Empowering Small Business

Leadership Traits & Their Impact on Performance, Customer Satisfaction

A new poll conducted by Maritz Research, a leading customer and employee research firm, has identified the six supervisor personality profiles and analyzed how different leadership personality types impact employee engagement and customer satisfaction.

Although we might assume that it's the aggressive, hard-driving bosses that get to the best sales and financial results, it's actually the supervisors who demonstrate the more human, positive, upbeat and flexible leadership traits who best motivate employees who in turn deliver the highest levels of customer service and build the strongest customer loyalty.

According to Maritz, employees reporting to a supervisor who they classify as being in the "Caring Mentor" category rate their businesses the highest on having a strong and productive customer focus. These employees also have the strong relationships with customers and build affinities with them, while believing their company can be classified as "outstanding" in their customer service. 26% of respondents have this type of supervisor.

"Caring Mentors" excel in relationship management and receive high appreciation marks from their direct reports. They rate high on being knowledgeable about relevant subject matter and demonstrate constancy and steadiness in their everyday business dealings. They are not seen as been particularly task driven, nor are they described as controlling, tough or ruthless. Bottom line, employees serving under this manager are the most likely to stay with a company long-term, as well as recommend the company to others.

Conversely, the least effective supervisor type is best described as tough, controlling, ruthless and Machiavellian. Maritz has named these inconsistent, untrustworthy and dishonest supervisors as "Win-At-Any-Cost" and 19% of respondents have this type of supervisor. Employees do not respect these bosses and employee engagement is the lowest among this group. In fact, 71% of employees would fire their supervisor in this category if they could.

Then there is the "Taskmaster/Taskmistress" category, with supervisors that are tough, controlling and task-driven but who exhibit a higher level of competency and ethics than "Win-At-Any-Cost" supervisors. Their focus is on productivity and achieving results but they are not rated as being highly effective or having/inspiring high customer service competencies. 10% of respondents have bosses that are in this category.

The largest percentage of respondents (29%) work for the "Respectable Professional" - a highly task-driven boss that is not greatly involved with business operations but is regarded with respect by their employees.

Shivonne Byrne, Innuity CMO

Global Growth Opportunities Ahead for U.S. Small Businesses

According to a new survey conducted for UPS Business Monitor of 600 small and medium-size enterprise (SME) business decision makers, 67% of these enterprises are focused on selling within the U.S. economy and as a market segment these enterprises are not taking serious advantage of global export opportunities.

In fact, only 33% of participants reported conducting any cross-border trade, and of those, 15% of importers and nine percent are exporters, and nine percent do both.

The primary reasons for these small and medium-size enterprises not engaging in international trade include concerns surrounding overall business risk, a lack of knowledge and understanding of international markets, unfamiliarity with customs regulations and disinterest in expanding business beyond U.S. borders.

However, there is an increasing awareness of what being "global" can mean to a small or medium-sized business' sustainability and growth. 52% see expanding into global markets are key to being competitive and increasing profits. Of those SMEs that are currently importing or exporting, 45% acknowledge that global trade has business benefits/advantages, while 18% of this group regard global trade as being a negative or disadvantage for their business.

From the Commerce Department's vantage point, they have reported that the export potential of SMEs is "enormous." SMEs account for almost 97% of U.S. exporters but represent only 30% of the total export value of U.S. goods. Since over 50% of SMEs exporting only sell to one foreign market, the Commerce Departments predicts sizable business growth opportunities if these enterprises were to sell products in more than one country.

Shivonne Byrne, Innuity CMO

Small Business Optimism Up, Spending and Job Plans Look Better

The National Federation of Independent Business (NFIB) "Small Business Optimism Index" rose one point in September to 97.3, although it is still below its historical average for 17 or the past 18 months. Optimism components include (1) plan to increase employment; (2) plan to increase capital outlays; (3) plan to increase inventories;  (4) expect economy to improve; (5) current job openings; (6) expected credit conditions; among others.

Many small business owners are looking to fill jobs, but are challenged by the applicant pool. A seasonally adjusted net 14% of small business owners plan to create new jobs over the next three months; 57% said they hired or tried to hire new workers, up four points from August, but 84% of the total reported few or no qualified applicants. 75% of the reported payroll jobs were in medical care, education and government, industries not dominated by small firms, where the hiring horizon remains weak.

