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Wednesday, June 30, 2004
Small Business in the Shadow of the Pyramids
Small business is a hot topic these days.

In the United States and other developed nations, it seems everyone wants to jump on the small business bandwagon. There is hardly a newspaper or business magazine that doesn't offer a "small business" section -- or at least cover small business articles regularly. The small business vote is being courted by politicians in much the same way the labor union vote traditionally has been sought. And official US policy supports small business and entrepreneurism, as we have noted previously here at Small Business Trends.

In other parts of the world, it is pretty much the same story -- and maybe even more pronounced. SMEs (small and medium enterprises) are being touted as the solution to faltering economies...and the lifeblood of their nations' futures.

Yet, it is not clear how much of this is mere lip service -- or whether developing nations are capable of increasing their support for SMEs.

Let's take a case in point: Egypt.

The Egyptian government announced that SMEs represent 98% of that country's private enterprises. The government espouses support for SMEs and as one report says, they are being viewed as the lifejacket for the Egyptian economy.

Nongovernmental aid agencies from other countries have initiated aid programs to help Egypt's SMEs. Predictably, the United States is in there with its USAID program, making small business assistance a priority. Italy also has provided aid.

But, according to one account, the Egyptian government does not put its money where its mouth is. Small businesses are beset by all the traditional issues: too much government regulation and bureaucracy; high taxes that inhibit growth; lack of access to expansion funding.

What's it going to take to make developing nations like Egypt more supportive of SMEs? Time and commitment. It takes a long time to bring government in line with new policies. And it takes commitment to stay the course.
Tuesday, June 29, 2004
CRM and Small Businesses
I stumbled upon this insightful discussion about CRM (customer relationship management) software for small businesses.

Check it out if you want a lesson in small businesses' attitudes toward CRM software. You will even find specific recommendations on CRM software packages for small business.

One of the most interesting aspects of the discussion is the way it illustrates how small businesses approach many purchasing decisions -- by word-of-mouth recommendations from other small businesses.
Monday, June 28, 2004
Marketing to Opinion Leaders
Colleague and friend Valdis Krebs was one of the featured speakers at last week's Supernova 2004 Conference. Valdis spoke about the growing field of social network analysis -- and, specifically, how savvy companies use it to identify opinion leaders.

You may be wondering, just what is social network analysis? Well, it is not Friendster or LinkedIn or Ryze or any of the other social networking sites.

Rather, it is all about mapping out in graphical form the connections between people or organizations in a network.

One of the most famous uses of network analysis was the mapping out of terrorists in the Al Qaeda terrorist network.

The information gleaned from these network maps can be put to numerous important purposes, including business uses.

Valdis points out that some businesses have discovered the importance of marketing to opinion leaders and use network mapping to identify those opinion leaders:
"One of the things right now with social networking... and pharmaceutical firms are that certain nodes are more respected and influential. Pharmaceutical firms want to identify who the key opinion leaders are. They don't want to sell a new drug to everyone, they want to sell to the 60 key oncologists. Who gets accessed the most for advice and information? We can figure out who the opinion leaders are."
Here is a link to an example of a network map identifying key opinion leaders in a market.

(Hat tip to Brewed Fresh Daily.)

Marketing to small businesses often involves an element of finding out who the opinion leaders are. Small businesses tend to seek out one another for opinions on everything as diverse as the best place to buy office furniture to a referral for a good attorney. Anyone marketing to small businesses should take a page out of Big Pharma's book, and look for ways to identify the opinion leaders who will influence other small business owners.
Sunday, June 27, 2004
PowerBlog Review: Project, Process & Business Improvement

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

The Project, Process & Business Improvement weblog is a great resource for businesses of any size.

As the title implies, it is all about using project management and processes to improve business.

The Project, Process & Business Improvement weblog is published by A. J. Vasaris, a management consultant, writer and speaker from Akron, Ohio, USA. A.J. uses his blog in connection with his consulting firm, Value Management Partners.

This is a great weblog for understanding how to make information technology -- and information technology professionals - work for you in business.

One of the things I like best about this blog is how practical all the posts and advice are. A.J. clearly has a lot of business and IT experience. So it would be easy for him to write at a level that is over his readers' heads. But he doesn't. He keeps everything streamlined and practical.

He also takes the mystery out of information technology implementations in business. It all seems so simple and easy to understand when A.J. explains it.

A recent weblog post illustrates what I mean. The post is about doing a "lessons learned" review after engaging in a lengthy project. A.J. says:

"Whether you call it a close-out, a lessons-learned review, or a post-mortem, what you do after completing a project is the first step in the success of all future projects. It should bring together people from all parts of the organization -- those who worked directly on the project to those responsible for budgets to transient personnel, vendors and contractors.

