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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Sunday, May 30, 2004
Carnival of the Capitalists
It's time to kick off this week's Carnival of the Capitalists. We have a bunch of great posts on a wide variety of subjects -- everything from satellite phones, to bond-market vigilantes, to music and drugs (well sort of). The Carnival is open, and the fun begins now.

Wayne Hurlbert, at his excellent Blog Business World blog, has an extremely interesting post about why you need a website marketing plan. His advice: start with the end goal in mind.

Zach Maxfield has a post at Bankstocks.com that takes a look at how soon-to-rise short-term interest rates may force some banks to put themselves on the auction block. If you have ever been curious about acquisition accounting in the banking business, this post is for you.

Torsten Jacobi takes a look at what has happened to the satellite phone business and lessons that can be learned from its failures and applied to other high-flying concepts.

Steve Verdon has two posts this week. Left over from last week is his take on the cost of repairing Iraq's water and sewage systems. He points out that much of the expense is a result of long-term neglect during the Saddam years. On a totally different note he comments on Nathan Newman's blog post about Arnold Schwarzenegger's proposal that 75% of punitive damages in civil suits go to the government. A spirited discussion followed with at least nine responses.

David Tufte continues his chronicle of the economic lessons of the HBO series Deadwood with a look at the relative value of a Chinese life stacked up against an American life in the old west.

For a really interesting look at what is driving up the price of gasoline and the possible consequences of high oil prices, you can't do much better than Jeremy Wright's post on Ensight.org. For those of us who are married the fact that this thinking grew out of a discussion with his spouse gives the post added spice.

Milton Friedman's four purchasing situations dictum is applied to the US Congress and how it works by Paul Smith in a short but pithy post at Freedom's Fidelity.

Russell Buckley explores MMS and the problems in front of it. If you're like me, clueless may best describe what Buckley is talking about without the explanation that MMS stands for multimedia messaging service, which is the next step up from text messaging (SMS or short messaging service) on mobile phones. Lots of good info in this post, especially for the technically-inclined.

Goal setting and planning to achieve those goals is the subject of a post on Sam Decker's blog that was submitted to the Carnival by Rob Long. To find out what Greyhound racing has to teach us about goal setting check out what Decker has to say. Follow that rabbit!

Jeff Cornwall tells the story of Australian John Wamsley's efforts to create a publicly held for-profit company to further conservation efforts. It's interesting reading both for the novelty of the concept of using an IPO to fund conservation and for the perseverance on an entrepreneur with a dream.

Attention all you starving bloggers. Les Jones takes a hard look at advertising on blogs from the perspective of someone who has both bought and sold Internet advertising. Should you quit your day job and wait for the money to roll in? You'll have to read his take on blogs, advertising, and money to find out.

The Federal Reserve is behind the curve on monetary tightening, and the bond-market vigilantes are leading the way says Arnold Kling.

Michael Kantor follows up his Jessica Cutler scandal success by ruminating about what causes people to read blogs.

Why is Mitsubishi Motors Corp. laying off 22% of its workforce and closing plants? Mike Pechar gives some intriguing answers to that question on his Interested-Participant blog.

Evelyn Rodriguez explores creativity as a renewable resource/skill and puts forth the suggestion that time off is a needed commodity if we are to recharge our creative batteries. She wants to hear from others about whether they find vacations and holidays as recharging times.

Overconfidence is the topic for Melissa Hershberger in a post on the Synergy Partners blog. Starting from a paper she read about Overconfidence, Investment Policy, and Executive Stock Options, she moves on to question the effect of overconfidence and optimism in team building.

Micha Ghertner at Catallarchy defends Libertarianism when it is accused of being the "new" communism. This is an old argument that Libertarians have heard before and Ghertner does a good job of meeting it head on.

The next four weeks could be especially volatile for stocks, says Barry Ritholtz. He explores the past week's market signals and the question of market turn, bounce-back rally, or something else in this post at The Big Picture.

Kevin Brancato sent a post of his own to the Carnival and suggested one by Bob Arne. Brancato takes on the question of whether the recently announced seven new Wal-Marts in Vermont is the disaster that the National Trust for Historic Preservation proclaims it to be.

Comparing what is happening in the music industry and the pharmaceutical industry makes for some interesting thoughts by Bob Arne. Even he admits to getting a bit confused and making his own special music late at night under the mood-altering substance of his choice.

David Foster tells a story about the man at the top of a corporation seeing a man at the bottom of the pecking order in need of help to get his job done. The guy at the top pitches in when others don't. There's a lesson none of us should ever forget. Oh yeah, the guy at the top was nineteenth-century inventor and capitalist George Westinghouse.

Overcoming the wall that holds us back from leading change is the topic of this post at Fouroboros that explores each of the elements that make up the wall and how to take that wall apart a brick at a time.

Consumer satisfaction, financial ratios, and stock price: how they might fit together intrigues Martin Lindeskog. He cites an article in a Swedish newspaper that points to a pattern linking changes in the American Consumer Price Index and Gross Domestic Product.

And finally, our own Anita Campbell writes about the sizzling hot RFID technology. Should we assume that RFID is a slam dunk just because Wal-Mart has gotten behind it? Or, could this be a case where Wal-Mart is not infallible?

UPDATE MAY 31: We have two post-holiday entries. First, Bill Callahan at Callahan's Cleveland Diary, a new face on Carnival, has submitted a thought-provoking piece outlining four ideas to improve the City of Cleveland, Ohio and its economic outlook. This is a piece that deserves some attention and debate.

And -- Steve Rucinski of the Small Business CEO blog has entered a post posing an excellent question: why don't economic development efforts simply focus on helping local companies get more customers? Sounds like a good question.

OK! The tents are up, the lights are on! Have fun at this week's Carnival. And thanks to all our participants for their excellent posts.

Oh, and if you sent a post and don't see it, please re-send it (it probably just got spam filtered). Since this is a holiday weekend in the US and many people are away for the weekend, we will happily post any late-arriving entries on Monday, May 31. You might want to send late entries directly to us at anita@anitacampbell.com.

