Empowering Small Business

Where Entrepreneurs Go to Learn

The New York Times just released an article in its Small Business section, fielding additional research from a Fortune Small Business study, that analyzes the best places to learn entrepreneurship out of the 3,000 colleges that offer courses in the field.

For undergraduate entrepreneurial programs, the top ranked colleges were Babson College, Indiana University, Syracuse University, the University of Arizona, and the University of Pennsylvania. Those seeking the highest ranked schools for graduate entrepreneurial education should seek out Babson, Harvard, Indiana University, M.I.T., Stanford, Syracuse, the University of Arizona, University of California at Berkeley, UCLA, the University of North Carolina at Chapel Hill, and the University of Pennsylvania.

Online entrepreneurial programs are another great place for busy entrepreneurs looking to build core small business building skills; the highest ranked online learning environments can be found via Boston University, the University of Houston at Victoria, the University of Wyoming, and Western Carolina University.

Engaging in cross-disciplinary studies is also a smart choice for entrepreneurs who need to get grounded in entrepreneurial basics and in an additional field of their choice; the topic programs for cross-disciplinary studies included Cornell, M.I.T., Stanford, the University of North Carolina at Chapel Hill, and Wake Forest.

Executive education programs that are time limited in nature and highly intensive are another smart route for busy entrepreneurs looking to elevate their "game" in meaningful ways. The top schools for executive education in entrepreneurism were Babson, Harvard, Northwestern, Stanford, the University of  Chicago, and the University of Texas at Austin.

Shivonne Byrne, Innuity CMO

The True Spirit of U.S. Entrepreneurs

It takes endurance, steadiness, and all-around resilience to be one of the 22 million Americans who own a small business and contribute in excess of $1 trillion in receipts each year to the U.S. economy (U.S. Census Bureau statistics). This is a small price to pay for the freedom and personal satisfaction of owning your own business according to  Discover Small Business Watch survey data from the last year.

In Discover's research, today's small business owners also exhibit their commitment to their entrepreneurial path and demonstrate their underlying steadfast character by answering "yes" to the following:

• Can you or your employees afford to go without health care coverage?
• Will you work six or seven days a week and give up your holidays?
• Will you consistently work more than 8 hours a day?
• Can you do what it takes to keep a customer happy?
• Are your business and your mind wired for a new digital age?

The same independent data from Discover also revealed these top four common characteristics to small business owners: (1) Independence is their prime motivation; (2)improving customer service keeps them up at night; (3)wider economic forces can make or break them; and (4)if they're not using the Internet, they're falling behind.

Small business owners' drive for independence definitely far outshadows their desire for more money. In fact, 61% of them said they would not sacrifice any of their freedom that's part and parcel of owning a small business to work for someone else, even if they were to increase the amount of money they make.  Almost  half (46%) started their businesses because of their desire for more independence or time flexibility, with only 19% starting their business to make more money.

Additionally, the majority of entrepreneurs and small business owners, 69%, don't want to grow larger. Most also have no plans to leave or sell their business, with 38% having no plans to retire.

All in all, it strongly appears that small business owners place a high value on their freedom and the ability to control their business themselves - both in service to their sense of independence.

Shivonne Byrne, Innuity CMO

Small Businesses Continue to Fuel New U.S. Job Growth

The updated United States Small Business Profile just released by the Office of Advocacy of the U.S. Small Business Administration (SBA) reported that small businesses added 1.9 million net new jobs, according to the latest data available.

Small businesses have employed in excess of 50% of the country's non-farm private-sector workforce, making this diverse market segment "America's job-creating dynamo," according to the Office of Advocacy's chief economist.

A powerhouse to be reckoned with, there are an estimated 26.8 million small businesses of which 6.1 million are employer firms. There are 6.5 million women-owned firms according to the latest data, and those businesses generated $940.8 billion in revenues.

The updated and most recent data also shows that the U.S. had 1.1 million Asian-owned firms, 1.2 million Black-owned firms, 1.6 million Hispanic-owned firms, 201,400 Native American-owned firms, and 28,900 Native Hawaiian and Pacific Islander-owned firms.

Dubbed the "small business watchdog", the Office of Advocacy of the federal government examines the role and status of small business in the U.S. economy and is a regular and impartial source of small business statistics.

Shivonne Byrne, Innuity CMO

SBA Unveils Loan Program Reform Initiative

In efforts to make the agency more small business-friendly and results-focused, the Small Business Administration (SBA) announced today that it is rolling out several major reforms to make its loan programs more effective and easier to use.

After conducting primary research on small business needs and examining ways to improve services, the SBA has crafted a loan reform initiative comprised of a set of new processes and products that have the potential to increase their outreach to small businesses in underserved markets; enhance relationships with lending partners; and strengthen the agency's ability to help small businesses start and grow.

Components of the Loan Program Reform Initiative include:

1. New Standard Operating Procedure: A shorter and more lender-friendly procedure that is remarkably shorter and better organized.
2. Streamlined Tab System: Helps lenders organize their loan purchase package by breaking down sets of documents.
3. 45-Day Pledge: The SBA is offering lenders major incentives to speed up processing time.
4. New, Improved Products & Services: Includes its Rural Lender Advantage. Community Express Loan Program and new Patriot Express Pilot Loan.

