There are no headlines when a restaurant cuts ten people or the local print shop cuts five. If fees fall at a doctor's office, the receptionist may have to leave.
By most estimates, small businesses, those with under 100 workers, employ 50% of the American workforce. While the announcements of banks and car companies cutting tens of thousand of employees make the front page, the economy may be hurting more by the declining revenue and credit crisis at firms no one has ever heard of.
According toReuters, "Wall Street's pain is rippling through U.S. small businesses, as bankers who once pulled in million-dollar bonuses lose their jobs and cut back spending on everything from parties to home improvements."
This may point to the fact that the bailout is being aimed in the wrong direction. While $700 billion may help large financial firms and may even be used to save tens of thousands of people from home foreclosures, there is nothing concrete being done by the federal government to help the small business owner.
What could be done? For starters, The Small Business Administration, a federal agency, should be assigned some of the $700 billion Paulson package. Credit-worthy companies should have access to that in the form of loans. Doing this would require far more people than the SBA has, so it would need to be done through the banking system. Banks should be given financial incentives to lend money provided by the fund.
The government is overlooking one of the most critical parts of the economy. In doing so, it is almost certainly helping unemployment push above 7%.
It's been "shock and awe" for the financial system over the past few months. Even seemingly invincible companies like GE (NYSE: GE) and Goldman Sachs (NYSE: GS) have not been immune. As a result, there has been a tremendous deflation of equity values across the globe.
Unfortunately, the game has also changed for your business. It's much more difficult to get debt or equity financing, and it may even be impossible, at least for now. Customers are having difficulties paying invoices. And, as for finding new customers, this is particularly tough.
So, in light of everything, what is the value of your business? Well, keep in mind that, for the most part, the value of a business is dependent on its cash flow. So long as this remains strong and long-lasting, you are likely to weather the storm. If anything, you could be in a nice position to capitalize on the situation, such as by buying companies, hiring employees and in making new investments.
But this is the rare exception. In fact, even some of the growth darlings are having issues. For example, the data service, VCExperts.com, has recently launched a new offering – called the Valuation Ticker – that provides valuations of venture-backed companies. Essentially, the system compares private companies to public indexes, such as the NASDAQ and S&P 500. Here's a look at a sample, with valuations over the last ten months:
Over the past couple years, major players like Google (NASDAQ: GOOG) and Amazon.com (NASDAQ: AMZN) have invested in the so-called "cloud." Basically, they are leveraging their huge infrastructures to provision services – like web hosting, storage and so on – to other companies. Actually, I know many startups that have such deals (helping to cut costs and get to market faster).
But what if you don't want to outsource this? Well, there is an alternative: Parascale. The company sells cloud software that you can install on your own servers.
As an indication of its power, Parascale has raised $11.37 million in a Series A round. The investors include Charles River Ventures and Menlo Ventures (both firms have extensive backgrounds in the storage area).
Parascale got its start four years ago. Interestingly enough, it hasn't been an easy journey. The original team had to get second mortgages and lines of credit to support operations.
But now, it looks like the timing is right. "With the explosion of digital content," said Sajai Krishnan, who is the CEO of Parascale CEO, "there is a need for more efficient storage systems."
The Parascale Cloud Storage (PCS) is built on widely followed standards as well as Linux servers. This makes it easier for customers to adapt the technology to their needs (which is not an easy thing to do with Google and Amazon.com).
No doubt, the storage marketplace has gone through several major shifts over the past twenty years. So, with cloud storage, it looks like we may be seeing another shift – and Parascale will now have the resources to become a leader in the space.
Hewlett-Packard Co. (NYSE: HPQ) certainly has a major footprint in the small business space with such things as PCs, servers and, of course, printers.
But HP is expanding its offerings. For example, last year the company purchased Logoworks and is now putting out some useful eBooks.
One is called the 9 Steps to Outstanding Market Success.
No doubt, it is colorful with many useful checklists, tips, examples and worksheets. Some of the topics include: social media, branding, search engine marketing, online marketing and so on. Ultimately, it's a good way to spark ideas to enhance your business.