Many of the participants said the meeting would be a waste of time because the project was so successful, nothing to talk about. But it is a misconception thinking that lessons-learned reviews are only needed when something goes wrong. Actually the close-out process really starts at the beginning of the project when goals are established. If the goals are met, the post-mortem sets out to prove it; if the goals aren't met, then it tries to discover what went wrong."
The power behind this technique is considerable. As A.J. later points out in the same post, human beings learn through experience. That is, they learn through making mistakes and learning lessons from them. That's why a recap meeting or lessons learned review is so important.

The Power: The Power of the Project, Process & Business Improvement weblog is in its practical, hands-on advice for making IT work for business.
Saturday, June 26, 2004
Small Business Banking in Australia
The small business landscape in Australia consists of a large number of very small companies.

According to a recent report by Datamonitor, SMEs account for more than 95% of the companies in Australia. There are 624,010 SMEs. The vast majority employ fewer than 20 people:
  • Approximately 66% of SMEs employ between 1 and 4 employees.

  • Another 29% of SMEs employ between 5 and 19 people.
In Australia banks are going after the small business market and competition for this segment is expected to heat up. Why? Because just as in the United States and many other parts of the world, small businesses are growing in number and becoming a more significant force in their countries' economies. For instance, the number of SME banking deposits between 1999 - 2003 grew faster than deposits by large companies, increasing at a compound annual rate of 15.8% growing to US$94.7 Billion at the end of 2003.

A few words of explanation are in order about the terminology "SMB" and "SME," both of which you will see used here on Small Business Trends. The two acronyms mean the same thing, more or less. They simply are used in different parts of the globe. "SMB" stands for small and midsize (or sometimes medium) businesses, and typically is the term used in the United States. "SME" is an acronym for small and medium enterprises. SME is the terminology of choice in much of Europe, the U.K., Australia and Asia.
Friday, June 25, 2004
Keys to Small Business Growth
A recent Yahoo! Small Business survey, conducted by Harris Interactive, shows that many small business owners believe an online presence is important, as is leveraging the Internet.

In a survey of over 1,000 small business owners, the following activities were listed as the most beneficial to the growth of their company, in order of importance:
  • Having or establishing an online presence (35%)

  • Having or obtaining dedicated business email (30%)

  • Increasing online advertising (30%)

  • Hiring more employees (19%)

In many ways the Internet is the great equalizer. It levels the playing field for small businesses to compete with the big guys. It can make a small business look big. It is a 24/7 marketing arm. It can open up markets, including global markets, that small businesses previously could only have dreamed about. And without the Internet, some businesses -- such as etailers and eBay sellers -- would not even be in business.
Thursday, June 24, 2004
eBook Sales Hit New Highs
eBooks are increasing in popularity and have hit new highs in sales. Open eBook Forum reports that the number of eBooks sold in the first quarter of 2004 was up 46%, and revenues were up 28% year-over-year. A total of 421,955 eBooks were sold yielding $3,233,220 in revenues. A year ago the numbers were 288,440 units and $2,516,469 in revenues.

The best selling eBook for May and the third straight month was Dan Brown's The Da Vinci Code with Kevin Ryan's Van Helsing and Brown's Angels & Demons, The Da Vinci Code: Fact or Fiction coming in second and third respectively.

eBooks are books in digital format that can be downloaded to a computer or other device and read using a software program. Depending on the specific format, an eBook can be read on a computer, PDA, or dedicated reader. Their advantages include instantaneous availability -- no waiting for a hardcopy to be shipped -- and lower price. The Da Vinci Code, for instance, can be purchased in hardcopy on Amazon.com for $14.97 or as an eBook for $10.47.

The fact that eBook best sellers are same popular books that sit atop traditional best-seller lists says a lot about how the trend toward digital publishing is becoming mainstream. The sales may still be small in respect to traditional book sales, but they are growing. Look for this trend to pickup speed as better handheld devices with longer battery life reach the market. And look for business publishing to become an early adopter of eBook and other digital publishing formats.
Tuesday, June 22, 2004
Lawyers Now Into Marketing
Over at the [Non]billable Hour blawg (law blog) Matt Homann has assembled a fascinating group of posts on how lawyers should -- and should not -- market to women as potential clients. Part of his Five by Five series, featuring five insights each by five guest bloggers, it can be found starting here.