Today, the SBA processes more than 100K loans per years, twice the amount it did five years ago; currently there are more than 300K SBA-backed loans outstanding. To combat this problem, the agency is standardizing its review process, reengineering its processing centers, and upgrading its central training so as to eliminate the backlog and prevent future occurrences of it.

Shivonne Byrne, Innuity CMO

Entrepreneurial Small Businesses Represent Over 50% of GDP

The SBA's recent studies on entrepreneurial firms and small businesses discovered that these emerging companies represent over 50% of the GDP, creating 78% of all new jobs every single year for the past twenty years.

Offering insight into the role of growing entrepreneurial firms in the economy, the SBA has examined how firms started, grew, merged, declined, survived, and closed from 1992 to 2002. Using census and other public data, the study concluded:

- Four year survival rates for small businesses held steady at about 50% through the study time period and is consistent with most recent studies. This is a new twist on the widely held belief that most small businesses fail in their early years of business.

-  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. 35% of small businesses had no employment change from one year to the next, 11% closed each year, 25% shrank in employment each year, and 28% grew in employment each year. Clearly the small business economy represents an overall healthy balance.

- Most firms start with 1-4 employees and do not expand beyond that employee class size.

- Fast growing firms, those with a 50% or more increase in annual employment were only 3% of all firms. 55% of these fast-growing firms declined in employment.

- Most small businesses remain in one location, rather than expand in multiple locations.

Shivonne Byrne, Innuity CMO

The SBA's recent studies on entrepreneurial firms and small businesses discovered that these emerging companies represent over 50% of the GDP, creating 78% of all new jobs every single year for the past twenty years.

Offering insight into the role of growing entrepreneurial firms in the economy, the SBA has examined how firms started, grew, merged, declined, survived, and closed from 1992 to 2002. Using census and other public data, the study concluded:

- Four year survival rates for small businesses held steady at about 50% through the study time period and is consistent with most recent studies. This is a new twist on the widely held belief that most small businesses fail in their early years of business.

-  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. 35% of small businesses had no employment change from one year to the next, 11% closed each year, 25% shrank in employment each year, and 28% grew in employment each year. Clearly the small business economy represents an overall healthy balance.

- Most firms start with 1-4 employees and do not expand beyond that employee class size.

- Fast growing firms, those with a 50% or more increase in annual employment were only 3% of all firms. 55% of these fast-growing firms declined in employment.

- Most small businesses remain in one location, rather than expand in multiple locations.

Shivonne Byrne, Innuity CMO

Promotion & Advertising Small Business Poll

The National Federation of Independent Business (NFIB) just published their National Small Business Poll and found that small business owners consider positive word-of-mouth (WOM) and associated referrals as the most effective means to promote their businesses.

In fact, 52% see WOM as generating "a lot" of their sales revenues, with 30% thinking that WOM contributes to "quite a lot" of sales. Although WOM is a powerful marketing phenomena, NFIB cautions small business owners on the fact that they have little direct control over ramping up WOM situationally; WOM or buzz occurs as a residual of producing great product, delivering superior customer service, and being "talked about" in a viral, positive way.

The report suggest that more formal advertising has a more direct effect on brand image or product-service information delivery. 41% of small businesses acknowledge that the results of their advertising contribute only more than a marginal amount to sale revenues, 8% say that advertising creates only a little of their sales revenue, and  only 7% see advertising contributing for "a lot" of revenues.

The most frequent forms of advertising include website, fliers, circulars, and hand-outs; newspapers, newsletters, bulletins, etc.; and direct mail. Hardly used vehicles include TV advertising; value packs or shopper supplements; outdoor off-premise signage; radio; and magazines.

Topping the list of specific advertising vehicles was the Internet at 16%, WOM 15%, newspapers at 15%, and direct mail at 14%.

Clearly there is a understood market need for small business online marketing solutions like those provided by Innuity such as search engine optimization (SEO), pay-per-click, and local search.

Shivonne Byrne, Innuity CMO

 

Small Business Research Board Q3 Industry Report

The Small Business Research Board (SBRB) recently published its Q3 Industry Report on Small Business based on a nationwide poll of 800 small business owners, reporting that the outlook for small businesses in two of three key U.S. industry categories declined in Q3.

The SBRB Small Business Confidence Index (SBCI) showed declines for businesses in construction and contracting as well as manufacturing while the food industry showed greater confidence.

Manufacturing companies reflected the most significant drop in its SBCI, decreasing almost two points from the previous quarter (38.33 vs. 40.3). The SBCI for construction and contracting dropped one point from the previous quarter to 47. In contrast, the food industry SBCI is up ten points from the first quarter of 20007, and eight points from Q2, and currently sits at 48.5.

The overall SBCI for all small businesses was 43, three points lower than Q2.

This study definitely suggests that small businesses are having notable concerns about the overall economy and its short-term impact on business conditions over the next 12 months.

