Tag Archives: Small Biz Labs

What Is An Entrepreneur? Says Who? Why Do You Care?

Entrepreneurship, Reflections, , , , ,

I used to start a university class on entrepreneurship by asking the class to define the word entrepreneur.

It’s a reasonable question. News and discussion is full of pat phrases about entrepreneurs, most of which we take for granted. Politicians talk about entrepreneurs along with job creation, small business, motherhood, and apple pie. Challenge: find a politician who isn’t in favor of entrepreneurship.

But is everybody who claims the title really an entrepreneur? Or, for that matter, do we care? If your annoying neighbor becomes an entrepreneur by having sold one piece of furniture on eBay, do you care?

I liked Robert Jones suggestion: Let’s just change the word entrepreneur. His post 5 reasons we need a new word for entrepreneurs, from last July, has at least four good reasons. He and I and others followed up, but we didn’t come up with anything that great.

His post, however, also inspired Startup and small business expert Rieva Lesonsky to follow up with her post asking what does it really mean to be an entrepreneur? She pulls a lot of different definitions together, offers a menu ranging from the heroic, dreamy, crazy-creative definitions to the way-less-glamorous project manager and social definitions, but concludes with tongue in cheek:

My favorite definition of an entrepreneur comes from Doug Mellinger, the co-founder of Foundation Source, who once told me, “An entrepreneur is someone who will do anything to keep from getting a job.

All of that discussion, however, came jsut a bit after Steve King posted Comparison Small Business Owners to High-tech Entrepreneurs on his blog Small Biz Labs. Steve dives into available research to highlight the huge differences between these two groups. We all talk and think like they’re the same thing. It turns out that they aren’t. Compared to overall small business owners, the techies are way more likely to be well educated, motivated by money, and (unfortunately) male. Steve concludes:

we think policy makers need a better understanding of not just high-growth firms and their founders, but also the less glamorous businesses and business owners that make up the vast majority of small businesses in the U.S. economy.

My favorite definition, in the real world, is from Chris Dixon’s simple milestone post, there are two kinds of people in the world. It’s in this first sentence:

You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out.  It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office.

Chris exaggerates. Sleeping in the office isn’t necessary. And the ones who develop a plan and raise money are still entrepreneurs. But I’m shocked, by the way, at the level of anger and angst in some of the 263 comments. It’s a simple two-paragraph post, a simple statement, overwhelmed by comments. It shouldn’t be that controversial: You’ve either started a company or you haven’t.

Amen to that.

(image: istockphoto.com)

5 Good Posts for Friday July 1

Blogs and blogging, Weblogs, , , , , , , , , , , , ,

I need your help: Can you suggest a way to give a theme and a title to a series of Friday posts listing good posts and recommended links I’ve seen from the last week? My title here is too dull. I’m not nearly good enough at titles.

I don’t want to do this every Friday, but this is the fifth time since April 1, so I’m thinking maybe I should make it a repeated theme, with a cool title. Except I don’t have the title.

  • My absolute favorite this week is Megan Berry’s post on Mashable called 7 Tips for Better Twitter Chats. It’s a very good short piece on the step-by-step details of doing a twitter chat. Megan’s marketing manager at Klout (and yes, one of my daughters).
  • Shashi Bellamkonda of Network Solutions, alias the swami of social media, posted 6 Ways to Improve Your Online Content on the Amex OPEN Forum. Shashi knows. He practices what he preaches.
  • The SBA (U.S. Small Business Administration) has an excellent short piece explaining why you need a business plan on SBA.gov. It’s not a blog post published this week, but SBA.gov tweeted it this week, which caught my attention.
  • Fred Cavazza, Why a Facebook Page is Not Enough forbes.com. I caught this one thanks to Becky McRay mentioning it on twitter.
  • The TED blog posted The 20 most-watched TED Talks (so far). How can you resist this best-of-the-best list from the amazing collection at TED.Com. Trivia question answer: TED stands for technology, education, and design.
  • (Aside: yes, I know, this is the sixth, but I can’t resist) Steve King had some fascinating demographics in his Comparing Small Business Owners and High-Growth Entrepreneurs on Small Biz Labs. 

How to Explain Lies, Damn Lies, and Statistics

Business Research, Business Stories, ,

Don’t get me wrong: I like research. Survey information is grand. I just say don’t bet the store on it. Use it to educate your guesses, but only as long as you stay skeptical. Read it, consider it, but don’t believe it.

Mark Twain said:

There are lies, damn lies, and statistics

Blogger and business researcher Steve King, a sometimes-Twain-like research analyst (well, a smart person who lives in California, at least) gives a great example in his recent post Why Surveys Show Wide Differences in Small Business Social Media Use on Small Business Labs. Steve is a researcher, one of the founders of Emergent Research, which does a lot of work for Intuit.

Steve pulls up two surveys with starkly different results. The Wall Street Journal recently reported that 70% of small business owners think social media is important.  But a Citibank survey said only 36% of small businesses use social media and a mere 24% have found social media useful for finding leads or generating revenue.

What’s up with that? Methodology and sampling techniques, Steve explains. The survey that was big on social media was taken from people it found online using Twitter, Facebook, and other social media. The other one was a telephone survey.

So, as they say, “no duh.” Most of the business people who use social media think it’s important. Most of the ones caught on the phone don’t.