Capital spending also breathed some life in September, where the frequency of reported capital outlays over the past six months rose two points to 60% of all firms. 45% of small businesses bought new equipment and 23% acquired vehicles. 29% of all small businesses plan to make capital expenditures over the next few months, up two points.

NIFB economists offered that "the NFIB indicators suggest that owners have seen the bottom and are expecting the economy to gradually improve in the months ahead."

Shivonne Byrne, Innuity CMO

Small Businesses Focused on Employee Healthcare Burden

Small businesses remain focused on growth but concerned about other macro economic issues according to American Express' Small Business Monitor, a semi-annual survey of business owners released last week. In fact, healthcare policy was cited by 21% of the 600+ survey respondents as the issue having the most influence on who small business owners would vote for in the next presidential election, followed by homeland security issues at 19%.

A strong 69% of respondents believe that is is important to offer healthcare to employees and 71% of the survey population do offer healthcare benefits to employees, the same percent as last year at this time. This survey group is examining policies that would make healthcare coverage more accessible to employees; 79% would consider proposed healthcare solutions and 65% support the solution that would "create purchasing cooperatives for small businesses to make health insurance affordable."

Over half of this survey sample, 58%, would support policies that would "ensure every child in the U.S. have health insurance" and 54% would support a plan that provides tax credits to low income workers to help pay for healthcare. Less than half, 42%, are in favor of a universal healthcare system, or are in favor of additional taxes on tobacco and alcohol to fund healthcare, 38%.

Yet with all this focus on healthcare as a driving policy issues, small businesses are not positive about forward movement in this area; 75% believe healthcare will be a burden for future generations of entrepreneurs.

Shivonne Byrne, Innuity CMO

Small Businesses are Growth Focused, Even in Current Economic Climate

According to OPEN from American Express Small Business Monitor, a semi-annual survey of business owners published this week, growth remains a top priority for entrepreneurs while hiring plans are at their second lowest point in the seven-year history of this survey.

More than one-third (37%) of small business owners said that their top priority for the next six months is growing their business as compared to similar results last year at this time with 35% saying the same. To accomplish this growth 57% of small business owners are willing to take on "risk" in order to ensure that this growth happens.

Capital investments remain a key vehicle for accelerating small business growth, with 59% of small business owners intending to make capital investments versus 56% last fall. Technology is the top area for capital investments, with 45% of small business owners intending to invest here. 53% vs. 47% last year intend to invest in mid-priced technologies such as desktops, laptops, printers; 19% intend on more significant investments such as software, servers or telephone systems. Capital investments outside of technology include 21% planning to invest in office equipment, 15% in real estate, 14% in manufacturing/production equipment, and 13% in office furnishings.

Marketing investments represent another pathway for small business growth, especially in the area of online marketing with websites being the most utilized marketing technique (55%) currently. 69% of small business owners are confident that their marketing dollars are well invested and 46% see a direct sales impact from their marketing investments.

From a hiring perspective, 31% of small business owners report intending to hire full or part-time staff, down from 34% in fall 2006, 37% in fall 2005, 35% in fall 2004, 34% in fall 2003, and 26% in fall 2002. In the group that said they plan to hire, 75% said hiring was based on being able to effectively manage their growing business and 65% will hire to help increase business volume.

Shivonne Byrne, Innuity CMO

Characteristics of Successful Women-Owned Small Businesses

I recently reported on the broad findings of a 2007 study analyzing women-owned small businesses sponsored and published by RMS McGladrey, the National Association of Women Business Owners, and the University of Chicago. A primary survey objective was to ascertain if there were notable variations in women-owned businesses of different sizes and revenues. Some additional results related to this objective, and others, include:

Business Characteristics:
1. The larger the business, the more likely it is to be a non-service business, especially businesses over $6 million. The larger the business, the more likely the business operates outside of the U.S., and again, especially the businesses over $6 million. The study suggests that this trend could be related to a larger business' ability to operate globally (because of resources), or it could be a result of choosing to expand globally with increased revenues being the outcome of that strategic decision.

2. Women-owned small businesses with international operations operate in these three main industries: (1) Non-durable goods manufacturing; (2) durable goods manufacturing; and (3) retail and wholesale.

4. Over 40% of the surveyed businesses are more than 11 years old, compared to other published studies that report that 50% of businesses survive four years or more, and only 40% of businesses last six years or more. In this study, 61% of the women-owned small businesses have been in business six years or longer.