The Five by Five was contributed by some of the finest, sharpest women blogging professionals around. I was honored to be invited to contribute along with this distinguished group. Check it out -- the marketing advice is geared toward lawyers, but most points apply to just about any professional services business.

Perhaps one of the most intriguing aspects to the post is what it demonstrates about changes in the practice of law in the United States.

Not so long ago -- well within my lifetime -- lawyers were prohibited from advertising. Marketing was frowned upon, lest it somehow be confused with ambulance chasing. There were strict guidelines on what lawyers could say about themselves, their experience and their practices.

All that's changed, of course. The ban against advertising long ago bit the dust. The largest law firms now routinely hire Marketing Directors. And savvy innovative lawyers, like Matt, are paying attention to how to market their services. But as a whole, the legal profession has a lot of catching up to do, and that just may spell opportunity for enterprising marketing professionals.

Monday, June 21, 2004
The Entrepreneurization of Space
Today marked history for space travel. Planet Earth saw its very first commercial, non-governmental manned flight into space, by a craft aptly named SpaceShipOne.

OK, so it did not go very far nor last very long. But that doesn't make the flight any less momentous.

What's so special is how entrepreneurial it all was. This is not the kind of government-dominated space flight we've all been conditioned to expect for the past 40 years. This flight had all the earmarks of a startup venture.

The space craft was designed by someone other than a government employee (Burt Rutan, who built it for a reported US$20 Million, a lot of money to be sure, but a teeny-weeny fraction of what it would have cost NASA). And it was financed by private investment money (billionaire Paul Allen's). And piloted by a civilian (Michael Melvill, at 63 years old not exactly your 30-something, 1-in-10,000 superman astronaut, but someone that the average person can more easily identify with).

Oh, and it managed to leave Earth's atmosphere and gravitational field just long enough for some M&M chocolates to float (exactly the kind of do-it-yourself test you would expect pioneering entrepreneurs to use).

What's even more interesting is that the U.S. government seemed to wholeheartedly embrace the flight. A recent White House commission report recommended that NASA should limit its role in future space missions to areas where it is uniquely positioned to add value, and let private industry take on a greater role -- and shoulder more of the financial burden of the space program. NASA issued this statement lauding the flight:
"Not unlike the first U.S. and Soviet space travelers in 1961, and China's first successful spaceflight last October, these private citizens are pioneers in their own right. They are doing much to open the door to a new marketplace offering the experience of weightlessness and suborbital space flight to the public.

We congratulate the SpaceShipOne team and wish all those who may follow safe flights."
And NASA may even offer prize money for future successful space flights. And the U.S. Federal Aviation Administration even jumped into the act, granting Melvill, the pilot, the very first civilian astronaut pin.

You are seeing the first inklings of a trend -- commercial space travel and tourism. Only, don't mortgage your home just yet to open that resort on Mars or buy the first McDonald's franchise on the Moon. Today's steps were important. But it is going to be a long time before civilians routinely travel into space.

In the interim, the real small business opportunity will be to join in or start one of the ventures to build and launch a commercial spacecraft to vy for the Ansari X Prize or a NASA prize, or to provide products or support services in connection with those ventures.

Visit Carnival of the Capitalists
I am back from a great vacation in the Carolinas on the U.S. East Coast, just in time for this week's Carnival of the Capitalists. It is posted over at my friend, Wayne Hurlbert's excellent Blog Business World blog.

Check it out for links to a showcase of great articles on business topics.

Carnival of the Capitalists is a traveling cyber-event that appears each week at a new weblog. Visit the Carnival home page for additional information on how to participate.
Sunday, June 20, 2004
PowerBlog Review: Ad Blog

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

Ad Blog, is published by San Diego-based freelance advertising copywriter John Kuraoka.

Kuraoka promises "news and views about advertising, branding, marketing, and copywriting." He delivers all that and more.

Going by the Ad Blog archives, Kuraoka has had Ad Blog up since February 2003. However, it is obvious that he has been a longtime collector of tidbits, advice, concepts, and creative approaches to advertising and marketing.

What makes this blog worth visiting is the quality of information posted and the links to other of Kuraoka's projects and articles. (Be sure to visit his Tightwad Marketing Project.) Kuraoka mixes timely observations of what is happening in the advertising and marketing world with solid advice on how to take a message to an audience.

Graphically this is a pretty plain-vanilla blog, but don't be fooled by the absence of bells, whistles, and color illustrations. This is a blog produced and hosted by a pro with a lot to say, and we would all do well to listen.

There is one thing I wish he would change. All his blog entry links are made from the phrase "Advertising copywriter blog link." Ad first I thought this was a permalink. It turns out that this is how he links to his sources. Not the most intuitive approach, and by the way, permalinks would be nice.