Next week's Carnival will be at The Window Manager. Send your entries to capitalists -at- elhide -dot- com.

Don't know what Carnival of the Capitalists is? Go to the Carnival of the Capitalists home page for information and for details about becoming a future Carnival host.

Saturday, May 29, 2004
VCs and Bootstrapping
One of my favorite columns is Guy Kawasaki's "Art of the Start" in Forbes.com. I like it because he delivers insights for startups, in a wise-cracking kind of way.

When asked in a recent column about VCs who leave companies hanging without saying yes or no, this is what he had to say:
I'll translate VC-speak for you. "Let's start doing due diligence" = "Yes, we're interested." Every other response = "No." It's that simple. Do you know how you can tell if a VC is rejecting you? His lips are moving.

I'm not sure if I am seeing a trend or not, but it strikes me that I'm hearing less from entrepreneurs these days about seeking venture funding. More frequently I am hearing about bootstrapping, i.e., small businesses growing from internal and customer-funded efforts, rather than external funding. Maybe the hype from the dotcom era has petered out, and entrepreneurs are back to reality. If so, that would be a positive thing.

Going after venture funding can be frustrating -- and a business-threatening distraction. I've seen many companies that should have been out getting customers instead chasing after venture money, only to be in a worse cash crunch 6 months later when sales have flagged and no VC money is forthcoming. The odds of getting VC funding are not in the entrepreneur's favor. According to the most recent Global Entrepreneurship Monitor report, in 2002 fewer than 38 out of 100,000 companies were funded by venture funding.

Friday, May 28, 2004
Today's "Anywhere" Businesses
The Dayton Business Journal has an article about a small business that is so "virtual" it can just pick up and relocate the company because the owner desires to make a lifestyle change.

John Wilfong writes about Support Air, a small business that is relocating its entire operation from Miami Florida to the Miami Valley in Ohio.

Support Air is a US$5 Million business that sources replacement aircraft parts, operating as an intermediary between the parts suppliers and the aircraft operators. Like an increasing number of small companies it is international in scope. Most of its business is done by Internet and fax.

What makes the relocation so feasible is the "virtual" nature of the business.
This business does not necessarily need to be near its customers, suppliers, raw materials or transportation facilities. It can locate in a place that's simply convenient to its owner.

The virtual business model is a trend that small businesses have adopted with enthusiasm. We were asked for our opinion in the article whether this was unusual. Here's what we said: "Quickly developing technologies, such as Web-based purchasing systems, cell phones that transfer photographs and video streams have allowed companies to not only shed overhead costs, but to set up shop wherever they want, she said.

"It's the epitome of 'less is more,'" Campbell said. "There's less expense and more profit. The less you have to burden yourself with plants and equipment, the more you can put toward profit. It doesn't really matter where you're at nowadays."

Thursday, May 27, 2004
SMBs Rely on Web for Tech Purchases
Spending more than $75 billion a year on technology, small and medium-size businesses (SMBs) remain hard to reach for tech vendors says a research study commissioned by Yahoo, Inc. and the marketing agency Grey San Francisco, a part of Grey Global Group. Conducted by the market research firm IDC, the study says that SMBs have a distinct set of priorities and use different resources for researching their tech purchasing.

Because small business is a multi-tasking environment, the people who make technology-purchasing decisions are likely to have multiple areas of responsibility. Only 33% of businesses with 20-49 employees have a full-time IT professional. For those with 50-99 employees that number increases to 50%. For SMBs with more than 100 employees, it is 90%.

When asked what factors are very important when making purchase decisions, 90% of SMBs listed product reliability, 83% cited product quality, and 79% said seller trustworthiness. Without these three attributes, products do not receive strong purchase consideration. While SMBs are demanding in their need to see a highly favorable value proposition in any technology purchase, they also find it important for the seller to be perceived as caring about SMBs as a specifically identified market segment.

SMB decision makers are constantly digesting information from diverse media sources. On average more than five hours per day is spent perusing print and electronic media. Often missed by mass marketing, SMBs are nevertheless hard to target with traditional individualized marketing efforts. Here, their small size and great numbers can create a prohibitive expense barrier for vendors.

The Internet is the medium of choice for prospective SMB technology purchasers to research and validate products and services. According to Bill Burkart, co-managing partner of Grey San Francisco the Internet "...is now an essential part of a complete marketing communications solution. To maximize the effectiveness of a brand's campaign, the Internet must be factored in to compliment print, direct, and other more traditional vehicles."

And the winner is...the Internet. No surprise there. No medium is better suited to delivering product information to an audience looking for that information. Small business people like to be in control of their work processes, and the Internet allows the process of tech acquisition to be one of making purchasing decisions rather than being sold to. What works well for tech will work equally well in other areas. Internet selling is definitely a trend to watch in the SMB marketplace.
Wednesday, May 26, 2004
Agritourism Discovers the Web
Small farmers in the agritourism industry have discovered the benefits of the Web to attract new business.

USA Today has an interesting article outlining how small, family-run farms are using the Web for marketing purposes. Gannett News reporter Maureen Groppe, quoting a representative of a "pick-your-own" orchard writes:
"We've found that, at least for what I would call the agritourism business, the Web site is a necessity," said Dennis Norton, Webmaster for the family operation.

People are constantly trying to find out what's in season and what kinds of activities are going on at the orchard, Norton says. He estimates that the Web site, royaloakfarmorchard.com, has had more than 500,000 hits since it was created about four years ago.
Via Core Components Web Marketing blog.

Agritourism businesses have also discovered the benefits of blogging. For instance, one of the blogs I link to here, the Oklahoma Wine News blog, is written by the folks at Nuyaka Creek Winery. It contains all sorts of interesting links and information about wineries, wine tastings, festivals, local bed-and-breakfasts -- everything a visitor might need to know.
Tuesday, May 25, 2004
Join the Carnival
It's "Carnival" time at Small Business Trends. Yep, next week we're hosting the ever-popular Carnival of the Capitalists. The Carnival will be going live at Small Business Trends late Sunday evening May 30. So start sending us your posts right now and we'll make this a really memorable Memorial Day.

