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Sunday, February 29, 2004
PowerBlog Review: The Small Business Blog

Editor's note: This is the fourth in our popular weekly series of PowerBlog Reviews of other weblogs...

The Small Business Blog's tagline is "The definitive Blog for Small Businesses and their Weblogs!"

And that right there tells you exactly what the Small Business Blog aims to be.

The Small Business Blog is a terrific resource for understanding the concepts of starting and running a small business.

The brainchild of Doug of D.J.K. Enterprises, whose Blogchalk says he hails from Old Bridge, New Jersey on the U.S. east coast, it emphasizes timeless business lessons. The blog was started in April 2003 and was one of the first blogs dedicated to small businesses.

Sure, it occasionally covers breaking news or up-to-the-minute issues. But the real emphasis is on core, enduring issues that small businesses face.

In fact, that's one of the unique features of the Small Business Blog: that it does not sell out to sensationalism. Instead, articles on the Small Business Blog emphasize fundamentals, by offering sound advice about starting, running and succeeding in a small business. As Doug told us recently when we asked about his strategy:

    "...The Small Business Blog pays attention to articles, information and learning avenues that others might ignore. The articles featured on The Small Business Blog are of high quality and directly relevant to a small business owner's experiences without concern for the date that they are written or whether they are exciting or controversial. In fact some of the blog entries might be less then exciting to someone not interested in the topic, but the point is that knowing this information will help you succeed in your business and that makes it worthy of notice."
One of the things we like best about the site is the way it uses light humor to drive home key learnings. Take for example this recent post: After introducing an article from Startup Journal, Doug adds the following comment that makes everyone I know chuckle -- including me: "... My favorite thing in the whole article is "cash-flow positive". I always get excited when I hear that (yee-hah!)."

Since the Small Business Blog launched there has been a lot of growth in blogs on business topics.

But as one of the first movers, the Small Business Blog is well positioned to build upon its early entry. Where will it go? Remember, it is run by an entrepreneur and small business owner. So the future will be in continuing to provide high quality information. But Doug hints that the blog is prepared to add even more value to small businesses, by integrating products and services into the site that focus on the core value of guiding others to start, grow and succeed in small business.

The Power: The power of the Small Business Blog is the way it speaks to entrepreneurs and small business owners directly, about fundamental issues. It is all about the core requirements of starting, running and succeeding in a small business. Just as succeeding in business often involves hard work and following core concepts without getting sidetracked on the latest, greatest hot topic, the Small Business Blog also sticks to the basics. And in the process provides a valuable resource for small businesses.
Film Piracy Threatens Small Businesses
When films are pirated and sold illegally, it hurts businesses of all sizes, large and small.

It may seem like that new hit film you enjoyed is the product of some large behemoth studio. But an entire ecosystem of small businesses is involved in getting that popular hit film onto movie screens.

A recent New York Times article by Nick Madigan points out:
    "LISTEN to the Oscar thank-you speeches on Sunday night, and one thing will be immediately apparent: moviemaking is a process requiring many hands and minds.

    And while the studios setting those productions in motion are big businesses, most of the workers are provided by a galaxy of smaller ones.

    The number of these small independent contractors has risen as some large Hollywood studios have closed costume, special effects and other departments."
Counterfeit films have become a huge organized business worldwide. The cost to legitimate businesses is significant.

For instance, in the United States audiovisual piracy is estimated to have cost legitimate businesses at least $1.2 Billion (USD) between 1998 and 2002 -- not counting Internet piracy and theft of TV signals.

According to another source, in the United Kingdom counterfeiting cost legitimate manufacturing and leisure businesses over 8.5 billion pounds in 2002. And the European Union is fast becoming the destination of choice for counterfeit goods.

It's a growing problem that is only getting worse as technology makes it easier to copy and quickly distribute video.

A wide range of small businesses are threatened if the big studios are forced to make fewer films due to piracy. First you have all the small independent contractors involved in making a film. And as the Small Business Survival Council points out, there are all the small businesses involved in distributing that film and getting it into the hands of consumers. "Retail stores, theaters, independent artists, and countless other firms serving these industries and their employees all get hit."

Increasingly we see the trend in many industries toward an ecosystem of small businesses that depend on large businesses, and vice versa. Each supports the other's existence. So when something threatens the large players in an industry, often under the surface is a network of small businesses who are also threatened. That's the case with the film industry and piracy.
Friday, February 27, 2004
2004 Venture Capital Activity Up
A new survey shows that U.S. venture capitalists are more optimistic in 2004 than in the past three years.

Looking ahead to 2004, 84% of the VCs think the environment for entrepreneurs looking for early stage capital will be better than 2003. And 7 out of 10 venture capitalists expect to invest more than they did in 2003.

The 2004 Venture Capital Study was conducted by Dee Power and Brian Hill, authors of "Inside Secrets to Venture Capital," "Attracting Capital From Angels," and "Overtime," a novel.

You can download a copy of the survey report here (reproduced with the authors' permission).

No surprises here. Just confirmation that the market is improving.
Thursday, February 26, 2004
"Proxy" Banks Help Indian Farmers
Via World is Green (thanks Suhit!) comes this report about a new entrepreneurial approach to banking in rural India.

With nothing more than an Internet-connected computer and an ATM machine, a branch bank of sorts can be set up to give farmers and rural citizens in India access to loans, insurance and mutual funds:
    "Deepa Shivaswami could have lived like any other girl her age in a remote village in Tamil Nadu. After she dropped out of school, Deepa could have married and started a family.