Characteristics of the "Woman Entrepreneur"
1. Higher education is highly connected to entrepreneurship, with more than 40% of women small business owners having post-graduate education versus the national average of 25% of female professionals having post-graduate education, and only 9% of the entire female workforce having advanced degrees.

2. Women wished they had started businesses earlier in their work careers, supported by the fact that of the larger small businesses with more than $6 million in revenue 40% were started by women between 20 and 29.

3. In terms of motivation to start and grow a business, there were significant differences between the business size categories. 83% of women owning businesses up to $1 million in revenues wanted primarily  to "generate enough income to provide for a comfortable life" versus only 40% of women owning businesses of $6 million and up in revenues having this as a goal. Women owning larger businesses also reported that their primary goal for their businesses is to build a business that can be sold for retirement funding or to build a business to pass on to future generations - both between 30-40% of responses.

Shivonne Byrne, Innuity CMO

What Makes a Small Business Workplace Great?

In today's Wall Street Journal (WSJ) their "Small Business Report" highlights their list of the top small business workplaces for 2007 - WSJ's first annual list of the most outstanding small business work environments. To come up with their 15 winners the WSJ, along with the non-profit group Winning Workplaces, collected 850 nominations of great workplaces in North American and winnowed down this group to 35 finalists. Eight industry and functional workplace and small business experts judged these finalists, selecting the eventual winners.

Although these small businesses serve different industries, reside in different geographic regions, and are of varying sizes some interesting shared themes emerged (noted below) as to why they have great workplaces:

1. Employees up and down the organization are involved in key decision-making
2. Future leaders of the business are developed internally
3. They provide generous traditional and untraditional benefits
4. They are committed to their employees having positive experiences and being engaged with the company
5. Many engage in significant profit-sharing
6. They invest in cross-functional internal training

In terms of further detail, the WSJ provided an executive summary excerpt on the key benefits their winner workplaces and nominees provide:

1. Health Insurance: The best small workplace winners offer very generous health benefits that exceed the norm for small businesses. A stunning 98.2% of these winning workplaces offer employees health insurance, paying an average of 84% of employee insurance premiums; 67% of this group pay at least part of dependent premiums. In contrast, according to the 2007 "Employee Benefit Survey by Business & Legal Reports," about 70% of small (fewer than 200 employees) and medium-size (200-500 employees) business employers offer health insurance. 57% of these pay 80% or more of health insurance premiums for exempt employees and 58% pay 65% or more for exempt employee's dependents.

2. Domestic Partner Benefits: According to Business & Legal Reports employee benefit survey, 22% of the small and medium size (SME) business employers offer health benefits to domestic partners of exempt and nonexempt employees. Contrast these figures against 31.6% of all the nominees for Top Small Workplaces offer these benefits, and 46.7% of the winners offer domestic partner benefits.

3. Paid Time Off/Vacation/Holidays/Personal Time: Universally there is the trend to "package" time off in such a way that employees determine how to use their time. The organizations in the nominee pool had 95.9% of them offering some combination of paid time off - vacation - holidays - personal time, with 83.8% offering paid vacation, 58.1% offering paid sick leave and 58.8% offering paid personal day(s). On average, a one-year employee is offered 18 days off, which entails 10 vacation days, 4 personal days, and 4 sick days.

87% of the workplace winners provide paid vacation; 66.6% provide paid sick leave; 40% provide paid personal day(s). Winners offer a one-year employee 20 paid days offs - 15 vacation days, 1 personal day and 4 sick days. The Bureau of Labor Statistics show that private industry provides paid vacations for 77% of all workers; 57% are entitled to paid sick leave.

4. 401(k) - Profit Sharing - Employee Stock Purchase Programs: The nominees and winners basically provide solid funding programs for retirement - 93.6% of the nominees offer 401(k) - profit sharing - stock programs; 100% of the winners do. While there is a wide variety in program design the emphasis is more on defined contribution plans that incorporate employee investment and reward employee performance.

Shivonne Byrne, Innuity CMO

Women Can Have a Life, and a Successful Small Business

RMS McGladrey, the National Association of Women Business Owners, and the University of Chicago, just published their 2007 survey into the nature of, and challenges faced by, women-owned businesses. In addition to fundamental trend analysis, this study dug into women entrepreneur risk profiles, management structure of women-owned businesses, and access to equity and debt capital.