Ad Blog ranges off topic from time to time, but as Kuraoka says, …it's my blog," and when the postings are as interesting as Kuraoka's are, why complain. A recent post that I enjoyed was the June 11 link to a series of BBC radio programs on branding. Kuraoka seems to pay particular attention to BBC articles on business and marketing.

Kuraoka promotes his freelance copywriting services throughout the blog. That's fine with me. From what I've read, he deserves to be hired as often as someone needs a strong, knowledgeable copywriter.

The Power of Ad Blog, is in the two decades of copywriting, advertising, and marketing experience Kuraoka brings to his blogging. His posts and articles add up to a primer on how to do it. Along the way he delivers a few chuckles and gets you shaking your head in astonishment over what seemingly smart people sometimes do.

Friday, June 18, 2004
Software Consolidation Is on Horizon
Last year Oracle launched a hostile takeover attempt of PeopleSoft. Last week both Microsoft and Sap announced that preliminary talks about a potential merger had been discontinued. Microsoft had approached Germany's SAP, which has a reported 54%-share of the global enterprise-software market. Microsoft has an 11% share.

When giants of the software industry such as Oracle, PeopleSoft, Microsoft, and SAP begin talking merger it's big news even when those mergers fail. Where there's talk, there's usually action—sooner or later. And many industry experts say the software business is ripe for a consolidation trend.

A merger between companies such as Microsoft and SAP would bring together a leader in selling to the largest companies (SAP) and a company (Microsoft) that has enjoyed wide penetration, particularly in smaller and midsize business markets. There are those who believe that companies such as SAP will have to merge if they are to survive. Others see little advantage to SAP combining with a Microsoft. At this point, it is pretty much pick the expert you want to agree with.

Part of what may drive the software industry to consolidation is the strengthening competition from open-source solutions. What was once seen as a crazy bunch of programmers with a utopian notion of giving away their software has gone mainstream. IBM and Apple have signed on to the open-source movement. However, open-source still has not grown with the speed to make it an immediate threat to companies such as SAP.

Time will tell how much and how fast consolidation comes to the software industry, but smaller enterprises will likely see their software choices change in the not-to-distant future. If a Microsoft-SAP or some similar merger takes place, it is likely larger-enterprise software will become more cost attractive to smaller companies. There is also the possibility that the number of software applications offered by traditional vendors to the small-business market will shrink. And then there is open-source. Whatever the outcome, change is on its way.
Wednesday, June 16, 2004
Price & Quality Count in Retail
The trend of bricks-and-mortar stores doing a better job of earning repeat business than online retailers continues, and existing customer-loyalty programs have a relatively small impact. A survey of 5,000 consumers conducted by Forrester Research reinforced these trends and the more obvious ones that product quality and price were the most important factors in determining customer loyalty.

Product quality was ranked either important or extremely important by 81% of the respondents, and 79% said the same about price. In fact, 40% said price was the single most important loyalty factor, while only 22% gave loyalty programs credit for returning them to a retailer. An even smaller number cited a retailer knowing who they were as an important influence on loyalty.

The trend of consumer reliance on price as a determiner of loyalty can be seen in the fact that Costco and Sam's Club were two of the top three ranking retailers. To be sure, there are other factors influencing the high ranking of these membership discount clubs. But what they promise above all else is low price and high quality.

Online giant EBay fell into the middle of Forrester's list, as did Amazon.com, with 45.6% of its customers indicating that they were loyal. Large multi-product online retailers have a harder time consistently pleasing consumers on the two key issues of price and quality. The sheer number and breadth of their offerings can work against them, making it hard to deliver the lowest prices and highest quality for all their many products.

Online retailers also suffered from a negative customer loyalty trend not seen in the bricks-and-mortar environment. Consumers who have a negative experience with an online retailer are less likely to purchase through other online channels. Bricks-and-mortar stores stand on their own. A bad experience at Wal-Mart is unlikely to make a consumer shy away from Target.

Price and quality are the most important points in determining customer loyalty...duh!

The real news here is the poor performance of existing customer-loyalty programs in the retail environment. The real danger is that smaller enterprises, reading how low the return has been for larger retailers who have invested in expensive customer loyalty programs, may throw the baby out with the bath water.

What this $249 Forrester report tells us is that there is no substitute for low price and high quality, not that customer-loyality programs won't work. I remain convinced that good customer loyalty programs will work and work especially well for smaller enterprises. However, customer-loyalty programs come after you have delivered the best price-quality equation for your business. Savvy retailers will get those two big factors under control and then turn to customer-loyalty programs.