Come and join the party. Email your post to capitalists -at- elhide -dot- com.

Don't know what Carnival of the Capitalists is? Go to the Carnival information page for details. And don't forget to check out this week's Carnival at Startup Skills.

The Garden Center Experience
The Experience Economy by Joseph Pine II and James Gilmore suggests that we have entered an age when consumers expect an "experience" when they shop. Having good products and excellent service is no longer enough. Consumers want to be drawn into the offering so that they feel pleasurable sensations and emotions when they shop. They want it to be memorable.

It seems that savvy owners of independent garden centers have read The Experience Economy. Gardening has become the ultimate consumer business. Independent garden centers, virtually all of them small businesses, have found a way to be profitable and compete even against the mammoth chains, by creating a shopping experience.

They may sell the same petunias as the big chains, but they make shopping there more fun and pleasurable. Savvy garden centers have added eye-catching displays and many new products, including greeting cards, linens, artificial flowers, garden statuary, skin lotions -- you name it.

Now you can go to a garden center and wander around literally for hours. And not be bored. There is plenty to see. And the staff at these savvy garden centers are trained to be knowledgeable, helpful and pleasant.

Today's Wall Street Journal has an excellent article profiling this new kind of garden center (requires subscription). Mostly these are fairly small businesses, run by plant enthusiasts who later became retailers. Which is probably a good thing, because then they are not bound by preconceived notions about retailing. Quoting Carol Miller of Garden Center Merchandising and Management magazine, Journal reporter Cynthia Crossen notes:
"Most independent garden centers are run by plant people learning about retail," says Carol Miller....*** "Most mass merchants are business people learning about plants." Matterhorn's annual revenue of $3 Million puts it in the top 10% of independent garden centers, according to Ms. Miller.

This is a welcome trend in niche retailing. Most of us, certainly those of us who like to garden, know of at least one independent garden center in our home towns that has learned how to create an "experience." If you are like me, you probably spend more time and money there than you should -- all due to creative retailing. Such centers are a great example of small businesses figuring out how to compete successfully against the Wal-Marts and Home Depots of the world.
Monday, May 24, 2004
Software to Detect Phone Rage
You're lost deep in a tree of alternatives on an automated phone answering system and not happy about it. Your breathing tightens. You begin to mutter. Perhaps you even spew a few epitaphs. Suddenly, as you are about to take out your frustrations on the phone set, someone comes on the line offering to help.

That scenario just may play out in a couple of years. Researchers at the University of Southern California are working on software that listens not just to what callers are saying but also to how they say it reports of The Financial Times of London.

The software will recognize when callers are angry and transfer them to a real live human being. Designed to detect phone rage, it is being developed under the leadership of Shrikant Narayanan, professor of electrical engineering, computer science and linguistics.

Unhappiness with automated phone systems is a growing concern on the part of companies and organizations. Software like that being developed at USC could go a long way in avoiding the kind of negativity that often results from such frustration. For companies, it could make the difference between keeping or losing a customer.

Is software that eavesdrops on what we say when we think we are speaking into an empty phone a helpful tool or an invasion of privacy? In this case, probably a helpful tool, but who's to say how such emotion gauging technology will be used. Will it be turned on when someone is trying to sell over the phone? Will it then be able to identify when you're ready to buy or what points in the sales pitch yielded the greatest interest? If this technology reaches market at an affordable price point and if it actually works (USC claims 80-85% accuracy) then it could be a boon to both small businesses and those who sell to them. However misuse could carry a stiff penalty for companies whose customers think their privacy is being abused.
Sunday, May 23, 2004
PowerBlog Review: re: invention

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

The re: invention blog is written by re: invention inc. founder Kirsten Osolind (also known as that visionary chick). The blog offers marketing and business soundbytes for women entrepreneurs.

But, as Kirsten says "Of course, progressive men are always invited to stop by for a visit."

That light flippant comment is typical of the way Kirsten serves up the content on re: invention. It's fast, witty and humorous. There's even the trademark Shoe of the Week section, featuring some of the most wicked -- and expensive -- stiletto heels around.

But don't let that humorous, light and feminine facade fool you. There's considerable substance underneath, with some great entrepreneurial and small business content.

This blog lets a lot of Kirsten's personality show through. Yet it is still a business blog all the way.

Kirsten tells us:

"re:invention's blog acts as a lead-generation and brand positioning tool (both for new clients and for re:invention associates). Our blog topics range from marketing, to business development, to breaking news. Traditional female images and motifs (stiletto shoes, butterflies, little girls, gosh darn cute nicknames) are used irreverently to slay "archaic notions of what a professional woman should or should not be." Our goal is to evoke confidence, inspire innovation, and encourage a new mode of thinking (one in which savvy women entrepreneurs can laugh at ourselves and not take things so seriously)."
One of the things I like best about re: invention is its niche focus on the women business owners. There are few really good sources out there writing exclusively about the women-owned, small business market.

But what's best of all is the way Kirsten bridges the male/female divide. Take, for instance, a recent post in which she compares the great Mary Kay, cosmetics mega-entrepreneur, with Matthew Lesko. (Matthew who, you ask? Why, it's that late night TV infomercial icon. Oh, you say.)

In the post, she points out the similarities in philosophy and approach between those two entrepreneurs, one female and one male. And Kirsten makes a good case that there are more similarities than differences.

Kirsten blogs from Chicago, Illinois, USA. re:invention has been live on the Web since July 2003.

The Power: The Power of the re: invention weblog is in its excellent coverage of a niche segment -- the women-owned, small business market. And Kirsten does it by letting her own personality show through. In the process she is an inspiration -- even a mentor -- to other businesswomen.
Saturday, May 22, 2004
What VCs REALLY Want
Here's a trend going in the wrong direction.

Venture capitalists want to see business plans that clearly define the markets for a business. And that should be pretty obvious if any entrepreneur stops and thinks about it. After all, VCs are investing big money on the expectation that a business will be a commercial success.