In terms of demographics and education, 68% of the women business owners surveyed are married and 67% have children, which is higher than the national data for all working women married which is at 53%. There is also a strong correlation between education and entrepreneurship, with 40% of these women business owners having post-graduate education versus 25% of all U.S. professional women, and 9% of the female work force.

As it pertains to business characteristics, more than 60% women-owned businesses have been in business for six years, exceeding that national average of 40% of all small businesses being in business for six years. The most successful women entrepreneurs are also younger, with almost 40% of women with businesses in the highest revenue category starting their businesses between the ages of 20-29.

From an entrepreneurial profile perspective, women business owners also take risks: The top two survey responses to the risk question being that they have used up to 95% of their personal savings, including putting their home up for collateral. These female entrepreneurs also defy the typical female profile of operating from instinct or their "gut," by showing their tendency to favor factual information as the basis for making important business decisions.

More results from this study in my next post.

Shivonne Byrne, Innuity CMO

Small Business Optimism Index

The National Federation of Independent Businesses (NFIB) just published its September report on small business economic trends, based on its August survey of its members. From an overall perspective their Index of Small Business Optimism fell 1.3 points to 96.3 (1986=100), but the report concludes that small business owners "are not seriously affected by all the media talk about credit crunches and recession."

Below its historical average of 100.2 for 17 of the past 18 months (NFIB has conducted its member sample monthly surveys since 1986), and below 100 all year, the Index is reflecting the overall economic growth climate. Here is how some of NFIB's findings and statistics shake out:

• Small businesses are looking hard to hire people, but their success rate is dropping. Twenty-five percent of respondents reported unfilled job openings, up two points from July; the year's average is 22%. Data indicates that the unemployment rate will stay in the 4.5% range. Thirteen percent said that availability of qualified labor was their #1 problem overall, same as June and July. Fifty-two percent are hiring/trying to hire new employees, with 84% said there are "few or no qualified applicants" for their positions.
• Plans for capital expenditures remains "steady" at 27%, with 12% of the respondents (down four points from July) noting that the current period is a good time to expand. A net zero percent expect business conditions to improve over the next six months. NFIB's concludes that small business owners still are not showing any "signs of panics in these numbers" and are not expecting a recession.
• Regular borrowing activity was reported by 35% of the owners, down one point from July. Based on all the data, NFIB concludes that there is "no evidence that credit standards are now rising and that business activity is being blunted by credit restrictions."

Shivonne Byrne, Innuity CMO

Angel Money on the Upswing for Small Businesses

The Angel Capital Association (ACA) just reported in their new mid-year survey, the "Angel Group Confidence Report," that angel groups across the country are meeting expectations set early this year to increase 2007 investment activities in early stage companies over 2006 levels.

The participating angel groups continue to forecast 2007 gains over 2006 in number of investments made, the quality of business opportunities presented by entrepreneurs, and co-investment activity with other investors. Additionally, the study also found that angel groups and venture capital firms have improved their integrated investment relationships, with 74% believing that overall relationships between these two groups have improved over the past three years.

As reported in other Empowering Small Business blog posts, angel investors are high net worth individuals who make equity investments into what are usually early stage or growing companies, usually in the start-up period. In many urban communities, angel groups have formed to more systematically review and evaluate business investment opportunities. (The Seattle area has the Alliance of Angels, Puget Sound Venture Club, and the Tacoma Angel Network.)

Fifty percent of this survey's participants said their angel group's deal flow had seen increases in quality and quantity, year over year, during the first six months of 2007 and they expect this trend to continue. In the first half of 2007, these angel organizations reported an average of 3.7 investments versus an average of 7.4 investments in 2006.

The Confidence survey also showed increases in the numbers of investors per angel groups as well as the trend of investing along side with other angels and early-stage venture capital firms. In the first six months of 2007, the average number of accredited investors per group jumped from 41 to 52.5 investors. Close to half (49.2 percent) of these angels reported that they "syndicated" - that is, invested along side or followed on - investments made by VC firms or other angel groups.

The Angel Capital Association is a professional alliance of U.S. and Canadian angel groups, with more than 155 affiliates and member groups representing over 6,000 angel investors.

Shivonne Byrne, Innuity CMO