Every month HP will release a new chapter (so far, it's on chapter five). The last chapter will be on October 15.
All in all, its helpful information – and not too overwhelming. And you can check it out at the small biz section of HP.
Google, Inc. (NASDAQ: GOOG) has risen from the ranks of startup to one of the most powerful advertising forces on the planet in about a decade. Although it maintains a corporate mantra of "don't be evil," the company's absolute power over the world of internet advertising borders on on the perception of monopoly just because it has the best product in all the right places. Notice I used the word "perception" there. Is Google a monopoly because it simply has the best product that customers apparently use and love? Of course not.
Similar to how Wal-Mart Stores, Inc. (NYSE: WMT) rose to power, Google got there by providing something the competitors didn't: the best product presented in the best way that was the most useful for the consumer. Wal-Mart opened more stores and offered the lowest prices, and consumers noticed and made it the largest retailer in the world as a result. Google is the largest internet advertiser in the world using the same means in a way, but like Wal-Mart, it has competitors (albeit, with much smaller market shares).
But when a company controls so much of the ad market in the online space, smaller advertisers and businesses that want to break onto the scene and fight with larger competitors that may be slower and tuned out will have to use Google at some point. To grow, one simply cannot do business the way it was done in the past. Just like the small and scrappy manufacturer trying to get into Wal-Mart but can't due to the larger companies offering the same widgets at much lower prices, this effect works inside Google too. Advertisers bid on keywords and if they can remain relevant to the consumer within Google's search results, they can out-spend smaller advertisers day in and day out. Are these market forces some kind of monopolistic behavior? Google doesn't control this -- it is simply giving the most relevant information to the customer. Still, one can see the spot Google could be in very shortly, if it isn't already there.
Lately, the headlines have been scary. Unemployment is increasing. There are concerns from the presidential candidates. Real estate values are sagging and foreclosures are skyrocketing. And, premier companies – like Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) – have raised billions of dollars to deal with heavy losses.
So, if the economy is slowing down, how can your business deal with things?
Let's take a look:
Deal with hidden costs: When looking at expense items, some might seem small. But it's often the case that these items – in aggregate – can turn into a big deal.
According to Tom Sharples, president of Qorvus Systems: "Typical small- or medium-sized businesses that have been around for a few years can find duplicative costs: unused cell-phone contracts that continue to rack up charges, subscriptions to services associated with long-departed employees and often all sorts of legacy junk that no one even remembers ordering, but that you're still paying for every month."
As a business owner, you are certainly an expert. You keep up with industry trends, you understand the benefits of your products and services, and you have creative ideas.
So why not provide some of your wisdom to your customers – through an email newsletter?
Actually, with web services like Vertical Response and Constant Contact, it's fairly easy to set one up. But before getting started, let's take a look at some things that will help your efforts:
Content Is King: Yes, it's a cliché. Then again, it seems that newsletter writers spend lots of time on the design of the email, not the content. Don't fall into this trap. Instead, try to come up with content that your readers can't wait to read. Some ideas:
Tips
Recent experiences
Innovative uses of your product
Profiles of customer successes
Industry statistics
How-to pieces
Oh, and make sure you spell-check your email and have someone provide some editing.
As you gear up your business for 2008, I'm sure you have lots of good ideas. But there is something that is often ignored – getting organized. And with the explosion of email and digital media, being organized is getting even tougher.
Ricci's core filing system is called F.A.I.T.H, which involves:
File It: If something requires filing, then file it now.
Act: Have an action file for your recurring tasks.
In Progress: This is a file for things that don't fit in a category. Examples: invitation to an event, plane tickets, directions to a client location, or even a birthday card.
Toss: Don't be a pack rack.
Hand Off: Maybe something will be useful for a colleague?
"Everyone should set aside time once a month to sort and slim the files," said Ricci. "Put the date in your planner for one hour on the last Friday of every month."