Yet, apparently VCs are still getting business plans that don't clearly paint a picture of how the business is going to make money -- even with all the resources available today for writing business plans. This is according to Lynn-Ann Gries, Chief Investment Officer of Jumpstart Inc.

"Ms. Gries, when asked how an entrepreneur should make his pitch to a money source, explained that the most important point is to be able to clearly explain what the market will be for the company's product.

She said that she is used to getting business plans which explain the new company's technology or product in great detail, but that's not what she wants. "I want to know exactly how you're going to generate revenue and who your customers are going to be," Ms. Gries said."
Via Steve Rucinski at the Small Business CEO blog.

My own experience squares with this view. I find that most start-ups and early-stage small businesses, especially technology businesses, have great technology and products. What they lack is the ability to market and sell on a wide basis. Ninety percent of the time, marketing and sales are the weakest areas.
Friday, May 21, 2004
Hybrid Digital/Print Versions May Be Future of Newspapers
Newspapers have had a hard time trying to figure out what to do about the Internet. They've seen the new medium cut into classified ad revenues and fear what new developments like local search may do to traditional display advertising. And as if that weren't enough, they are losing readership to Web surfing.

In the past few years, newspapers have tried making their content available on a website for free, for a user fee, only to subscribers of their print version, and a plethora of variations. Now comes an interesting concept that may hold promise.

The Dutch newspaper de Volkskrant recently introduced a program called Saturday Plus, reports the website Springwise in a recent newsletter. In the Netherlands, the Saturday paper is the big weekend edition. Those who subscribe to the new program receive a printed copy of the Saturday de Volkskrant plus online access to a full digital version on weekdays.

What makes this so intriguing is that it may be just the kind of transitional step publishing companies need to be able to take in order to reinvent their news gathering and distribution business. Publishing companies of every stripe have found it hard to move from paper and ink to digital publications. Offering a weekly hard-copy and a daily digital version lets them keep one foot on familiar terra firma while at the same time stepping onto new ground.

The weekly print edition is available to people when they have the time to sit and read. The daily digital is available in the home or the office on demand. This may be the best of both worlds. Early on, the only Web content that anyone paid for was pornography and financial advice. That is changing. By combining weekly print and daily digital editions in one subscription, newspapers will be able to ease people into paying for their content on the Internet. In fact, they may not need to increase the price to do it. Think of the money they save by not having to print and deliver individual copies.

The old line businesses that specialize in mass communication have not been quick to understand the Internet. Often they have seen it as a scary competitor to be denigrated at every opportunity. Publishers have felt compelled to have an Internet presence, but one look at most of their websites tells you just how uncomfortable they are with the digital world. If the de Volkskrant model works, it may remove one of the major roadblocks to digital newspapers. Publishers could shift their thinking from what to do about the Web to what to do on the Web.
Thursday, May 20, 2004
Entrepreneurs: Just Do It
Jeremy Zawodny cites an attitude that is crucial for entrepreneurs to adopt:
"What I like about this story, is that I could have given up at any point since there was a large problem ahead of me: a problem I had no answers to. And I see this with many free software developers, students and even in normal social situations: people stop doing things because they see a big problem ahead of them that they can not possibly conceive working around. My advise to every young programmer is to start writing code and delay addressing imaginary problems until they become real.

There's a lesson that for folks in lots of areas, not just software development. Even life in general."
Wednesday, May 19, 2004
Wireless Home Networks Are Wave of the Future
In-Stat/MDR states in its report "Digital Domicile 2004: Home Networking Hits the Big Time" that large numbers of broadband users installed home networks in the past year. The $3,495 report also forecasts a doubling in value of the equipment that will be connected to home networks in the next four years. The research firm specializing in forecasting developments and tracking trends in the semiconductor and communications industry cites the desire to share audio and video content among multiple entertainment devices as a driving force.

The report states that increasingly, new technologies are making wireless a viable alternative for home networking. It also notes that retail storefronts have become the dominant place to purchase home networks.

Personal experience backs up the In-Stat/MDR findings. Last week the wireless 802.11b router in my home bit the dust. When I bought it online three years ago, I paid $239.00. Since then, 802.11g and other faster wireless technologies have moved to the forefront. However, I still had my computers fitted out with 802.11b cards, and this "older" technology was delivering satisfactory speed. I shopped around a bit and rather than upgrade the entire system bought a new 802.11b router at my local Staples. After rebates, it cost $9.95.

I bought at a retail store, and I bought old technology that had dropped in price 96% in three years. What drove that price down: the arrival in the marketplace of higher speed technology. And by the way, I could have upgraded my entire wireless system to 802.11g for about what the original router alone had cost. I probably would have done it if it hadn't been for the $9.95 price.

When what was the dominate technology a mere three years ago drops to less that 5% of its price and the newer better alternative is half the cost of its predecessor, we are seeing a tsunami of a trend. Wireless is the trend wave of the future in home networking. Its lowering cost and increasing performance will drive the sale of entertainment hardware, spur the development of new products, and open more distributions channels.
Monday, May 17, 2004
Truckers Among Wi-Fi's Early Adopters
Truck drivers in the US and Canada are increasingly using Wi-Fi to stay connected while on the road. According to the Associated Press (AP), 70% of truck drivers own computers and two-thirds have broadband access at home. At truck stops, truckers pay for Wi-Fi by the hour or on a yearly basis for unlimited access.

Flying J offers Wi-Fi service at 180 of its Travel Plazza locations in the US and Canada, selling access for $1.95 for an hour online or $200 for a yearlong subscription. New Plymouth, Idaho-based Truckstop.net charges $250 a year for access at its locations.

An indication of the importance of the truck-stop Wi-Fi market is the recent IBM agreement with Columbia Advanced Wireless and Rocksteady Networks, which rig more than 1,000 truck stops across the U.S. with Wi-Fi. IBM Global Services will deploy the networks using IBM eServer xSeries servers running Linux.