Tuesday, June 15, 2004
Carnival of the Capitalists Is Up
After a bit of delay due to a missing host, this week's Carnival of the Capitalists is posted over at Accidental Verbosity.

Check it out for links to a showcase of great articles on business topics.

Carnival of the Capitalists is a traveling cyber-event that appears each week at a new weblog. Visit the Carnival home page for additional information.
Monday, June 14, 2004
Small Business Optimism Sags But Stays High
Optimism among U.S. small-business owners sagged slightly in May, but remained up beat according to the National Federation of Independent Business (NFIB). The Small Business Optimism Index slipped a fraction of a point to 104.5, but for the past 14 months the Index has average of 103.4, an unprecedented run in the 17-year history of the Index.

Fears of worsening inflation are credited as a major factor for the pause. In recent years the number of small-business owners citing inflation as their most pressing problem had been between 1% and 2%. Now that number has reached 6% -- higher, but still a far cry from the record 41% of the early 1970s. Nevertheless, the increase is worrying for U.S. small business owners.

NFIB reported that small businesses planning to raise prices are now double what they were a year ago. Thirty percent indicated an intention to increase prices. Price hikes are more prevalent now than since the late 1980s. One-quarter of owners reported higher selling prices in May -- up three points from April. A net 59% of agriculture firms, 33% of those in construction, and 29% of retailers said they raised prices last month.

Inflation is on the rise. Everyone expects interest rates to kick upward soon. The question is how much and how soon. It's been my experience that a little inflation tends to work to the advantage of small businesses. A heating economy spurs both sales and investment on the part of small business owners. But a little inflation can go a long way. The trick is to keep it to manageable proportions. As the economy heats up, those selling to small businesses would be wise to quickly ramp up their efforts.
Sunday, June 13, 2004
PowerBlog Review: Management Professor Notes

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

The Management Professor Notes weblog is published by Sandy Piderit.

Want to guess what Sandy does for a living?

She is a management professor, at the Weatherhead School of Management at Case Western Reserve University. As she notes on her blog, she works in the Frank Gehry-designed Peter B. Lewis Building on the Case campus in Cleveland, Ohio, USA. (Watch the video of this astounding building here).

Sandy teaches organizational behavior at Weatherhead to undergraduate, MBA and PhD level students.

Sandy started her blog as a way "to share information with current and former students and as a way for former students to keep me up to date about what they're doing." In her blog she often speaks directly to her students, sometimes about course assignments, sometimes about University affairs, sometimes about business and life.

Using her blog as a teaching tool is a worthy objective in its own right. I find the teaching aspect unique and quite interesting in its own right, even though I am not one of Sandy's students.

But there's far more to this blog than a teaching tool.

One of the things I like best about it is the way it pushes the envelope of new ideas for balancing work and life -- and new ideas for shaping how we work. These are issues of great importance to entrepreneurs, small businesses and large corporations. Take, for instance, a recent post in which Sandy speaks about the universality of the life/work balance issue, but points out how people just don't seem to connect their own circumstances with the issue:

I'm so frustrated with the response I get when I say that I'm interested in talking about work-family issues. The young and mid-career women with children are interested, but it's rare for anyone else to stay engaged with me for long. And I want to do more than address people in the same life situation as me -- I also want to do something that's relevant for and helpful to baby boomers who are taking care of their aging parents, and seasoned employees who want to gradually shift into a new career (rather than quitting their full-time job immediately and then struggling to build a new career), and artists who want to work more than 40 hours a week for 8 months, and then not at all for 4.... but those people don't hear themselves when I talk about work-family or work-life issues.
I first learned about Management Professor Notes sometime last year. I started visiting regularly and came to appreciate Sandy's insights and her very personalized way of speaking directly to her readers.

The Power: The Power of the Management Professor Notes weblog is in the unique way it is being used as a teaching tool for business students (both those in Sandy's classes and those of us, like me, who are lifelong students). And in the way it confronts and addresses life/work issues that affect us all, including small business owners and entrepreneurs -- all in a very personalized way, speaking directly to readers.
Friday, June 11, 2004
Self-Checkout Goes Mass Market
Self-service shopping has gone mainstream in supermarkets, drug stores, mass merchants and home improvement centers. Self-checkout systems will generate transactions worth $70 billion in 2004, according to a new study from IHL Consulting Group. The 2004 North American Self-Checkout Systems Market Study also forecasts that the value of these transactions will increase to over $330 billion by 2007 as many more systems are deployed in the next few years.