It's easy for me to preach "shop local" from my blogger's perch in Manhattan. While many companies are headquartered here in New York, boutiques, bodegas and mom & pop shops rule this roost. Aside from Starbucks (NASDAQ: SBUX) -- c'mon, they're ubiquitous -- and maybe Rite Aid (NYSE: RAD), I'd have to hike a mile or so to reach the nearest publicly traded business.
But committing my Christmas dollars to local businesses is a tradition I picked up from my ex back in North Carolina, and I think I'm all the better for it -- and all the better served.
For starters, you're far more likely to be wowed with the service from a small shop. At a local business, often you deal directly with the shop owners, who have an undeniable stake in your transaction. Because their equity and livelihood depend upon the repeat business of customers like yourself, you're worth more to the small business owner than the customer queued up at a crowded cash register at Circuit City (NYSE: CC) or Sears (NASDAQ: SHLD), and that value is evident in the transaction.
If you take a look at the stories of great entrepreneurs – such as Wal-Mart (NYSE: WMT)'s Sam Walton, Microsoft (NASDAQ: MSFT)'s Bill Gates, and Howard Schultz of Starbucks (NASDAQ: SBUX) – you will see that they had the help of mentors and advisors.
After all, being an entrepreneur can be lonely, stressful and challenging. And it's often difficult to get solid advice.
So where do you find mentors? Ben recommends lots of networking. In fact, he considers the Small Business Administration's SCORE (Service Corps of Retired Executives) a great resource (and it's free).
But be wary. Make sure you do lots of background research on the people you like. You might realize that they really aren't a good fit.
Being from L.A., I've had to deal with earthquakes and fire (no, it's not always sunshine here). And, of course, I saw the devastation of the recent fires.
But what about some of the businesses that need to rebuild? Could they have prepared for the fires?
Well, I recently interviewed Jon Toigo, a disaster recovery expert at Toigo Partners International. Over the past 20 years, he has put together nearly 100 disaster recovery plans. His clients include Microsoft (NASDAQ: MSFT), Cisco Systems (NASDAQ: CSCO), and Hewlett-Packard (NYSE: HPQ). Also, Toigo has a partnership with Office Depot to help businesses deal with disaster preparedness.
"The bottom line in disaster preparedness is to protect your most irreplaceable assets – your people and your data," said Toigo.
Amazon.com (NASDAQ: AMZN) took the curtains off a new business assistance offering this week, as the e-tailer's new "All Business Center" will be targeted at helping entrepreneurs find the products they need to service their small- and medium-sized businesses. Basically, this is a sub-brand of Amazon that I see competing with the likes of Staples (NASDAQ: SPLS) and Best Buy (NYSE: BBY)'s "Best Buy for Business" division.
Amazon's new offering will include quick and easy access to small- and medium-business products. Try these categories on for size: software, computers, printers, books and office products. While this is not exactly innovative, it's a great targeting technique for the largest internet retailer as it diversifies its customer base in many areas outside the standard consumer. In addition to products, Amazon's business services will also be pitched -- offerings like Amazon Web Services, Fulfillment by Amazon and Amazon Corporate Accounts will also be inserted into its "All Business Center."
Amazon knows that launching a small business and taking that first step as an entrepreneur can be exhilarating yet dangerous, and wants to give these customers the tools to manage inventory, unexpected growth and initial low sales, according to Amazon VP Greg Hart. Well, that's great -- but offering products like office superstores have done for years won't catch customers and hold their attention. What will are Amazon's small business customer forums, idea exchanges and real-time communication channels that have already proved workable with standard consumers. Communication is still key.
Because of continued troubles at Sprint (NYSE: S), the company's CEO, Gary Forsee, essentially got the boot. In fact, over the years, the CEO spot has been pretty tough – as seen with companies like Disney (NYSE: DIS), Boeing (NYSE: BA), and Hewlett-Packard (NYSE: HPQ).
So if big companies have trouble, what about small ones? Unfortunately, hiring a CEO is extremely difficult for any company.