    Instead, she became an entrepreneur. She runs an Internet kiosk in her village, offering services like e-mail, Internet chat, tips for health and education and so on. By and by, she plans to introduce her village to financial products like mutual funds, insurance and even equity trading.

    An automated teller machine (ATM) that flashes the local language, Tamil, on its screen is being set up next door. In some time, the Internet kiosk and the ATM duo could well be a proxy bank for rural India. ***

    By mid-2004, over 10,000 such kiosks may dot Tamil Nadu and serve as a new vehicle for banking in rural India."

Just like in the United States where branches are the mainstay of driving new business for banks, the "branch" appears to be a necessary part of a banking strategy in rural India. Even if it is a novel kind of "branch." ATM manufacturers, take note.
Wednesday, February 25, 2004
Optimizing Your Google Personality
A few months ago I posted an article over at Blogcritics about "Google numbers." The post was rather popular so I thought I would post it here for readers of Small Business Trends. Here it is, along with an additional quote I've attached at the end from Faith Popcorn:

Do you know your Google number? Better yet, how big is your Google number?

Your Google number is literally the number of times your name pops up in the Google search results. But, that number has taken on greater significance. To some, it means you are a thought leader, an influential person, an expert -- maybe even famous.

Having a high Google number is becoming a matter of competition in some circles. Here's what colleague Valdis Krebs has to say about it in an article he wrote in HR.com:
    "We were discussing the current economic climate, when one of the consultants started bragging about a just published book. Soon others were talking about their books. Eventually we were verbally jousting - who amongst us was the most 'well-known' consultant? Being the only consultant present without a book to my name, I had to quickly turn the measuring stick from 'books published' to something else. *** I said, "That's nice, but what's your Google number?" Puzzled looks soon overcame everyone in the room. Google number? What's that? I quickly explained that it was a rough-order measure of your reputation and influence as a thought-leader - it is how much buzz, or word-of-mouth, you have as an expert."

    So, how do you interpret your score in Google? Here is what the author has to say:

    "If your Google Number is around...
    100 or less - keep your day job and start publishing ....

    400 - do a nice web site and publish more

    800 - it is probably safe to hang out your shingle

    1,000 - you are getting some real attention

    2,000 - you are well known in your field

    5,000 - you are an often quoted expert in your field - a thought-leader"

Faith Popcorn, the trend expert and futurist, predicts that 2004 will be the year in which people actually start optimizing their Google personas: "Google has created the concept of the "Public Resume" -- a new kind of pervasive, email-able DigiTruth. Now that everybody can know everything about almost anyone, an industry will soon evolve to help you manage that public persona-creating the perfect online profile, optimizing your own Google search, giving us control over our digitized public identities."
Tuesday, February 24, 2004
The Environment and Small Businesses
Until recently, snowmobiling was one of the biggest winter draws for Yellowstone National Park in the western United States.

Then the National Park Service began to phase out snowmobiling for environmental reasons. The number of snowmobiles permitted to enter the Park was severely restricted. Predictably, there followed a series of legal maneuvers involving two lawsuits. Things got really confusing when the lawsuits resulted in conflicting Federal court decisions.

Meanwhile, with spring almost here, the winter season at Yellowstone is a bust. The situation is bleak in towns surrounding the Park, especially West Yellowstone, which depends on the tourist trade. Most of the businesses in town are hospitality related -- hotels and motels, camps, restaurants, snowmobile rentals. And mostly all are small businesses.

Here's what one businessman from the town of West Yellowstone has to say:
    "... done heavy damage to the economy of a community named West Yellowstone.

    Hardly any of the commentators I've encountered on the issue seem to care about West Yellowstone. After all, it's not the commentators' livelihoods being wrecked. They can pretend out of their arrogance and ignorance that the town can recover nicely, and anyway, it's just business we're talking about, isn't it?

    Some in our midst seem to think business is the enemy of humankind, whereas the truth is nearly the opposite. Thriving businesses mean jobs and better health and better education and even the funding of all those government programs many of these very same anti-business types do care about."

Usually when you hear about a battle between environmental concerns and business interests it involves Big Business -- logging, oil, mining. In West Yellowstone's case, it's pretty much all about small business.
Monday, February 23, 2004
Rapidly Rising Steel Prices
We've been tracking a fast-developing situation: the rapid rise of raw steel prices. Steel prices in the U.S. have jumped 30% in the last two months.

In turn, that's put a real squeeze on contractors and manufacturers that use steel for their products and building projects. Many of them are small and midsize businesses, which can't easily absorb price increases. Especially at a time when they are just coming out of a recession.

Apparently a major contributing factor is high demand for steel in Asia, especially China.

Today's Wall Street Journal has a front page article on steel prices (requires subscription). Buried deep in the article is this comment:
    "A group of steel consumers and producers is considering petitioning the federal government to limit exports of steel scrap, which is used as a raw material to make new steel products."

Having lived most of my life in two U.S. cities where steel is a BIG deal (Pittsburgh and Cleveland), it's beyond ironic that a country that used to produce more steel than any other now can't seem to get enough supply. And is even considering a petition to limit the export of steel scrap. It gives food for thought in the offshore outsourcing debates. Companies need to think -- really think -- about the long term effect of outsourcing critical parts of the supply chain.
Sunday, February 22, 2004
PowerBlog Review: The Enrepreneurial Mind

Editor's note: This is the third in our popular weekly series of PowerBlog Reviews of other weblogs...

Looking for a weblog covering topics of interest to entrepreneurs? Try the Entrepreneurial Mind from Dr. Jeffrey R. Cornwall, director of the Center for Entrepreneurship at Belmont University in Nashville Tennessee.