In stores currently using self-checkout systems, as much as 40 percent of the total number of transactions now go through the self-checkout, allowing retailers to provide more customer assistance within the aisles to help customer find products. Home Depot now has more than 3,200 self-checkout lanes installed.

The key technology players in self-checkout are NCR, IBM and Fujitsu Transaction Solutions. NCR currently dominates the market but IBM and Fujitsu have recently entered the fray through key acquisitions, bringing with them significant point-of-sale success.

A synopsis of this $1,695 report on retail self-checkout can be found on IHL's website.

Self-checkout systems still appear to frustrate many traditional shoppers, but grocery store shopping trends show a change in pattern that makes self-checkout likely to gain more rapid acceptance there. Instead of making a weekly stop to buy all the needed groceries, shoppers are visiting the supermarket more frequently and making fewer purchases. This trend should continue in younger shoppers and in the baby-boomer generation as it retires and has more time on its hands.

Storeowners like the labor savings inherent in self-checkout. However they probably should invest in a greater marketing and education effort to encourage use. Look for self-checkout to migrate both up and down market as people begin to use it in the major chains. Once it hits its tipping point acceptance should become near universal. Don't forget, there was a time when people didn't want to use automated tellers.

Thursday, June 10, 2004
Reagan and Small Business
Here at Small Business Trends we avoid taking political positions. So you won't find us debating John Kerry's position on small business policy, for instance.

But, as a matter of business insight, I think it is fair game to include the following quotes of former U.S. President Ronald Reagan as he described the challenges faced by small businesses and entrepreneurs:
Reagan noted in a June 1983 speech: "We hear so much about the greed of business. Well, frankly, I'd like to hear a little more about the courage, generosity, and creativity of business. I'd like to hear it pointed out that entrepreneurs don't have guaranteed annual incomes. Before they can turn a profit, they must anticipate and deliver what consumers want.... The truth is, before entrepreneurs can take, they must give."

Reagan also was famous for using humor to make his points. In an April 1982 speech before the U.S. Chamber of Commerce, he observed: "Winston Churchill said that some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few see it as the sturdy horse pulling the wagon. Well, this administration believes the workers, savers, investors, and the entrepreneurs of America have been milked and shot at long enough."

Even today, two decades later, President Reagan's description of small businesses and entrepreneurs remains as accurate as ever: (1) No guaranteed income. (2) Must anticipate their customers' needs. (3) Must deliver before they reap the rewards. (4) Drivers of the economy.
Wednesday, June 09, 2004
Nevada: Small Business Opportunity
Nevada was recently rated the number one state for a favorable business climate for entrepreneurs and small businesses.

Every year the National Policy Research Council publishes a report called America's Best Cities and States: The Annual Gold Guide to Leading Rankings. The most recent ranking had Nevada as the leading place in the United States for small business.

Last week I had breakfast with an investor who is establishing a company to invest in residential real estate located in a place he claims is the hottest growing place in the nation for residential real estate. It consists of a single zip code. The zip code is a suburb of Las Vegas, Nevada.
Tuesday, June 08, 2004
Deadwood: Business Lessons in the Old West
David Tufte over at Voluntary Xchange continues his insightful chronicle about the economics and business lessons in the HBO series Deadwood.

If you live outside the United States or haven't seen the series, you need to know that Deadwood is a Western. That fact alone is notable. When was the last time a Western TV series was made in the U.S.? Westerns are not exactly in vogue these days, but perhaps Deadwood is the start of a trend and we will see more of them.

I find the series fascinating because of all the business lessons in it. David Tufte is chronicling those lessons, including this subplot in the most recent episode:
"The effects of uncertainty on a small business are shown as Joni Stubbs notes that her plans for opening a new brothel have been on hold due to unclear funding."

Seems like even in the old West women had trouble securing venture funding.
Monday, June 07, 2004
The IRS Magnet
The smaller the business, the more likely it is to be audited by the U.S. Internal Revenue Service. That's according to the most recent edition of the Kiplinger Letter (requires subscription):
"Small proprietorships are the most likely to hear from the IRS. Questionable deductions by many firms with gross receipts under $25,000 hike their audit rate to 3%, triple the rate for all firms.

Self-employeds also get examined more often than most taxpayers. Their 1.9% audit rate is three times the rate for other individuals."
But then there is this report by bcentral.com, suggesting that small businesses have never had it so good with the IRS:
"Audit rates for small businesses plummeted in the 1990s. In 1997, the IRS audited more than 4% of all sole proprietors with total gross revenues of at least $100,000; by 1999 that figure was down around 2.4%. The audit rate for sole proprietors with total gross receipts of $25,000 to $99,999 fell to 1.3%.