The point is that both surveys are valid in their specific context, both were done professionally, and both can help you understand what a defined group of people thought – or told survey takers they thought. But they contradict each other. So if you’re using research, use it well, explore the assumptions, look for the built-in slants, and take all of that into account.

Humans make decisions. Statistics don’t.

Small Business Labs on Trends for 2011

Economics, Social media, Technology, , ,

Sure, there are lots of trends pieces going around these days, but Steve King of Emergent Research is the best expert I know on researching trends and putting them into sensible pieces. His company does some really good trends research that is often published by Intuit. , so I’d like to share his Top 10 Small Business Trends for 2011, some of them with my comments.

First, four major economic trends:

1. The small business economy recovers from the great recession.

From your lips (or keyboard), Steve, to God’s ears. May you be right on this one.

2. Variable cost business models:  Small businesses will continue to focus on cost containment, bootstrapping and business flexibility in 2011.  More small businesses will shift from fixed cost to variable cost business models, adopting a pay-as-you-go approach to minimize cash requirements and increase business agility.

3. Small firms reinvest U.S. Manufacturing

That’s a surprise to me. I thought U.S. manufacturing becomes less competitive. But Steve points to the weak dollar, technology, growing world markets, and the web giving more worldwide access to smaller companies.

4. Alternative financing

He cites “merchant advances, micro lending, community lending, crowd funding, and factoring.” I bet alternatives like crowd funding take longer, though, because of securities law, fraud, and those worries.

Second, five social and social media trends:

5. Social media moves to the small business mainstream.

6. Social commerce: the amazing growth of Groupon and other social commerce sites in 2010 …

7. Small businesses friend Facebook. …. small businesses are embracing and adopting Facebook as a key part of their web presence, and in growing numbers using Facebook as their primary website.

Myself, I’d like to see more examples.  Is this proving to be good business?

8. New localism continues to flourish

9. Freelancers realize they’re small business owners

It’s about time.

Finally, one technology trend:

10.  Working in the Cloud: No trends list would be complete without mentioning mobile, cloud, local and social computing.

No surprise there.

So I give special attention to Steve’s trends posts because 1.) that’s what he does for a living, mainly; and 2.) he’s good at it.

The Paradox of Location vs. Technology

Bootstrapping, Entrepreneurship, Starting a Business, , , ,

Did you see this piece over the weekend? In Start-Ups Follow Twitter, and Become Neighbors the New York Times presents several San Francisco companies (including klout.com, my personal favorite) that purposely located offices near Twitter for good business reasons.

Steve King called it The Real Magic Comes from Being in the Same Place in his new blog on coworking. He quotes the Times piece:

‘Even though it’s all about tech and the Internet, the real magic of Silicon Valley comes from people being in the same space,’ said Burt Herman, co-founder of Storify.

He calls it "Accelerated serendipity"

It is a belief that coworking increases the generation of business ideas and productivity.  The concept is when smart people from diverse backgrounds come together in a coworking community, good things happen – including business innovation.

Which is all cool, for sure. And of course, in my years in the Silicon Valley from 1981 through 1992, I saw that happening a lot.

But still, wait a minute: Isn’t this the opposite of 2011 and beyond? Aren’t we all – you reading this blog, me writing it, and all the information we both share on Twitter and Facebook – braking the barriers of physical space and geography with a new online landscape? One that brings us closer despite the distance in miles? Haven’t we seen lots of accelerated serendipity online?

In a comment to Steve’s post above, I quoted his (well, his company, Emergent Research) trend number 7 for 2010, from a piece about a year ago, the convergence of social, mobile, and cloud computing. And, come to think of it, trends number 4 and 5, the new localism and the growth of home businesses, are also counter to the idea of being in the same place.

My conclusion: I love a good paradox. And business is full of them.

Don’t Believe the Research Until You’ve Read Steve’s Post

Business Research, Entrepreneurship, , ,

Posting on his Small Business Labs blog, Steve King wrote: Don’t Quit Your Job Until You’ve Talked to a Small Business Failure. Amen. Everybody even thinking about starting a business should 1.) Read that post; and 2.) do what it says, talk to a small business failure.

Steve cites a couple posts he’s done recently on research showing small business owners feel relatively safe in their jobs. But then he adds:

Several people have asked me does this data mean that small business ownership is less risky than traditional employment?  The quick answer is yes, but only if your small businesses is successful. (emphasis is mine).

I love the irony: the polltakers ruled out failures by asking existing business – which, by definition, aren’t failures – about risk. Steve’s a professional researcher, so he quickly identifies the problem as survivor bias, which he says turns up often in research. He adds:

My favorite example of survivor bias is surveying existing customers to develop satisfaction ratings.  I was once asked to figure out why a company was losing so many customers despite having stellar customer satisfaction ratings.

It turned out they didn’t include customers that left prior to the annual customer satisfaction survey.  After all, they explained, they weren’t customers anymore.

So, as Steve suggests, if you want to explore the dark side of small business, talk to the losers instead of the winners.

(Photo credit: el lobo/shutterstock.com)

If You Are Raising Money, You Need a Business Plan

Business Planning, Venture Capital, ,

There was a nice piece in Small Biz Labs yesterday, in which Steve King notes that you should have a business plan whether or not you expect investors to read it. He offers this summary in that post:

In my opinion, the best way to prepare for the pitch process is to develop a business plan. Preparing a plan organizes the entrepreneur’s thinking, requires going through all aspects of the business and helps to identify important issues facing the company.

Agreed.