What better group than truck drivers with their lonely hours on the road to be leaders in a new communication medium--and not for the first time. In case you don't remember, they're the people who brought us the CB radio craze back in the 1970s. Long-haul drivers cross boundaries and barriers at every turn. The fact that they are early adopters of new technologies should come as no surprise. Makes you wonder what other emerging trends are moving down our highways in the cabs of those ubiquitous semis.
SMBs To Spend More on IT
Small and midsize businesses (SMBs) will be spending on average 6.6% more on IT this year. That's according to a recent Forrester Research survey, The State of IT in the SMB Market. The 19-page report surveyed 1,002 technology decision makers at North American small and midsize business and can be purchased from Forrester for $2,999.

Ninety-five percent said they expect to replace one out of every four PCs this year. More than 68% are likely to buy their PCs direct from manufacturers with Dell leading the popularity contest. Nearly four out of every five SMBs prefer Dell PCs, although HP, IBM, and Gateway are also high on their list.

In other IT equipment areas, 74% of SMBs are expecting to buy a new server and 65% anticipate adding data storage capacity. Wireless networks are drawing SMB attention with 51% saying that they at least have a pilot program underway. SMBs are also planning to increase their Web access. Seventy percent are looking to buy added connectivity and bandwidth.

In these other areas, Dell again leads the list of preferred vendors, except in networking where Cisco is the vendor of choice for 67%. However Dell tops the list in server preference (68%) and storage (50%).

Eighty-seven percent said that they have a website with 39% of those sites hosted by outside vendors.

Four out of five SMBs plan to employ local or regional consultants, independent contractors, or VARs. E-commerce and Custom application development are the two areas most likely to require outside help.

While an increase in IT spending by SMBs is a good sign for the industry, the fact that Dell continues to enlarge its status as "the" preferred hardware provider would seem to bode ominously for other major makers. If the trend continues, they may find themselves nearly frozen out of the lucrative SMB market. On the other hand, the fact that 80% of SMBs use local or regional firms in assisting with their IT implementation, indicates a robust and competitive service provider market should continue to exist throughout North America.
Sunday, May 16, 2004
PowerBlog Review: Chat Room LIVE

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

Chat Room LIVE is written by Chris Seper, Cleveland Plain Dealer technology reporter. The blog resides on Cleveland.com, an Advance site and the online home of the Plain Dealer.

Chat Room LIVE
is rare among newspaper blogs: it's interesting, fresh, updated regularly, full of useful content, and -- addicting.

It's one of only a small handful of blogs I visit almost daily.

Chris says in his very first post that the blog was started as a way to enhance and expand the paper's coverage of technology. Since he writes in a conversational tone, it's easier to address subjects in informal ways. He's also able to address items that are newsworthy, but not significant enough for coverage in a major newspaper like the Plain Dealer.

Take, for example, his ongoing experiment with GMail, the new Google email service that adds advertisements to email messages. He offers to be his readers' "Google email guinea pig," by writing about it in the blog.

For those, like me, who are interested in GMail, but who don't have the time to try it out, Chat Room LIVE is quite useful. For instance, Chris reported in a recent post how GMail can undermine corporations' expensive email marketing efforts by placing competitors' ads in customer emails. This is an important point for any company that has spent big bucks building up an email list to grow customer loyalty:

"Many of the concerns about Gmail center on the invasion of consumer privacy. But e-marketing companies may also feel a little violated by Gmail, according to Thom Ruhe, president of the e-marketing firm Optiem LLC, which is based in Cleveland's Flats. Ruhe said putting ads in e-mail messages poses a threat to corporate e-mail marketing campaigns."
Chris plans to integrate his blog content and his regular newspaper column more deeply, using the blog to refer to column articles and vice versa. He points out this is an experiment right now.

It's an important experiment, and the results may be surprising. For instance, I read the blog regularly, but only read the column when pointed to it for longer substantive articles I'm interested in. For me, the blog has become a central filter of the newspaper's technology content.

One of the things I like best about Chat Room LIVE is the way it addresses technology from a business perspective, rather than a technical one. Over the years I've found there is a lot of unnecessary mystery surrounding technology. Some people like to make it more complicated than it needs to be. So I always look for writers who can cut through the insider lingo and razzamatazz obfuscation, and get to the heart of what technology is supposed to do in a business sense. Chat Room LIVE fits the bill.

Chris blogs from Cleveland, Ohio, USA. Chat Room LIVE has been live on the Web since December 2003.

The Power: The Power of the Chat Room LIVE weblog is in its coverage of technology from a business perspective, and the wide range of topics the blog format allows it to cover -- well beyond a formal column.
When Your Office Weighs 5 Pounds
Valdis Krebs, whose interesting study of polarized political books has been written up in the New York Times, describes his office:
"Come to Cafe Ah Roma on Friday afternoons to see how new business is done by Cleveland entrepreneurs. In fact visit any coffee house, with free WIFI, any day of the week and you will see the new office work of the 21st century!

My office? A 5lb aluminum laptop w/Bluetooth and WIFI!"
Via George at Brewed Fresh Daily.

Want to know something else interesting about today's entrepreneurs? They're not just twenty-somethings. I've been to the "Entrepreneur Friday" at Cafe Ah Roma that Valdis mentions. Most of the entrepreneurs and business people there range from thirty-something to fifty-something. Many bring with them world-class training and sophisticated business experience gained while having worked in Corporate America.

So the next time you think about an entrepreneur or small business owner in a coffee house as being a green 22-year old with limited business experiences, think again. It's a different world.

Saturday, May 15, 2004
Little Guys Thrive in Visual Effects Market
Trend Watch reports that the entertainment and broadcast media industries depend on very small businesses for their visual effects.

There are 30,000 visual effects and/or dynamics media studios in the United States developing computer-generated graphics for the entertainment and broadcast media industries.

Of these visual effects studios, over half are very small businesses:
  • Approximately 54% have fewer than 5 employees.
  • One in three (29%) are freelancers.
Of course, the businesses that purchase creations from these small studios tend to be much larger themselves. Purchasers of visual effects and dynamic media include major film production companies, theme parks, computer game companies -- to name a few.