This blog went active in July 2003 and since September, has averaged a new post about every two days. It is divided into nine categories. The most interesting of these appear to be Entrepreneurial Myths, Ethics and Values, and Public Policy and Entrepreneurship.

Like all good blogs there is a touch of personal idiosyncrasy. In Dr. Cornwall's case, it's his golf-as-metaphor-for-entrepreneurship bent. So far there are only two postings in his Golf category, but the concept holds promise.

The Entrepreneurial Mind is a nicely laid out and organized blog with a lot of good information. Anyone interested in entrepreneurship and entrepreneurs will find it a worthwhile read.

The power of the Entrepreneurial Mind blog lies in Cornwall's wide-ranging exploration of entrepreneurship and the management of enterprises. Regular readers of the blog benefit from Cornwall's exposure to the latest magazine and journal articles as well as his ongoing study of what makes a successful entrepreneur and a winning business.

Saturday, February 21, 2004
CPAs and Offshore Outsourcing
There's lots of buzz in accounting circles these days about outsourcing the preparation of tax returns to places like India. And now the AICPA, a professional association for CPAs in the United States, has issued an Advisory opinion which clears the way for CPAs to outsource.

The Advisory doesn't expressly endorse outsourcing -- it stops well short of that. But it does indicate there are no outright legal prohibitions.

Of course it cautions CPAs that they have certain responsibilities to ensure security and privacy of their clients' data when outsourcing. The Advisory summarizes those obligations:
    "AICPA members have responsibilities related to the practice of using third parties to provide services in engagements for clients. Primary among them are security and confidentiality of information, due professional care and compliance with provisions of the Code of Professional Conduct. In addition, members must monitor security procedures that third-party providers have put into place to ensure they remain effective."
The Advisory is being published in the March 2004 edition of the Journal of Accountancy, but you can download a copy here.

In case you have been on another planet for the past six months, offshore outsourcing is a polarizing issue right now in the United States. Fears of U.S. workers losing jobs and U.S. corporations losing competitive edge are being debated at every turn. Professional workers are even considering unionization.

In places like India, however, outsourcing is good news (as long as the outsourced work is going to India). And in India the AICPA's position was greeted as a positive move. It is estimated that preparation of tax returns could mean the inflow of $15 Million (USD) in 2004 to Indian business process outsourcing partners.

Friday, February 20, 2004
How Small Businesses Pay for Technology

Perhaps U.S. small businesses should spend more time with their accountants:
  • A new study by HP shows that a whopping 46% of small businesses pay for technology purchases with credit cards (expensive!).

  • And, over half of the businesses were not aware of the U.S. Sec.179 tax credit available to offset the cost of tech purchases.
The study was sponsored by HP. So, the statistics relate to basic office computing technology of the type sold by HP, such as PCs, printers, office software, etc. The study doesn't speak to other kinds of technology purchases.

Small Business Computing has a reasonably in-depth article about the study. There is a lot of interesting data and it's worth a read.

The use of credit cards almost half the time is not surprising. They're the easiest source of credit available to small businesses -- albeit the most expensive. Nor is it surprising that most small businesses don't understand the tax advantages available to them from buying technology. What's really surprising is why more tech vendors haven't seen this for the selling opportunity it is, by offering attractive financing programs and educating buyers about the tax advantages. They just might sell more.

Thursday, February 19, 2004
RSS for Small Businesses
RSS feeds are getting a lot more attention among businesses large and small.

The number of people using RSS newsreaders is still tiny. MarketingSherpa estimates a mere 250,000 people using them (although that sounds like a lowball estimate to me). But more and more businesses are experimenting with RSS as a way to communicate with customers and business partners.

Most people familiar with weblogs know what an RSS feed is. It's a way to syndicate content electronically. But just in case you happen to be new to RSS feeds, check out our handy-dandy RSS newsfeed information sheet here for background information. Or if you really want to delve into the subject, Lockergnome has extensive information on RSS.

It's interesting to consider the possibilities for using RSS in business. BlogBusinessWorld commented last week on using blogs as a replacement for email newsletters, and Commoncraft extended the discussion by pointing out that it is actually blogs and RSS feeds that could replace newsletters.

The technology for RSS is rapidly evolving. For instance, RSS made a big buzz at the DEMO 2004 conference this week.

This is a key trend in the online world that could revolutionize the way content is accessed across the Internet. Although use of RSS feeds by small businesses is still limited, we expect to see the use of RSS feeds grow among businesses in much the same way weblogs are fast being adopted by businesses and becoming mainstream. In fact, RSS and weblogs go hand in hand.
Wednesday, February 18, 2004
Selling IT to Small Businesses
Tim Reynolds, President of Tribute Inc., revealed what it takes to successfully sell IT to small businesses at today's NEOSA forum on Trends in Information Technology. Tribute sells enterprise software mostly to small manufacturers with under $10 Million (USD) in revenues. The session was adeptly moderated by John Soat, Senior Executive Editor of Information Week:

  • On the small business marketplace: "...we're seeing solid steady growth in IT spending by small manufacturers since the fourth quarter of 2003." "They're looking for shorter-horizon projects...IT solutions to solve very specific issues... they expect a one-year payback period."

  • On the sales process: "...small businesses today are more educated about IT than a few years ago...they ask more questions and better questions...we've changed our sales model over the past 2 - 3 years to focus on consultative selling rather than feature selling."