Quite simply, the audit rate has pretty much reached the point where there is nowhere to go but up."

I'm not sure how to reconcile these two reports. Perhaps they are perfectly consistent, inasmuch as they focus on different size levels within the small business segment.

But there is one trend everyone seems to agree upon: in the future, the IRS will be conducting more audits on American small businesses. The IRS has restructured and is hiring 2,200 new auditors in part to focus on enforcement efforts with small business. Somehow I am not surprised, given the significant role that small business is playing in driving the U.S. economy.

Visit Carnival of the Capitalists
This week's Carnival of the Capitalists is posted over at The Window Manager.

Check it out for links to a showcase of great articles on business topics.

Carnival of the Capitalists is a traveling cyber-event that appears each week at a new weblog. Visit the Carnival home page for additional information.
Sunday, June 06, 2004
PowerBlog Review: Duct Tape Marketing

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

The Duct Tape Marketing weblog is a great resource for small businesses.

And don't you just love the name? It is so appropriate for a weblog targeted toward small businesses. It signifies -- at least to me -- the epitome of being a small business person, i.e., having to use whatever material is at hand to get the job done.

I mean, think about it. How many uses can you make of duct tape? How frequently do you use it to do an emergency patch job -- a patch job that works just fine, by the way? That exactly captures the mentality of being in a small business, where you make do with the resources available -- and get along just fine.

The Duct Tape Marketing weblog is published by John Jantsch, a marketing coach, consultant, speaker, writer, and author located in Kansas City, Missouri, USA.

According to his companion website, johnjantsch.com, John has been advising small businesses for over 15 years. He uses his weblog as a place to provide fresh content in the form of advice and how-to's for small businesses.

What I like best about this blog is the way the advice is extremely practical and hands-on. While John clearly demonstrates a grasp of marketing theory, he knows that small businesses need practical guidance delivered in easily digestible bites. After all, the person responsible for marketing in a small business probably wears several hats and doesn't have a lot of spare time -- he or she wants to cut to the chase quickly.

He also gears his advice toward a small business's size. There's no sense talking about marketing advice that the average small business can't implement because it is too complicated, too expensive or too out-of-touch with the business's way of doing business.

A recent weblog post illustrates what I mean about practical advice geared specifically for small business. The post is all about using photos in testimonials. John says:

"Instead of simply listing your clients and telling about the results you have delivered, take a photo of every one of your clients using your product, meeting with you, doing something goofy involving your name brand.

The power behind this technique is incredible. Suddenly, you can offer tons of proof that people are happy with your company."
The Duct Tape Marketing blog covers the entire range of marketing for small businesses. There are other weblogs that cover one slice of marketing: online marketing, search engine marketing, marketing communications, branding, etc. But Duct Tape Marketing covers it all.

The Power: The Power of the Duct Tape Marketing weblog is in its practical, hands-on marketing advice targeted specifically for small businesses. And the way it provides a full-range of marketing advice for a small business. For any small business, it is worth reading regularly.
Saturday, June 05, 2004
Microsoft's SMB Push
Microsoft is serious about the small and midsize business (SMB) market. It is so serious that Steve Ballmer, Microsoft's CEO, will be directly overseeing the Business Solutions unit that makes software for the SMB market, following a shake-up there.

It seems that the unit has disappointed Microsoft's management. The unit grew revenue 4% from a year earlier. This is right in line with the overall SMB market growth in software spending, which grew 4.1% in 2003. But apparently Microsoft expects its business units to exceed the market rate of growth.

Hat tip to Chris Seper at Chat Room Live.

The software market for small and midsize businesses is growing faster at 4.1% than the market as a whole which grew only 0.7% in 2003, according to research firm IDC. Which explains Microsoft's (and every other IT provider's) emphasis on small business -- that's where the growth potential will be in the near future.
Friday, June 04, 2004
E-Retail & Cross-Channel Retailing Grow
Year-over-year ecommerce retail sales rose 28.1% in the first quarter of 2004 to $15.52 billion according to the Department of Commerce. That increase was the second greatest quarterly, year-over-year increase since Q1 of 2001. Ecommerce sales were 1.8% of total retail sales in 2003.

Relying on variety of sources, The e-Tailing Group, reports that 51% of consumers are now regular online shoppers, making purchases across an average of eight categories. On a related issue Forrester states in a $249-report that 11% of online consumers now buy on line and then pickup in stores.