The visual effects industry presents an example of a thriving and complex ecosystem that can exist between large and small businesses. Large entertainment and broadcast businesses are outsourcing visual effects to a host of smaller companies. And the smaller companies in turn rely upon the larger businesses to be customers of their services. Sounds like some great partnerships to me.
Thursday, May 13, 2004
Debit Cards Make Inroads in Credit Card Use
Nearly half of US households holding credit cards (48%) still use credit cards for the majority of their card-based purchases. These credit-card loyalists charge $1,000 or more each month, tend to be slightly older, and disproportionately reflect households at both the bottom and the top of the economic ladder.

However, a growing number of households do most of their shopping with debit cards rather than credit cards. These consumers now total about one-third of all households and are heavy spenders. On average, using all possible payment methods, they spend $1,000 more than the credit card loyalists. Of that additional spending, $950 is done with debit cards and less than $50 with credit cards.

Twenty percent of households use credit and debit cards interchangeably. This group is comprised of consumers who spend at the limits of their budget. While they spend more than the other two groups, they have the lowest income.

Of those who make purchases almost exclusively with credit cards, 60% say they do so because of points, rewards, or airline-miles programs. Consumers who prefer to use debit cards and those who use both types of cards interchangeably say they use debit cards to avoid going into debt.

The above data is based on March 2004 collection and comes from Forrester Research's Ultimate Consumer Panel, a single-source panel that electronically captures an array of offline and online behavior, including credit card and bank transactions and monthly statements, from a sample of 10,000 US households.

The trend to debit cards
would seem to reflect a growing concern on the part of consumers about debt. However, the fact that the those who use debt cards the most are still among the heaviest spenders, would seem to indicate fear of debt has not created major restraints on their spending. For retail businesses relying on card purchases for the bulk of their sales, understanding changing card usage is an important dynamic. For companies selling goods and services to those businesses, the trend toward debit cards is an opportunity in need of exploration.

Tuesday, May 11, 2004
Traditional R&D Hit with Double Whammy from Two Respected Sources
Is heavy investment in R&D a guarantee of bottom line success? No say Booz Allen Hamilton's Alexander Kandybin and Martin Kihn in an article posted on the Booz Allen website Strategy+Business..

Drawing conclusions that seem to fly in the face of conventional wisdom, they state, "Our recent work has shown tha...each additional dollar spent on new product development ultimately yields a lower and lower return." They say that both anecdotal and statistical evidence indicate that additional spending on product innovation does not yield a direct acceleration of sales, market share, or profits.

In support of this thesis, they point out that the ratio of new consumer products introduced in the United States to increased sales is greater than 2 to 1. Kandybin and Kihn cite their own analysis of personal-care and consumer healthcare companies as evidence that there is "...no clear correlation between R&D spending as a percentage of sales and growth in revenues or profitability." They find further support in Christoph-Friedrich von Braun's 1997 book The Innovation War, in which 30 Global 500 firms were analyzed, and almost no correlation was found between increased R&D spending and improved profitability.

Kandybin and Kihn identify four critical sets of capabilities necessary for successful innovation -- ideation, project selection, development, and commercialization. They stress how hard it is for a company to be expert in all four and note that an innovation chain is only as strong as its weakest link. They suggest outsourcing potential weak links in this innovation chain while strengthening internal capacity in those links that simply cannot be outsourced. Project selection and commercialization are identified as processes that must remain within a company, but ideation and development are seen as ripe for outsourcing.

The writers identify an innovation effectiveness curve that they believe can be determined for every company. (More on this innovation effectiveness curve) Interestingly in his just out book, Free Prize Inside, Seth Godin identifies a curve that shows a purported diminishing return for increased spending on technology and traditional interruptive marketing.

Since technology and marketing are often two strong components of any new product resulting from R&D, it would seem that Booz Allen and marketing guru Godin are arriving at similar positions.

While the Booz Allen authors and Godin are not saying exactly the same thing about R&D dollars they are addressing the area of innovation and its value chain with new insight at the same moment. Their independently arrived at conclusions make for very interesting reading. Also, Kandybin and Kihn, in their proposal for greater outsourcing of links in the R&D chain, may be pointing toward more symbiotic relationships between traditional big-firm R&D and smaller enterprises. If they are right, and if Godin's concept of what really constitutes viable innovation holds water, then small businesses can look forward to new and increased markets for their ability to innovate quickly.
Monday, May 10, 2004
Restaurants Adopting Fingerprint Scans
The axiom used to be that if you owned a restaurant, you had to be there all the time or your profits would be "eaten up."

That made the restaurant business a physically grueling one for most small business owners. A 60-, 70- or 80-hour work week was not uncommon.

Well, now, mom-and-pop restaurant owners are adopting fingerprint scanning as a way to find some time for themselves, as an article in the Akron Beacon Journal notes (as they say, read the whole thing). This emerging trend among smaller eateries not only lets restaurant owners take a break, but it promises to improve customer service, too.

Fingerprint scanning systems:
  • Cut down on buddy punching, i.e., the practice of one employee clocking in for another who isn't there.

  • Automatically enter orders into the computer system, cutting down on mistakes.

  • Speed up orders, leading to happier customers and faster table turns.

  • Require managers to physically process voids and other transactions needing a manager's approval, cutting down on fraud.
Surprisingly, it's the small, independently-owned restaurants that are adopting fingerprint scanning technology -- not the national chains. In fact, the distributors of these biometric systems are exclusively marketing to small-restaurant owners:
"Steve Pritchard, co-owner of Cash Register Sales Co., said he only markets to small mom-and-pop shops instead of the large national chains, which haven't yet embraced the new technology. But owners of the small restaurants are eager to try the new technology that helps with security, he said.

James Coffelt, owner of Business Data Systems, agreed. Small-restaurant owners are very open to the new technology because restaurants are such a labor-intensive business that have a lot of people working in them."

Yet another example of small businesses improving and even revolutionizing their operations with technology. Frequently it is larger businesses that are the first to adopt new technologies. One reason is economics. Larger businesses can better afford the investment. But when a technology's productivity value is significant and obvious, small businesses become trendsetters.
Sunday, May 09, 2004
PowerBlog Review: Sardonic Views

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

Check out Sardonic Views for a weblog with views that are, well, sardonic.