  • On establishing ROI: "...we don't typically try to justify ROI based on cutting personnel costs...in small businesses the person running the server may also be the Controller, and even if they install new software, the person's position as Controller isn't going away." "We usually justify the ROI based on how the software can help them run the business better, such as getting a better handle on accounts receivable turnover."

  • On offshore outsourcing: "Customers don't give a hoot whether you are outsourcing...what they care about is what your company can do for them." (Note: Tribute does not outsource.)

  • On data mining: "We're seeing more interest by small businesses in mining their data than we did 2 or 3 years ago...now that they have systems to collect all this data they want to use it."

  • Up-to-the-minute insights into the behaviors and attitudes of small business customers....
    Tuesday, February 17, 2004
    Small Building Contractors Squeezed
    Building contractors in the United States are feeling squeezed by rising material costs.

    An article in the Detroit Free Press takes a look at the plight of one small contractor in Michigan:

    Nearly every day, Lee Jasinski, co-owner of a Whitmore Lake commercial contracting company, gets word from one of his suppliers about another price increase.

    A letter informs him steel is going up. A memo reminds him of an increase in insulation. A fax says drywall is going up.

    Consider this: Galvanized steel, which Jasinski uses to make trusses and wall panels, went up 10 percent the first of the year. Now, his suppliers tell him it's expected to increase by 30 percent to 40 percent by midyear. Insulation went up three times last year and is expected to go up another 7 percent in 2004. Drywall is expected to increase by about 7 percent.
    The biggest culprit is steel. Even though the U.S. steel tariffs were lifted in December and contractors had expected prices to go down, the opposite has happened. Demand for steel is higher in the United States due to low interest rates that have spawned a construction boom. Also, favorable foreign currency exchange rates (i.e., a weak American dollar) and increased demand for steel from China have prompted suppliers to sell to markets outside the United States.

    Small building contractors can absorb only so much in increased material costs. Eventually the increases have to be passed on to consumers and end users. Meaning, inflation?
    Monday, February 16, 2004
    P2P Filesharing and Business
    A short article in PCMag.com cites proof for something that many have long feared/ suspected/ already concluded: The P2P filesharing networks are becoming breeding grounds for viruses, trojan horses and backdoors.

    In a study by ICSA Labs, a division of Tru Secure, 45 percent of files downloaded through KaZaA contained malware. ICSA predicts a significant increase in the amount of these malicious "gifts" deposited on filesharing networks during 2004.

    Businesses everywhere need to remind employees about the risks of downloading from P2P networks. Smaller businesses are especially at risk, because they frequently lack the IT staff to stay on top of security measures the way larger companies do. It surprises me how many businesses still don't take adequate preventive steps to practice "safe computing," even in this day and age when malware is, unfortunately, old hat.
    Sunday, February 15, 2004
    PowerBlog Reviews Back
    This weekend we continue with our new series, PowerBlog Reviews. In the series we review other weblogs that we frequent here at Small Business Trends.

    We're very pleased -- and surprised -- by the favorable response to the first PowerBlog Review last weekend. It brought instant messages, emails -- and even a mention on my Ryze page.

    One reader wants to know how we decide the order of reviewing the weblogs. There is no real science to it. Partly it has to do with the order in which other blogging entrepreneurs supported Small Business Trends when we were first starting out (we DO reward loyalty!). And partly it is just about mixing up the subject matter of the Reviews, to keep things interesting. The rest is just random choice.

    So, sit back and take in the PowerBlog Reviews. Remember, all PowerBlog Reviews will be available from a link on the left sidebar.
    PowerBlog Review: Brewed Fresh Daily

    Editor's note: This is the second in our popular weekly series of PowerBlog Reviews of other weblogs...

    Brewed Fresh Daily is a weblog to start your day with.

    Brewed Fresh Daily is like an online coffee shop. The atmosphere is warm, inviting and interesting, just like your favorite neighborhood place. Like any good coffee shop, it's part office, part living room, part cafe. It feels like a physical place, yet it's all online.

    On the Web since July 2002, it's the avocation of George Nemeth, an entrepreneur and business owner from Cleveland, Ohio (USA), who's been referred to as a superblogger.

    Many weblogs never let you know where the author is from. But Brewed Fresh Daily leaves no doubt that you are "in" Northeast Ohio.

    It maintains the most complete blogroll of Northeast Ohio weblogs out there. So complete that other weblogs simply copy Brewed Fresh Daily's blogroll for their own weblogs, something George encourages. By positioning itself as THE place to find out who has a weblog in Northeast Ohio, Brewed Fresh Daily has become something of an online hang-out.

    If you are from outside Ohio or the USA, don't stop reading this, thinking the weblog couldn't possibly be relevant to you! Even though it has a very local flavor, its appeal goes far beyond its local area. And it holds valuable lessons about using weblogs for business purposes no matter where you are.

    Brewed Fresh Daily is an intriguing example of how a weblog can become an integral part of its owner's business networking efforts, without becoming crassly commercial.

    Brewed Fresh Daily weaves together the online world of weblogs and the offline world of business relationships. Sometimes it is hard to tell where the blogging stops and the networking begins. They all seem to be one. All starting online, and then spilling over into meetings, events and informal get-togethers offline (and frequently vice-versa).

    And at Brewed Fresh Daily it's not just about one entrepreneur networking. It is about many people networking.

    For instance, Brewed Fresh Daily has figured out how to leverage Ryze, one of the business networking sites that are so hot right now. One of the features that I especially like is the "Ryze Clevelander of the Week." George links to a Ryze member's page, highlighting something unique or interesting about the person.

    Like any true networking effort, Brewed Fresh Daily is very much about introducing people to other people, thereby sparking accidental conversations that can lead to new business opportunities for all involved.

