Entrepreneurship: December 2009 Archives

My friend and fellow blogger Barry Moltz has a new blog he is writing for Chicago Now website (from the Chicago Tribune) called It's a Small Business World.  He has a post at his new site on his top ten small business trends of the past decade.

As always, Barry provides brings an upbeat voice to the forces that have shaped small business.  His list includes trends related to how we work and new ways small businesses can compete.

While all of his trends are good ones, here are the top 10 small business trends from my alter ego, Professor Gloom:

1. Washington is looking to small business owners to pay for expanding government programs through higher income tax rates.
2. Washington is looking to add new taxes that will impact small businesses such as VAT and other new taxes and fees.
   
3. Regulation of business comes back in style and hits small business with its wide brush.
4. Property rights erode in the wake of the Kelo decision by the Supreme Court.
5. Policy makers loose faith in free enterprise.
6. Deficits grow and threaten to create inflation or even hyper-inflation.
7. The small business job creation engine grinds to a halt.
8. New venture creation rates drop while business failures sky rocket.
   
9. The movement toward healthcare reform threatens to burden small businesses with increasing costs and regulations.
10. Small business optimism reaches record lows.

There are two resources that I would like to recommend that provide some insight on how to prepare for what looks like another difficult year in 2010.  One has an unconventional title and the other is unconventional in almost every way you can think of, but both offer important ways to help entrepreneurs sharpen their saws. 

Due to the worries and challenges of the prolonged recession, consumers are looking things that create better value for their spending.  The first resource is a book looks at how to create better value through customer service. 

Barry Moltz and Mary Jane Grinstead's book B-A-M!: Delivering Customer Service in a Self-Service World may have an unconventional title, but it presents recipe for customer service that can help entrepreneurs differentiate their businesses.

Moltz and Grinstead fill the book with clear, concise lessons that can help entrepreneurs truly add value to their offerings through excellence in customer service.

The second resource is both a book and a blog that were developed in an unconventional way and is presented in an unconventional format. Getting business models right has never been more important than during this long and difficult recession. 

Business Model Generation is the book version of a project that helps capture the very best thinking on developing a business model that has a better chance of entering the market and staying relevant during the turbulent and dynamic times ahead.  It was co-authored collaboratively by 470 (that's right, 470) strategy practitioners from around the globe.  From their website:

Business Model Generation will teach you powerful and practical innovation techniques used today by leading companies worldwide. You will learn how to systematically understand, design, and implement a new business model -- or analyze and renovate an old one.

The book is visually different than most traditional books -- it if full of colorful graphics that help use visual learners see the processes that these experts from around the globe agreed upon as a set of processes that can help any business -- from start-up to large corporation --  develop more effective business models.

The original book is already out of stock, but their will be a new edition that will be available soon through Amazon.  You can get on their waiting list at the website.

In the meantime, one of the leaders of the project, Alexander Osterwalder, offers a lot of the pertinent information from the project at his blog called the Business Model Alchemist.   There is more than enough information there to get started in defining or redefining your business model.  But, I would still suggest you order the book when it becomes available through Amazon.

Here is my column from the weekend as it ran in the Tennessean:

A couple of recent studies shed some light on the direction of entrepreneurship in our economy for the upcoming year and beyond.

The latest study issued by the Global Entrepreneurship Monitor, recently released by Babson College, gives a very interesting snapshot of the face of today's American entrepreneurs.

The GEM study found that total entrepreneurial activity actually increased in the U.S. in 2008 from the year before.

In a different study funded by Microsoft, the findings were that most of these new entrepreneurs are either accidental ones or at least folks who had never aspired to become entrepreneurs before the current recession. The study found that about 70 percent of the respondents who are first-time entrepreneurs left their jobs to start businesses in the midst of the current recession.

Even though we know many of today's entrepreneurs came to start their ventures because of the economy, they are still seeking to make something out of opportunities they have observed rather than just starting a business to make ends meet.

The GEM study found that 87 percent of U.S. entrepreneurs started their business because of a business opportunity while only 13 percent started their business simply out of necessity or desperation. However, even though these entrepreneurs say they see opportunity, they also see an increased risk of failure.

One finding that caught me somewhat by surprise was that the typical entrepreneur is getting older. The GEM study found that baby boomers are becoming more entrepreneurial, while the millennial generation and those in Generation X are becoming less likely to start a venture.

The results indicate a marked reduction of around 9 percent in entrepreneurial activity for individuals 18 to 44, while those 45 and up had an increase in entrepreneurial activity of almost 10 percent this past year.

The study did not differentiate those of the millennial generation from those of Generation X.

My anecdotal observation from the business program at Belmont University and from other similar programs is that the millennials seem to be fairly steady in their rate of business startups. We see signs of increased entrepreneurial activities from them in the coming years. But Generation Xers seem to be hunkering down, trying to make ends meet through traditional employment.

In a finding that sent chills down my spine, the study found that the size of the ventures entrepreneurs are thinking about is changing. From 2007 to 2008, the number of jobs entrepreneurs expected to create from their startups decreased among the smaller firms.

That's not a good sign of long-term employment growth in our ailing economy.

Manufacturing is down

The GEM results indicate a continuation of the trend away from a manufacturing economy in the U.S. There are fewer new businesses in innovative, transformational industries that could create renewed long-term growth in our economy compared with other countries around the globe. This is another bad sign for the long-term economic outlook in the U.S.

Finally, in terms of financing, people are looking more and more to friends, family and other private funding to fund their new ventures. The number of people investing in someone else's business increased, as did the amount they financed. However, those numbers are countered by a precipitous decline in Small Business Administration lending.

It is the private sector -- not the government -- that is keeping the entrepreneurial engine running in our economy.