Sardonic Views is published by Chas Rich. Like me, Chas, is a transplant to Cleveland, Ohio from Western Pennsylvania.

And, as his Ryze profile indicates, Chas's views are sometimes sarcastic and cynical, and I would throw in, wry, intellectual and well-reasoned.

Chas is an attorney -- a legal researcher and writer, to be exact. Lawyers are usually very good with words, and Chas's easy ability with writing is pretty obvious.

Whatever you might be expecting, this is not your typical law blog, or blawg. Chas covers legal topics from time to time, but Sardonic Views is much broader in scope.

As the site says, it covers: "Anything from current events, campaign finance reform, sports (especially baseball), corporate/political/legal ethics, pop culture, confessions of a recovering comic book addict, and probably some overly indulgent discourses about my baby girl."

One of the things I like best about Sardonic Views is the way it dissects motives and examines them in the light of day. Motives for what, you ask? Well, any motives.

For instance, in one recent post he exposes the motives behind tax abatements that so many cities and regions use to lure businesses:

"I always find the cost of business to be the most frustrating thing when I hear people talk about wanting businesses and getting jobs in the area. Especially when it's the politicians, because they don't like to admit or mention that the taxes (and this includes the permits, regulations and inspections) are a major disincentive for even small businesses to consider going into the downtown areas. They are so willing to offer abatements and tax incentives to large companies and any developer talking about new buildings (and can make sizeable campaign contributions); but that just puts more pressure on collecting all the other taxes they can from the businesses and smaller companies that aren't so prestigious, big, or offer the big bang press releases if they opt to operate within the city itself."
Sardonic Views has been live on the Web since April 2002.

The Power: The Power of the Sardonic Views weblog is in its incisive, well thought-out opinions on everything it covers. It's a gem of a weblog -- definitely worth checking out and coming back.
Friday, May 07, 2004
We are "Blog of the Day"
Small Business Trends has been named "Blog of the Day" over at -- you guessed it -- the Blog of the Day weblog.

Thank you, Arthur!
Wharton Picks a Winning Business Plan
Eight finalists competed in the University of Pennsylvania's fourth annual Wharton Business Plan Competition last week. They presented their plans to a six-judge panel, hoping to win the $20,000 Grand Prize. Second place received $10,000 and third earned $5,000. Each of the three top teams also received $5,000 worth of legal services and $5,000 worth of accounting and strategy-consulting services.

First prize went to Infrascan, developer of a handheld device that it calls the HematoScope to detect brain bleeding. Second place was taken by CelfCure, which wants to harvest a patient's stem cells, dose them with drugs, and then put the cells back into the patient to treat neurological problems such as head and spinal-cord injuries and stroke. Third prize went to BioSpecrum, which has developed a faster means of screening proteins that have a role in diseases.

This year's competition involved almost 700 students from the University of Pennsylvania, including students in 10 of Penn's 12 professional schools. The eight finalists were chosen from a field of nearly 200 teams. Any team that included a Penn student could participate. Other finalists presented plans for businesses ranging from space tourism to renewable energy to computer animation. No dotcom company made it to the finals.

This years judges were Bill Cadogan, general partner St. Paul Venture Capital; Jack Daly, vice president Principal Investment Area of Goldman Sachs; Jim Furnivall, general partner Canaan Partners; David Kronfeld, founder an chairman JK&B Capital; John Osher, entrepreneur; David Piacquad, vice president business development Johnson & Johnson; Andy Raskin senior editor Business 2.0; Dan Skaff founder and managing partner Sienna Ventures; and Salman Ullah general manager Microsoft Corporate Strategy Group.

The Wharton Business Plan Competition is managed by the Wharton Entrepreneurial Programs and a management committee comprised of students from throughout the University of Pennsylvania.

One problem: the "and Then There Was One" link at the bottom of Wharton's web page announcing this year's results went to a run down of last year's winners at the time this was written.

There's something to be learned when one of the world's great business schools sponsors a business plan competition. Business schools are an often underused resource for those of us in the small business marketplace. Collectively, they probably have more active research underway on smaller enterprises than all the professional research firms and think tanks combined.
Thursday, May 06, 2004
Bull Market 2004
"Bull Market is filled with people who will shake things up."

That's what Seth Godin says in his latest business eBook, Bull Market 2004.

And Dave and I are thrilled to report that Small Business Trends is one of the business blogs profiled in Bull Market 2004.

Seth, an entrepreneur and bestselling author, has this to say about business blogs:

"While there are a few good blogs run by employees of large companies, most of them are the work of dedicated freelancers and consultants (with a small "c") and the best of them realize that the more they teach you, the better they'll do."
And you want to know the best part? You can download Seth's eBook for free.

As an added bonus there are excerpts in it from Seth's bestselling print book, Purple Cow, and also from his just released Free Prize Inside.

Dave has been a huge fan of Seth Godin for some time. He often repeats bits of wisdom he's picked up from Seth's books. I am more of a newcomer to Seth's work, but I have since become a fervent fan. Thank you, Seth, for being such a supporter of entrepreneurs and small businesses. And thank you, Fast Company, for co-sponsoring the ebook.
Wednesday, May 05, 2004
Roving Informationistas
The nature of employment is changing. Howard Rheingold comments on the new breed of free agent whose workplace is Starbuck's, Kinko's and the Fedex drop box:
"Now that Fedex owns Kinko's, I really think they ought to consider buying Starbucks to constitute the ultimate 21st century cybernomadic infrastructure: 24X7 coffee, wireless broadband, and handy global shipping for roving mobs of socio-knowledge workers.

Starbucks is trying to be a "third place" for untethered informationistas by furnishing couches, caffeine, and WiFi. Kinko's pitches toward the independent operators who don't have offices full of copiers, or for the traveling infoworkers who want the hardcopy ready for their meetings when they arrive. What if Starbucks starts providing printers, scanners, and copiers? Or Kinko's starts serving good coffee and puts in a few couches?"
Via Atmaspheric.