    The Power: The Power of the Brewed Fresh Daily weblog is the way it weaves together online blogging with the process of building a network of valuable business contacts. For any entrepreneur or business thinking about a weblog, but wondering how it could be made relevant to a local market, take a look at the Brewed Fresh Daily model. It uses a people-oriented focus to draw in a following, integrate it with traditional offline networking techniques, and in the process build a stronger network of valuable business contacts.

    Friday, February 13, 2004
    The Long Slow Decline of the Video Store
    Two big announcements this week drove home the point that the video rental business is in a long slow decline.

    First was Comcast's offer to buy Disney. One of the main reasons given by Brian Roberts, Comcast's CEO, for the merger is the desire to have access to Disney's media content for delivery to consumers through cable service. As he pointed out in a television interview on CNBC TV, consumers used video-on-demand an average of 13 times a month. Who needs to rent movies when you can get them delivered to your living room via cable?

    Then there was Viacom's announcement that it was getting rid of its controlling stake in the Blockbuster video chain. The reason: declining revenues, in part due to competition from video being made available over cable systems or the Internet.

    A Forrester Research report supports the bleak long term outlook for video rental stores. This report (free by the way) paints a picture of a future where computers, media, networks and broadband converge. In the future, we will be watching movies on computers, delivered via cable TV signals over our home network. In that future vision, there is no need for rented videos.

    Predictions suggest that video stores will be around for another decade, because it will take years for consumers to migrate completely over to newer technologies. But the video rental store's heyday has come and gone. What's left for Mom and Pop video stores? Well, this is not a good time to make any new investment in video franchises or open up video rental stores, unless you are an expert at milking a declining market.
    Thursday, February 12, 2004
    Small Businesses and Banks
    The U.S. Small Business Administration's Office of Advocacy has issued a study suggesting that the banking industry's consolidation is hurting small businesses.

    Small banks tend to extend more credit to small businesses than do larger banks. Thus, when small banks get swallowed up and become part of large banks, small businesses no longer have as much access to bank credit.

    However, small businesses in the study were still getting credit. They just turned instead to non-bank financial institutions such as credit unions and brokerage houses.

    You can conclude a number of things from this study. One conclusion is that small businesses need small banks. However, banks should take notice of another possible conclusion: Non-traditional financial companies appear to be stepping up to the plate and filling the role that smaller banks traditionally filled for small businesses.
    Midsize Business IT Spending Going Up
    In-StatMDR projects that midsize businesses, i.e., those with 100 to 999 employees, will spend $82 Billion (USD) on information technology in 2004 in the United States. That's an increase of 5% over 2003.

    A key driver of growth: midsize firms are increasingly investing in solutions for their remote and mobile workers.

    According to In-StatMDR, a market research firm, the midsize business market represents 15% of the IT market overall in the United States. It's the third largest market after the enterprise market and the small business market.

    The statistics here are useful. But perhaps the most useful aspect of this report is the way In-StatMDR has clearly segmented the "small and midsize business" market according to size, in this case employee size. That's crucial to successful selling in this market. Just think of the differences between a truly small business (say, one with 25 employees) and a midsize business (say one with 500 employees). The buying motivations, the price sensitivity, the deal size, the product needs -- just about everything is different.

    Wednesday, February 11, 2004
    Reverse Consolidation
    A short piece in Inc. magazine forecasts that 2004 will be the year when the trend toward industry consolidation reverses itself:

    Over the last decade or so there has been massive vendor consolidation -- companies are working with fewer and fewer partners, whether in high-tech software or low-tech janitorial services. I would argue that we will see a reversal of this phenomenon. In 2004, nimble entrepreneurs will emerge in a host of industries to create a more complex purchasing ecosystem.

    Interesting, but no support is given for this opinion. Our views? Industry consolidation is here to stay for the foreseeable future. Trends like this involve entire marketplaces, and movement does not occur swiftly. We don't see the trend toward consolidation changing much in 2004.
    Tuesday, February 10, 2004
    More Top Ten Internet Trends
    Following on yesterday's post about the Wall Street Journal's top Internet trends, we thought it would be interesting to show another list of top trends, this time by the Web Talk Guys.

    Here's what the Web Talk Guys see as the top trends in the Internet right now:
      1. The decline of the web browser usage on the desktop as a way to get to web content

      2. The growth of Internet applications - the executable Internet

      3. All things wireless will proliferate

      4. Digital media enters the living room

      5. Professional journalistic weblogs are syndicated through RSS

      6. Microsoft mobile platforms

      7. Voice over IP (VoIP) makes mainstream calls

      8. Internet radio growth and revenue

      9. Online search extends beyond web into book extracts and other deep databases

      10. How online popularity is creating world wide celebrities
    The full article can be read here.

    While there is some overlap with the Wall Street Journal's list, there are considerable differences, too. Why the differences? Well, we think it has to do with the perspective from which each publication views the Internet.

    The Wall Street Journal views it from the perspective of businesses and the impact of the Internet on the business world. The Web Talk Guys view it from more of a technical perspective, and the way the individual interacts with the Internet.

    We agree with some of the Web Talk Guys' top trends. Numbers 3, 4, 5 and 9 stand out especially. But... growth of Internet radio as one of the "top" trends in 2004?????
    Monday, February 09, 2004
    Top Ten Internet Trends
    Today's Wall Street Journal (requires subscription) has a special section on top trends in ten industries. The review of the Internet trends is especially interesting and germane to the small and midsize business market.

