hear Fifth Amendment Case Involving Small-Business Development
Continue reading… 0 CommentsCall it a tax by another name. Daniel and Andrea McClung wanted to develop some property they owned into business space--including a Subway shop--but they ran into some problems with the city government in their town of Sumner, Washington. The city had to make some infrastructure improvements to the drainage system--but decided those improvements would be made on the backs of developers, even if that means paying for improvements that do not benefit their properties. Ilya Shapiro at Cato has the details:
Unwilling to pay for these costly upgrades, the city enacted an ordinance that placed a condition on new development: Anyone who applied for a permit would have to pay fees for the improvements to the drainage system—even if the proposed development did not have any impact on the existing infrastructure. When the McClungs applied for this permit, the city informed them that it would be granted only if they paid for the improvements, which cost $50,000.
The city ignored the McClungs’ protests that their fees would go towards improving infrastructure not on their property, so their development would have no impact on the drainage system—let alone one worth $50,000. The city did not care; the McClungs were a captive source of revenue.
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Happy Earth Day: Businesses Cut Out Going Green
Continue reading… 0 CommentsEnvironmentalists often argue that "greening" one's business not only helps save the Earth, but also can make a business more efficient, thus saving money. But according to a new Wells Fargo/Gallup poll, many business owners are finding environentally-friendly reforms to be expendable when cutting back.
One-third of the small-business owners surveyed said that the economy has affected their plans to become more environmentally friendly. What's the main reason? Seventy percent of the business owners cited the perception that customers will not want to pay more for environmentally-friendly products--up from 37 percent in 2007.
But there is some good news for the green movement. Over two-thirds of the owners have said that they have started to use more energy-efficient products like green light bulbs in the last year.
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Newspaper Bailouts Criticized On The Hill
Continue reading… 1 CommentYesterday the House Judiciary Committee held a hearing on the decline of the newspaper industry. As Dana Millbank reports in the Washington Post, the attitude of some of the congresspeople regarding the potential death of newspapers was one of slightly restrained glee. Why bail out an industry that has failed to do its job of objective journalism, some asked?
But even some defenders of the industry were uneasy with the idea of a government bailout. Ben Scott, policy director of media nonprofit Free Press, testified at the hearing and said that the death of newspapers will lead to less professional journalism, which in turn leads to "severe problems for a democratic society." But it doesn't follow from that, Scott argued, that we need bailouts.
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Some Good News Amidst The Recession: U.S. Manufacturing Is Strong
Continue reading… 0 CommentsThe popular wisdom is that the U.S. manufacturing sector is being hollowed out, and there's some truth to that. It follows from that popular belief that in a recession, manufacturing is taking an especially hard beating. But that doesn't seem to be the case.
Don Boudreaux points me toward this BusinessWeek article that breaks down all the positive trends that are surviving the recession:
In fact, even in the midst of a global recession, the U.S. exported an estimated $1.377 trillion worth of goods last year, according to the authoritative CIA World Factbook. Nearly half of the exports were capital goods: aircraft, computers, electric power machinery, office machines, telecommunications equipment, and the like. Industrial supplies, such as organic chemicals, accounted for another nearly 27 percent. And consumer goods, including pharmaceuticals, and agricultural products accounted for 15 percent and 9 percent, respectively.
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Eating Out Is Top Luxury Americans Are Willing To Give Up
Continue reading… 1 CommentIf you're an entrepreneur thinking about opening a new restaurant, right now is one of the worst times for that business. As I wrote in my list of overrated businesses, restaurants are always tough, but that's especially true in a recession. Here's some evidence about just how bad it is: Forbes just published a list of the top things Americans are willing to give up. It's based on a consumer survey by GfK Custom Research.
Here's the top luxury that Americans are willing to cut back their spending on, by an overwhelming amount:
For instance, an overwhelming 82% said that dining out would be easy to abandon. While the National Restaurant Association in Washington, D.C., forecasts that Americans will spend $566 billion eating out in 2009, a 2.5% increase over 2008, discounted menus at mid- to high-end restaurants suggest otherwise.
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Baby Mammoth: More On Relics From the Ice Age
Continue reading… 0 CommentsThe discovery of a well-preserved baby mammoth from the Ice Age is has stirred up the scientific community, and a National Geographic documentary about the blast from the past has brought new attention to the case.
But the next Ice Age relic to be rediscovered might be early man. See my previous post here.
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Why Twitter Might Be Bad For Your Business
Continue reading… 4 CommentsOprah Winfrey's arrival on Twitter might indicate that the phenomenon has reached some kind of point of critical mass. But just as everyone can't seem to get enough of Twitter, Jim Blasingame comes along with a column about why Twitter is not only overrated, but for some businesspeople, can actually be a damaging waste of time:
Unfortunately, some business owners, especially start-ups, get caught up in the social media whirlwind and, since it's all the rage, actually believe that spending time "connecting" online will cause sales dollars to roll in. This is where the danger lies because social media activity can become a thief that steals time from effective marketing practices. "Effective" means those strategies that are known to result in sales.
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Obama's Stimulus Not Yet Stimulating Businesses
Continue reading… 0 CommentsRemember when the stimulus was being sold as immediately necessary to prevent the recession from deepening? Well, it seems that many of the businesses who were supposed to use the stimulus money to create new jobs are still waiting on the money. This Wall Street Journal article has numerous examples, and here's one of them:
The stimulus package included about $19 billion to encourage the use of electronic medical records -- a potential boon for information-technology companies like Perot Systems, Plano, Texas. But it remains unclear exactly how Perot's clients, such as medical practices, will qualify to receive government reimbursements starting in 2011, says Harry Greenspun, chief medical officer for Perot. "It's foggy," he says. "People can make out shapes in the distance and know what they are, but the details are not out."
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Will "Craigslist Killer" Reignite Legal Debate Over Internet Classifieds?
Continue reading… 24 CommentsThe "Craigslist killer" is back in the news again. A Warwick, Rhode Island woman became the victim of an attempted robbery last night after meeting with a potential client in a hotel. She had advertised massage services on Craigslist. Police believe this crime may be linked to the murder of a woman in a Boston hotel two days earlier. Again, the victim is believed to have met the killer through Craigslist.
Authorities have critcized Craigslist in the past for providing criminal avenues. Last month, a Texas sheriff sued Craigslist, saying that the site provided a "safe haven" for prostitutes.
Will the law crack on Craigslist to try to prevent these tragedies? These cases could force online classified and social media sites to have to be more careful about what they allow for fear of liability.