With so many small business owners and consultants working on-the-go, larger businesses may find it harder than ever to reach them with marketing messages. After all, how do you call on businesses that don't have formal offices or even land-line phones? Why, by going to them where they hang out: the Starbuck's and Kinko's. Or by establishing a physical presence adjacent to or close by the Starbuck's and Kinko's.
Tuesday, May 04, 2004
Trends are No Coincidence
The Chicago Boyz outline five trends that led to the U.S. economic boom of the past decade.

The growth in small businesses was one of them: "Many, many people risked their homes and life savings to start small businesses. Small businesses are the biggest source of jobs and economic growth. They are also often the source of innovative ideas."

And the other trends? They were:
  • Investment in information technology

  • Commitment to product quality

  • Demise of labor unions

  • Thinning of management ranks

I think it is no coincidence that information technology proliferated, labor unions lost their power, and management melted away, all at the same time that America's entrepreneurism grew. All of these trends are related. They suggest greater power by the individual. Once information became widely available and started leveling the playing field, large organizations no longer held all the cards.
Monday, May 03, 2004
On the Way Back from the Dotcom Bust
The Internet is on the rise again. Both the number of websites and Internet advertising revenues have increased substantially in recent months.

For the first time, the Internet has topped more than 50 million websites according to the May 2004 Web Server Survey issued by Netcraft, an Internet services company based in the UK. It took 21 months for the Web to expand from 30 to 40 million, but only 13 to cross the 50-million mark. May was also the sixteenth consecutive month of growth in sites, following the two-year shakeout known as the dotcom bust.

The Interactive Advertising Bureau and Pricewaterhouse Coopers have reported in the Internet Ad Revenue Report issued earlier this year that overall Internet advertising revenues rose nearly 21% in 2003 to $7.3 billion. The report cited strength in the Keyword Search category as an important contributing factor.

There can be little doubt about the Web/ecommerce revival when numbers like these are added to the much anticipated announcement of Google's coming IPO. Look for this revival to gain speed and bring venture capital back to Internet-based businesses. Also expect it to whet the appetites of business large and small for a bigger taste of the Internet.
Sunday, May 02, 2004
PowerBlog Review: Inside Real Estate Journal

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

Inside Real Estate Journal is published by John Mudd.

John is a realtor located in beautiful Tampa Bay, Florida, USA. He also goes by the name "Mr. Real Estate."

As his blog's name suggests, he publishes a real estate blog.

OK, so you never heard of a real estate blog? Well, there are several other real estate blogs around. Most of ones I've seen are written by realtors. You can find links to other real estate blogs on Inside Real Estate Journal.

I first learned about Mr. Real Estate on the group blog, Blogcritics. I periodically post articles there. Eventually I ran into Mr. Real Estate, who also posts on Blogcritics. And I came to appreciate his insights into the real estate market. From there I found his own weblog, Inside Real Estate Journal.

On Inside Real Estate Journal you get news and insights about the nationwide real estate market, mortgages, interest rates, homeownership rates, housing prices -- you name it. If it is important to the real estate market, you can find something about it on Inside Real Estate Journal.

Mr. Real Estate even discusses useful niche subjects. In one post, he discusses the concept of buying real estate with no money down. He even shows a client property that he sold with 100% financing, pointing out that a skilled realtor can help a buyer negotiate such financing.

He also knows the nuances of his subject matter as only an expert in his field would know. In one post he describes the market for luxury beach condominiums. And he distinguishes them from luxury houses, for which a very different market exists.

I like Inside Real Estate Journal because it provides bite-sized chunks of real estate market information. I can digest it quickly and easily.

And since most realtors are the quintessential small business people, I get a sense of how they think and what drives them. Being close to their markets, they have a good handle on trends. They have a good pulse on what's happening in the real estate market from ground level. I can get a clearer, more immediate picture of what's happening in real estate by reading material from those working in the industry each and every day.

Inside Real Estate Journal has been live on the Web since March 2003.

The Power: The Power of the Inside Real Estate Journal weblog is in the subject matter coverage it provides, i.e., all matters related to the real estate market. And what better way to gain on-the-ground insight into the real estate market than by reading a weblog written by a real estate professional?

Lessons from Spirit of America
Jim Hake, the entrepreneurial founder of Spirit of America, raised US$1.52 Million so far through the Internet, media, and blogs, among other sources. The money will be used to fund requests by Americans serving overseas on behalf of the countries where they are stationed. Most recently, Spirit of America raised funds to buy broadcasting equipment for several Iraqi TV stations, so they can re-open.

Much has been written about this worthy charitable effort, including this article in the Opinion Journal. Also, many blogs helped raise funds, an effort which Wizbang and other blogs drove.

From a business perspective, what I find so interesting are the entrepreneurial lessons of Spirit of America:
  • Set a Goal. It's amazing what you can do starting with not much more than a goal. Entrepreneurs are a can-do lot. Give them something to focus their efforts on, and [****] happens.

  • Find a Niche. Even in a mature saturated market, small startups can thrive. They just have to find the right niche. To do that, you have to identify a need that is not being met. That's what Spirit of America did. Spirit of America defined its mission as raising money to help Americans who are serving overseas respond to needs in the countries where they are stationed. The US seems to be overrun with non-profits, with some group or other raising money for just about every cause you can imagine. But none was serving that exact niche.

  • Excite Others. It's important to get others behind your dream. Make your dream become their dream. That's how successful entrepreneurs build a team. It's even how they attract funding. An entrepreneur can't do it alone. They need others -- partners, employees, customers, bankers, investors, and even service providers such as lawyers and accountants. Everyone wants to root for the home team. Get a banker or a customer to view your small business as "their" team, and you will have more than just a banker or a customer. You will have someone actively helping grow your small business.

  • PR is Powerful. The typical non-profit in the US uses traditional marketing, i.e., local fundraising events, direct mail and phone solicitations, etc. Spirit of America did something different. It leveraged the Internet, the media and the blogs. Spirit of America understands the power of public relations, especially the kind of grassroots support that can come from blogs. And not only is PR powerful, but it can be very low cost.

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

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