    Here are the Journal's top 10 Internet trends for 2004:
      1. Internet security taken seriously: Security alerts are being issued more quickly, companies are testing their software code for bugs more thoroughly, and companies and government agencies are more likely to have backup systems.

      2. Search is critically important: More users are searching the Internet, paid search categories have jumped to nearly one-third of all Internet ad revenue, and local/personalized search is a hot area.

      3. Regulation of the Internet is increasing: The United States federal government passed the CAN-SPAM Act late last year, pre-empting 37 state laws. And so far the U.S. Congress is in a stand-off about whether to make permanent the moratorium on state and local taxing of the Internet. If they don't act, then Internet transactions could become subject to tax, to the tune of $11 Billion (USD) a year.

      4. More entertainment will be delivered via the Internet: Increased broadband adoption is allowing use of the Internet to deliver more entertainment including videos and interactive gaming. The Wall Street Journal predicts that future content will be community-based (think "blogs") and controlled by consumers rather than traditional content creators.

      5. Not all content will be free: More online content creators are figuring out how to get consumers to pay for content.

      6. Making money with blogs: Some weblog authors are turning their blogs into "something resembling actual businesses."

      7. Offline content moves online: This trend includes efforts such as by the Internet Archive to move works online -- everything from Shakespeare to cigarette commercials. It also includes initiatives such as by Amazon and Google to enable users to search within the text of books.

      8. Ads are becoming more intrusive: Stealthy pop-under ads, rich media ads that enable animated objects to cross your screen, spyware masquerading as ads, and junk email annoy consumers. That's led consumers to stop going to certain sites, and install ad-blocking software.

      9. Business models converge: The Internet behemoths (e.g., Google, eBay, Yahoo, Amazon) are increasingly providing services that look similar, as they realize that being an intermediary helping others find and buy things holds more profit than actually selling them.

      10. Patent proliferation threatens commerce: Patents are being granted more easily for things that some might consider in the public domain, threatening the interoperability of the Internet and leading to increased costs of doing business.

    We have commented previously on at least nine of the Internet trends -- sometimes more than once. (The only one we have not commented on before now in any significant way is number 4.) The one additional Internet trend we would have included in this list is globalization, which is accelerating at a dizzying pace and making national boundaries and geographic location much less significant. With translation software getting better all the time, improvements in Voice-over-IP, and cross-border surfing becoming the norm -- why, just about anyone can visit different locales without leaving their PCs.
    Sunday, February 08, 2004
    Introducing PowerBlog Reviews

    We have started a new feature here at Small Business Trends. Each weekend we review some of the great weblogs being authored on the Web today.

    We call them PowerBlog Reviews. "PowerBlog" because these weblogs really are powerful. Many of them are downright superb. Each of them that we link to here at Small Business Trends offers something unique -- a fresh perspective, useful insights, great writing, or "heart."

    Some of them have as their topics small business or entrepreneurship. Others are niche-focused, covering subjects such as blogging, economic development or even computer bugs. Still others cover a wide variety of subjects.

    But they all have one thing in common. They are written by people who are entrepreneurs or small business owners, or they focus on topics that are of interest to small and midsize business and entrepreneurs.

    What's the connection to a site that tracks trends? Simple. Blogging -- and especially blogging about business topics -- is one of the hottest trends on the Web today. We can think of no better way to track this fast-developing trend than by profiling the unique and interesting uses of the blog medium today for business purposes.

    UPDATE: Previously we listed the PowerBlog Reviews on the home page, but the number simply became too great to continue that practice. Now we are listing each of the PowerBlog Reviews below - check them out!

    (Would you like your blog featured in a PowerBlog Review? Email me!) The Powerblog Review series is being retired at the end of September 2005 and we are no longer accepting new blogs to review. It's been fun!

    Be sure to come back each weekend for a fresh PowerBlog Review.
    PowerBlog Review: Cracked Cauldron Spillings

    Editor's note: This is the first in what we expect to become a weekly series of PowerBlog Reviews of other weblogs...

    Cracked Cauldron Spillings tells you that it is a weblog "Wherein we follow our intrepid entrepreneurs as they flounder around opening a bakery." And that humorous byline sets the tone for this wonderful, witty business weblog.

    On the Web since October 2003, it is one of the most entertaining business blogs around.

    It's a weblog telling the story of two Oklahoma (USA) women, a mother and daughter. We follow them as they pursue their dream to open a bakery/cafe business together. They plan to name it the "Cracked Cauldron."

    Mother calls herself "Moneybags" because she will be putting up the collateral -- her home -- for a small business loan. As Moneybags quips in one post, she's not worried about the risk of mortgaging her home for a business loan because she was "homeless once before and it wasn't that bad." And of course, nothing could better drive home the point about the risks entrepreneurs take when putting their homes on the line for their businesses!

    Daughter is called "Manager" because she is going to be running the bakery. Manager is a sociologist by training, and she is learning about business at Moneybags' knee, so to speak. Indeed, Manager will be getting a summer job in a bakery in order to learn the bakery business before they open their own.

    With lots of humor and some social commentary on subjects such as the homeless and taxes thrown in for good measure, Cracked Cauldron Spillings makes you want to keep reading... and smiling.

    In the process, you learn a lot about the practical side of opening a small business. In fact, Cracked Cauldron Spillings is really a case study about entrepreneurs planning to open a small business.

    We follow Moneybags and Manager as they create a business plan, develop pricing strategies, scout for locations, estimate staffing costs, investigate business equipment, decide which products they will offer, develop a marketing plan, research government regulations, try to navigate tax requirements -- oh, and test their products. By product testing, we mean the recipes and menus for the baked goods, soups and other food they will sell once they open their business.