"For an early stage company, the wrong CEO can be costly," said Gordon Gould, the founder and CEO of ThisNext. "Divorcing the executive can mean wasted time, money, momentum and possibly the company itself."
So, if you have doubts about a candidate, it's probably better to wait. "To get the right CEO, it takes time," said Dipanshu Sharma, the founder and CTO of V-ENABLE. "So allocate at least three to four months for the process." Actually, his company recently hired a new CEO.
Sharma believes it is critical to hire a recruiter. "A top-tier venture capital firm recommended a recruiter for us," he said.
And the process was strenuous: "We set up a weekly call with the recruiter and the board/management. Every week we would prioritize the candidate list. After a few weeks, we got candidates that we had initial conversations with. Of those we found that matched our selection criteria, we held several rounds of interviews. In the final process, we flew them to our offices and introduced them to a broader team before finalizing the candidate."
It was also important to spend time on creating a candidate profile. As for V-ENABLE, the company focused on a CEO with:
Demonstrated success in previous CEO roles
Team player
Growth oriented
Raised capital and has experience in M&A
Worked in wireless and has relationships with wireless service providers
"Our board and management went through several iterations to make sure we were covering the short term as well as long term needs for the company," said Sharma.
A recent study has found that employer efforts to cheer up employees -- getting them treatment, phone counseling, etc. -- makes sense for more than just altruistic reasons.
The research, conducted by the National Institute of Mental Health, found that, on average, depressed employees who receive aggressive attention from their bosses worked about two weeks more during the year-long study. Workers are also more likely to keep their jobs when they receive aggressive help, which can reduce the costs of recruiting and training new employees.
According to the Associated Press, "The researchers haven't finished a formal cost-benefits analysis but early results suggest savings from more hours worked averaged to about $1,800 per employee. That far exceeds the program's initial $100 to $400 per worker cost. The benefits also likely exceed other costs, including drugs and therapy too, the researchers said."
Hopefully this will change the way that so many employers perceive depression and its treatment. The productivity costs of depression can be just as real as a broken leg, and employers should provide aggressive treatment options, both for their own benefit and the benefit of the worker.
If you're tired of poisoning your kids with lead-painted toys from China or killing your pets with melamine-laced Chinese pet food, you may be wondering what you can buy that's made in America.
To its credit, China is trying to fix its reputation. Last week, according to CBS News, China's product safety chief Li Changjiang offered assurances that toys made in China would be "safer, better and more appealing. Before Christmas, we will certainly provide children safer, better and more appealing toys. They will certainly like them." To bolster that claim, on September 11th, China signed an agreement to prohibit the use of lead paint on toys exported to the United States.
As I posted in July, I expect that there could be a business opportunity to sell products to U.S. consumers that are made anywhere but China. Then I cited examples of an upscale New York grocery with no Chinese seafood and a New Jersey-based natural producer of premium dog food blended from meat and vegetables. However, I have not seen much in the way of new developments in the last few months.
So what are the choices for those who want to buy products made in the U.S.A.?
It's been "shock and awe" for the financial system over the past few months. Even seemingly invincible companies like 
Over the past couple years, major players like 
and 
. He also operates 
Lately, the headlines have been scary. Unemployment is increasing. There are concerns from the presidential candidates. Real estate values are sagging and foreclosures are skyrocketing. And, premier companies – like 
As a business owner, you are certainly an expert. You keep up with industry trends, you understand the benefits of your products and services, and you have creative ideas.
As you gear up your business for 2008, I'm sure you have lots of good ideas. But there is something that is often ignored – getting organized. And with the explosion of email and digital media, being organized is getting even tougher.
and the founder of 
It's easy for me to preach "shop local" from my blogger's perch in Manhattan. While many companies are headquartered here in New York, boutiques, bodegas and mom & pop shops rule this roost. Aside from 
If you take a look at the stories of great entrepreneurs – such as 
.
Being from L.A., I've had to deal with earthquakes and fire (no, it's not always sunshine here). And, of course, I saw the devastation of the recent fires.
Because of continued troubles at 
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