Shivonne Byrne, Innuity CMO

VC Exits Not Impacted by Market Volatility

The National Venture Capital Association (NVCA) just released a report that showed that the average disclosed mergers and acquisitions transaction value reached in highest level since 2000 in Q3, 2007.

Of note, 67 venture-backed mergers or acquisitions were completed for a disclosed total value of $7.7 billion according to the Exit Poll report by Thomson Financial and the NVCA. These numbers represent a 104% increase from Q3, 2006, when 41 disclosed deals equaled $3.8 billion in value. Better yet, the average disclosed acquisition value hit its highest mark since Q4, 2000.

In Q3, 2007 there were also 12 venture-financed initial public offerings (IPOs) representing $945.2 million, which represents some increase over this same quarter last year which saw eight offerings representing $934.2 million.

However, while the  NVCA applauded venture-backed companies success in navigating stock market volatility and subprime hurdles, "exit strategies will be facing challenges over the next several quarters."  Their data reveals that the closing period for acquisitions is extending and that VC-backed companies are trading below their offering prices, "signaling potential market weakness."

From a market threat standpoint, it is important to note that while these issues are "surmountable" they do have the potential to force business course corrections and thus impact the overall health of the exit market.

Shivonne Byrne, Innuity CMO

The Future of Women-Owned Small Businesses

The New York Times just published an article about how women-owned small businesses significantly lag behind small businesses owned by men in terms of revenue growth, exploring the reasons behind this discrepancy and investigating current efforts in place to reverse this trend.

It's a perplexing issue as women entrepreneurs are starting up businesses at twice the rate of men in the U.S., resulting in 10.4 million U.S. women-owned businesses according to the Center for Women's Business Research. However 43% of women-owned businesses have revenues of $10K or less, over 70% having revenues less than $50K, and only 3% have revenues in excess of $1M according to the Women's President's Organization. In contrast, 7% of male-owned small businesses exceed the $1M revenue mark.

It's not all an issue about available cash to invest in growth, but more about motivation itself. As published in an earlier blog post, I noted recent research from American Express that found that while men view their primary business goal as "growing the business," women regard their top priority as "maintaining the business."

One highlighted initiative to help women leapfrog over this growth barrier is Make Mine a Million, an organization that helps selected women-owned businesses with revenues of more than $200,000 grow to $1M plus in 18 months. This organization hosts a contest of sorts, a la "American Idol," where applicants apply to be one of 25 finalists to make a three minute business case in front of a large audience of small business owners (next event in New York on Oct. 23rd) that then vote. Winners can earn up to $50K in investment capital plus receive a wide-range of start-up business counsel.

In terms of some other key facts about women-owned businesses, the Center for Women's Business Research just published its annual Key Facts Update and here are some highlights:

• Women-owned firms employ nearly 13 million people and generate $1.9 trillion in sales.
• Between 1997 and 2006, majority women-owned firms grew at twice the rate of all firms (42% vs. 24%).
• 83% of women business owners are personally involved in selecting and purchasing technology for their businesses.
• Women owners of businesses with $1M and higher in revenues embrace financial measurements as management tools and produce more financial reports more often than smaller firms.

Shivonne Byrne, Innuity CMO

Breakthrough Business Ideas

The Harvard Business Review annually publishes a catalog of business breakthrough ideas for the year at hand. To see how their thinking could impact small businesses, here is a quick summary of a couple big ideas that could change how entrepreneurs market to their customers:

1. The Accidental Influential: Duncan Watt's academic research turns upside down Malcom Gladwell's theory in The Tipping Point that the rapid spreading and acceptance of big trends, "social epidemics," are triggered by a small subset of highly influential individuals in a particular social environment. Influentials are described as a smallish, select group of people who supposedly have "influential" impact (influence) on various market subsegments (people) - thereby negating the need to market to everyone in these market subsegments, but rather to a few key influencer's.

Watt's research instead shows that the key requirement for what his calls "global cascades" - the broad propagation of an concept through networks - occurs via a critical mass of "easily influenced people." Via this theory adoption and buying trends are not led by a few influentials, but rather though many easily influenced individuals. So, we can see why today's popular social media vehicles (MySpace, Facebook, YouTube) are the real catalysts and drivers today for the adoption of new ideas, concepts and products/services.

2. Brand Magic: In brand marketing theory it goes without saying that a brand strategy matches up with a market segment - an audience category defined by its primary and differentiating characteristics such as age, interests, education, and socioeconomic status. As an example take a look at the range of cosmetic brands, by the same parent company, targeted at different age groups. To follow traditional brand principles, the brand parent graduates their customers to new brands once customers "move beyond" a certain age.

However, this approach can discourage customer loyalty, cause indiscriminate brand jumping, and is the root source of significant overspending in product development and marketing. Instead, a brand parent should build and evolve a brand along with its customers' natural developmental processes, and adapt the brand as their customer base grows older, has (or doesn't have) kids, and moves forward in life. They call this form of brand strategy "Harry Potter marketing" - a branding concept that grows up with you like this fictional character did with its reading population.

Shivonne Byrne, Innuity CMO