    We learn all about competitive advantage from the discussions about which foods they will offer at the Cracked Cauldron, and which ones they will not. For instance, we learn early on that they will offer unique breads, because there is no place in their town to buy specialty breads. However, we later learn that they do not intend to offer donuts, because their town has a great donut shop already, and why try to duplicate what someone else is already doing well? Instead of competing, they decide to partner with the donut maker and cross sell each other's products.

    The posts about food give this weblog a special character. Scattered amongst recipes and menus you hear the authors' opinions on faddish diets and food trends, including the Atkins Diet and low-carb breads. All of it keeps you coming back for seconds.

    The Power: The Power of the Cracked Cauldron Spillings weblog is in how it makes business concepts come to life for the reader. Instead of reading about concepts such as "competitive advantage" as abstractions, we experience them in a very real sense, as we follow Moneybags' and Manager's dream to start their own small business. Along the way, you can't help but gain a renewed sense of respect for the challenges facing any small business owner today.

    Friday, February 06, 2004
    Skype Free But Not Practical -- Yet
    Skype, a way of making voice calls using the Internet instead of telephones, is currently free. It is also easy to use, requiring only the purchase of a $15 (USD) headset.

    But Skype is still a ways from being practical for small businesses.

    Skype, a Scandinavian company, is by the same people who developed KaZaA, the music filesharing application. Skype is a "peer to peer" voice application. All you do is go to the Skype website, download the Skype software to your Windows 2000 or XP computer, plug in your headset, and call up another person.

    The catch is that right now the other person also has to have the Skype software. And, since there is no Skype phone book or directory assistance, it is up to you to know how to reach the other person.

    Skype claims to be different from other Voice over Internet Protocol (VoIP) applications. In addition to being simpler to use, the website says that Skype works behind most firewalls whereas most VoIP solutions do not work behind broadband connections due to firewalls. Early reports rave about Skype's clear reception and ease of use.

    One of Skype's founders, Niklas Zennstrom, announced today on CNBC TV's Closing Bell that Skype is entering into agreements with major telecommunications providers to enable Skype users to communicate with regular telephone customers. No word was given on when that service would become widely available. Until that happens, Skype's usefulness for business purposes is limited.

    The telecommunications companies are worried about Skype and other VoIP. They are leading the charge in the United States to convince state legislators and the Federal Communications Commission to subject VoIP providers to licensing and tax requirements the same as telephone companies.

    "Skype Me" Button that tells others you are a Skype user

    Although it looks like VoIP solutions will eventually overtake and replace standard telephone service, Skype and other VoIP solutions are still not ready for prime time at most small businesses -- yet. Small businesses tend to be technologically risk-averse. Mostly they adopt solutions after they become mainstream, i.e., after prices come down and the solutions mature to the point they are bullet-proof. Small businesses can't afford solutions that might fail and turn out to be nothing more than expensive experiments, or which require special technical expertise to implement. So for the time being, the average small business is likely to stick with tried-and-true communications such as land-line phones and cell phones.
    Thursday, February 05, 2004
    The Coffeehouse Environment & Small Business
    With a Starbucks or one of its imitators seemingly on every corner it's time to take a look at the coffeehouse as more than a beverage-dispensing trend. Sure people go to these little islands of caffeine for a taste of the bean, but that's not the only reason, and maybe not even the main reason.

    For city dwellers, a coffeehouse is a special kind of space. Part restaurant, part living room, and part office, it's a public place that people treat as if it were private. Even in the burbs people will drive to a coffeehouse to read a book, play a game of Scrabble, or work on their laptop. All things they could easily do in their homes or offices.

    There's something about these warm, sometimes funky, spaces that just makes people want to sit, sip, interact, and contemplate. Smart operators are taking advantage of it. After all, there is a huge profit in selling colored water for upwards of a buck and a half a cup.

    But there are more opportunities for business than can be poured into a cup, and the trick to taking advantage of them is in bringing people back and having them stay a while.

    Starbucks has been making WiFi (wireless Internet access) a part of the equation for a couple of years now. Other "consumer services" are finding their way into coffeehouses just as coffeehouses have found their way in to other consumer spaces -- think Borders and Barnes & Noble. The typical coffeehouse of the future is likely to become a multifaceted selling environment, and the environment of the coffeehouse is morphing into retail outlets.

    Tearooms have already sprung up in cities everywhere, and chocolate cafes such as the Moonstruck chain, out of Portland, Oregon, are beginning to appear in the urban centers. The possible environments for coffeehouse-like spaces are just beginning to be explored.

    So what's it all mean to the small business marketplace? Well for one thing, the coffeehouse environment is great for meeting with small business owners. They're out of the shop or office and you've got their undivided attention. It takes less time than lunch and isn't as expensive. Another possibility is building a coffeehouse into your physical sales environment. That has worked wonders for bookstores. What might it do for a Staples or Office Depot? What about working with a coffeehouse to set up product demos for area businesses? Send out the invitations offering a free coffee break and wait for the prospects to come through the door. Coffeehouses and their ilk with their warm environment are a trend waiting to be harvested by those selling to small and midsize businesses.
    Wednesday, February 04, 2004
    eBay's Year of Small Business
    We've written before about the rapid growth over at eBay's B2B venue, Business Marketplace. It targets small businesses which need goods (such as PCs and restaurant supplies) and services to run their operations.