It's a statement of the obvious, but look for online sales to continue to grow as a percentage of overall retail sales, and look for that growth to accelerate. What might not be quite so obvious is the trend toward online shopping and in-store pickup. This cross-channel shopping will lead to more cross-channel merchandising. Companies like Staples and Barnes & Noble have been leaders in using the Web to support in-store merchandising. The result has been increased store traffic and larger sales. Smaller businesses will begin to take advantage of cross-channel merchandising as their technological sophistication and acceptance grow, creating an opportunity for consultants and service firms in this area.
Knitting Shop Boom
Knitting is officially cool. Movie stars like Cameron Diaz and Nicole Kidman are said to knit between scenes on the movie set. Knitting clubs are popping up on college campuses. Teenagers are taking knitting classes. And knitters no longer limit themselves to sweaters and socks -- they actually knit works of art.

There are more knitters, they are knitting more frequently, and they are spending more per knitting project. Today, 38 million Americans knit. And the nature of knitting has changed, going upscale. It's not your grandma's ball of yarn anymore. Now it's a ball of hand-dyed, natural-fiber, luxury yarn that can go for as much as US$50.

All this has meant a business boom for knitting shops. The traditional sleepy yarn shop run by Mom and Pop (or, typically, just Mom) is looking different these days. Yarn shops are being expanded as the owners ride the trend. Several cities have knitting cafes, melding together the coffeehouse and the knitting shop.

In California, the center of this hot trend, knitting shops that once pulled in US$100,000 now bring in ten times that.

An interesting aspect to this trend is how the Internet and even blogs have helped fuel the boom in knitting. Like many other hands-on hobbies, the Internet plays an important role as an information source, an extension of community, and a source of supplies. A quick Google search reveals dozens -- possibly hundreds -- of sites selling yarn and knitting supplies online. And online forums and blogs re-create online the community gathering place that the yarn store serves in the physical world. The knitting blogs even manage to duplicate the homey feel of a small local yarn shop -- for instance, the Morcatknits blog.
Thursday, June 03, 2004
Carnival of the Vanities
Carnival of the Vanities is up over at Read My Lips. Dave's post on Phone Rage is entered in this week's Vanities.

Vanities is similar to Carnival of the Capitalists, except posts can be on any topic, not just business.

There are a number of these traveling Carnival shows and link roundups on the blogs now. (It's a trend, we say.) You can find information about them over at the Memeblog.
Wednesday, June 02, 2004
Donald Trump, Trend Tracker
Entrepreneur magazine suggests that spotting trends is a path to business success. Part of the article outlines mogul Donald Trump's trend spotting tips. Trump, who has built a business on trends (which partly explains his involvement in The Apprentice reality TV trend), offers these tips for entrepreneurs eager to capitalize on what's next:

  • Do Your Research: read magazines and study pop culture for signs of what's next.

  • Extend a Trend: try a variation on an existing trend.

  • Be a Contrarian: sometimes it pays to go against the trend, because trends change over time.

  • Be Flexible: you never know when a trend is about to stop, and you need to be able to stop manufacturing production when the trend stops.

  • Be First: if you're too cautious, you may be too late.

  • Follow Your Gut: follow your instinct, even if friends and family don't understand your vision.

And don't miss the list of trend websites at the end of the Entrepreneur magazine article. Dave and I were pleasantly surprised to find our own site listed as one of ten online trends resources. Here's how Entrepreneur magazine listed us: "Small Business Trends is a business trend-tracking blog for entrepreneurs and small and mid-sized businesses that's updated even on the weekends."
Tuesday, June 01, 2004
Small Business Quarterly Indicators
The U.S. Small Business Administration (SBA) has started an interesting new feature that we'll be watching closely here at Small Business Trends, called "Quarterly Indicators." The Quarterly Indicators are a compilation of economic trends likely to impact small firms.

What do these Indicators suggest for the first quarter of 2004? Here are a few highlights, mostly all positive:
  • Manufacturing production, which had been weak, is up. Capital spending is also up, meaning small businesses are buying equipment and making other major purchases.

  • Proprietor's income has increased by 10% over the past year. Corporate profits increased a healthy 31.4% over a year's time.

  • And it looks like the ranks of incorporated self-employed are up, now at 5.2 million compared with an average of 4.4 million over the past 3 years.

Oddly, despite the positive economic growth and improvement, small business sentiment has dipped a bit since December 2003. The SBA speculates that this dip may be due to small business owners' concern over slow jobs growth in the US economy as a whole. But overall, sentiment is still higher than in the past 5 years. You can find the Quarterly Indicators in the most recent edition of the SBA newsletter.
More news... more trends... more insight...

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