    Now, in an article by Small Business Computing, Jay Fiore, an eBay marketing manager, reports that eBay believes 2004 will be the year of the small business. Since small businesses are leading the market recovery, the effects are being felt on eBay in the form of stepped up activity:

    "We seem to be in a recovery cycle and the small business market, by its nature, is leading the way," Fiore said. "If your resources are limited but business starts to pickup, all you can do is buy more and hire more. A small business can't expand without doing that."

    The eBay site now handles so many transactions that its activity mirrors the market as a whole. Tracking eBay Business Marketplace activity (i.e., what's selling, what's not) may prove fruitful as a way to track small business market trends.
    Tuesday, February 03, 2004
    The Far-Flung Reach of Janet Jackson
    Say what you may, the Janet Jackson fiasco has had an effect, and in some unexpected places. Take a look at the referral links at the bottom of the left column of this page today and you'll find some that surprised us!

    It's all because our Anita Campbell posts (on topics unrelated to Janet Jackson) on the Blog Critics site, which was inundated with visitors as a result of Ms. Jackson's antics. They have a healthy traffic of about 10,000 on any given day -- except yesterday, when that number topped a quarter million. Traffic was so strong that Blog Critics lost their Blogads ads for a while. In fact, it nearly took down the Blogads server.

    So what's the takeaway from Janet, Justin, and the great unveiling? The Superbowl delivers a super impact. If its commercials have half the effect of the halftime shocker, the advertisers will be laughing all the way to the bank.

    Monday, February 02, 2004
    Starbucks Helps Small Farmers

    Starbucks is launching an initiative in Costa Rica which will guarantee supplies of coffee and also support the coffee farmers there. According to Drinks Business Review Online:
    "Starbucks has set up the Starbucks Coffee Agronomy Company. Part of the company's role will be to support coffee farmers through loans, training and education on sustainability. It will also invest in regional social programs and protecting ecosystems. One of the most important aspects of the program will be to demonstrate a long-term commitment to coffee farmers and their families. The Seattle-based firm hopes to forge strong links between the company and individual farmers, thus protecting its supply and improving its image with customers."

    As the article points out, Starbucks is being shrewd in dealing with both the business issues and the social issues surrounding its business. Skeptics will say that Starbucks is motivated solely by its own interests. Maybe so, but Starbucks is attempting to do more than most large corporations which are supplied by developing countries. If the program is even halfway successful, it could be a big boost for the small individual farmers who supply Starbucks. And it is a good example of how big business can lend a helping hand to small business -- in a partnership that works for both sides.
    Sunday, February 01, 2004
    Internet Transforms Medical Practices
    The Internet -- specifically Google and blogs -- is changing doctors' practices.

    Medpundit, a practicing physician, describes in an article over at Blogcritics.org how she and other physicians increasingly use the Internet. Among the uses:

  • Finding information to assist in making medical diagnoses of rare conditions.

  • Determining the appropriate tests to order.

  • Illustrating and explaining medical points to patients.

  • Looking up correct diagnosis codes for insurance billing.

  • Staying current on the latest breakthroughs in medicine.

  • The Internet is making hardcopy medical textbooks obsolete. As she points out, timeliness is critical when dealing with the latest medical discoveries and treatment breakthroughs. The Internet beats out print books hands down:
      "In today's internet world there's a forum that is equally adept at handling new medical information, dissecting it, and presenting it in a timely fashion. Perhaps you've heard of it. It's called the blog."
    In addition to the Medpundit weblog and various mainstream medical websites such as familydoctor.org and WebMD.com, there is also a directory of medical weblogs. Along with Google, all are helping transform the practice of medicine. Now, even a solo practitioner doctor in a small town has up-to-the-minute access to a wide body of the latest medical knowledge, provided he or she has an Internet connection.
    Counterfeit Goods a Hot Cottage Industry

    The sale of counterfeit goods has mushroomed and become more prevalent in recent years. So much so, it's now become a cottage industry for entrepreneurs and even gone mainstream -- sort of.

    One way counterfeit goods are sold is through home parties in American suburbia, similar to stodgy Tupperware parties. Loss Prevention Magazine, in an article in its January-February 2004 edition (available in print only) written by two Tiffany & Co. employees, gives the following account:
      "[W]e received a call from an informant indicating she had information on counterfeit Tiffany & Co. merchandise sold at "home parties" in a suburb of a major city in Ohio. The caller claimed that one woman organized the parties and made a large amount of money in this business. ***

      With "buy" money and a company-provided camera concealed in her purse, the undercover officer, along with the informant, went to the party and purchased various Tiffany & Co. merchandise, which was later examined and determined to be counterfeit. During the buy, we also learned that another party was scheduled later that week in the party organizer's home."
    In addition to home parties, another growing trend is the sale of counterfeit goods on the Internet, especially via auction venues such as eBay. Entrepreneurs are popping up all over the Internet selling low cost "brand name" goods. The Internet makes it easier to find buyers and distribute fakes all over the world.

    Counterfeiting is a major concern to manufacturers and retailers of brand name goods. Counterfeit merchandise now accounts for $350 Billion (USD) in sales, or 7% of world trade, according to the International AntiCounterfeiting Coalition. Some estimates indicate it will rise to 18% of world trade by 2006.

    Counterfeit goods hurt legitimate businesses both large and small. The brand owner whose merchandise is faked is obviously hurt. But smaller legitimate retailers are hurt, too. It's tough for legitimate retailers to compete when just around the corner or online there are fake goods being passed off for originals at under-market prices. Not to mention that there is a strong connection between counterfeit goods and organized crime gangs and terrorist organizations -- it's one way they finance their organizations.

    More news... more trends... more insight...

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