Small Business Labs

BIGresearch on Consumer Trust

BIGresearch is a syndicated survey research firm whose misson, according to their website,  is to provide the "premier knowledge base of consumer insights, past, present and future to executives in the retail and package goods industry."  I haven't worked with them at all, but I enjoy their work.  They tend to ask fun and interesting questions, and they release a fair amount of their data to the public.   

They recently did some survey work on consumer trust of politicians and media (registration is required to see the detailed survey results).  Not surprisingly they found that consumers simply don't trust either with roughly 70% of adult Americans saying they did not trust politicians or the media. 

A wide range of research shows that consumers are losing/have lost trust in traditional institutions over the last several decades, including businesses of all sizes.  This creates opportunities for firms that can created trusted relationships with their customers.

Microtrends

Recently read the book "Microtrends - The Small Forces Behind Tomorrow's Big Changess" by Mark Penn. Penn is the CEO of the PR firm Burson - Marsteller, a well known political pollster, and the chief strategist for Hillary Clinton's campaign.  He coined the term "soccer moms" while working for President Clinton in the 90's.

Penn defines Microtrends as "smaller trends that go unnoticed or ignored."  According to Penn, microtrends are about "the niching of America." and the increasing number of small groups, "drawn together by shared needs, habits and preferences.."  The book covers 75 microtrends across a variety of subjects including religion, leisure, sex, work life and politics.

If you are interested in trends or trend watching, Microtrends is fun, easy to read and well worth getting.  I also found Penn's perspectives on the electorate to be very interesting given his key role in the Clinton campaign.  For more on this topic and the book in general, see Marc Ambinder's Atlantic Monthly blog post on the book.

Gen Y Skeptical of Working for Large Corporations

The Small Business Trends blog has a great post on Gen Y's interest in entrepreneurship and their views of working for corporations.  Key quote:

"Generation Y (25 and under) has grown up watching their parents go off to work every day, 40 - 60 hours per week, with fierce loyalty only to be downsized, outsourced, or laid off in their 40’s and 50’s."

This echos our research on Gen Y, which shows a great deal of skepticism about working for large corporations and a strong interest in controlling their own work destiny.  The post ends with this question for Gen Y:

"What are you doing to take hold of your financial future and safeguard yourself against the tumultuous corporate world?"

For large corporations the question is how do you attract and retain Gen Y workers??

Competing or Cooperating With Big Companies

Northwestern's Kellogg School of Business has a web site called "Kellogg Insights" that posts research done by their professors.  They recently highlighted a study called "Compete or Cooperate - Choosing the Right Commercialization Strategy as a Technology Start-Up".  The study authors investigated the commercializaton strategies of 118 start-up companies across 5 economic sectors.  They found that cooperation is a good strategy for start-ups when one or more of three conditions exist for the start-up:

1) The firm has a high degree of control over its intellectual property rights
2) The firm enjoys low deal transaction costs
3) There is a high sunk cost requirement for the firm to compete in its industry

While the study focuses on technology start-ups, we are seeing big company/small company cooperation increasing in many industries. This increased cooperation seems to be driven by two main factors:

1) cooperation to better serve the increasing number of small and specialized niche markets.  VAR programs in the technology industry are an example.

2) cooperaton to leverage large fixed assets, which is discussed in the Northwestern study.

We will covering this topic in more detail in our next research report, which is due out later this year.

Lots of Americans Want to Start Small Businesses

The most recent Discover Small Business Watch survey asked consumers (non small business owners) whether or not they would like to start their own business someday.  29% of the respondents said yes, with 35% of those saying that they were very or somewhat likely to do so in the next 12 months. 

Doing the math means a bit over 10% of the respondents said are they very or somewhat likely to start a small business in the next 12 months.  While it is unlikely most of this folks will follow through, these numbers reflect the continuing strong interest in enterpreneurship in the US. 

Discover Small Business Watch Survey -Small Business Cash Flow Concerns Growing

The Discover Small Business Watch is "a monthly index measuring the relative economic confidence of US small business owners who employ less than 5 employees."  Discover has been doing this for over a year now, and in addition to recurring questions about small business confidence, they also ask other questions from both small business owners and consumers in general.

I was fortunate enough to have the opportunity to talk with the Director of Discover's small business card unit, Sastry Rachakonda, about their most recent survey.  I was curious if their surveys were detecting any impact of the sub-prime mortgage loan problems on small businesses liquidity and cash flow.  Sastry pointed out that 46% of the September survey respondents said they had experienced cash flow issues over the last 90 days - a substantial increase over August's 41% and July's 35% . 

Their September survey also found that one third of the respondents said they extend credit to their customers, and 64% of those extending credit said their customers whoe use credit had delayed payments or had ask to delay a payment in the past three months. 

While just one set of data, it does indicate that small businesses may be feeling the impacts of sub-prime mortgage sector.

Thanks Sastry for taking the time to talk.

Highland Capital's CareerNet

I'm often asked how to go about getting a job with a venture backed start-up.  The tradtional answer is via networking with both employees of start-ups and search firms that specialize in start-ups.  Neither approach is efficient and because of this, recruiting is expensive and time consuming for venture backed start-ups and many qualified candidates never hear about potential jobs. 

HIghland Capital Partners, an A list venture captial firm that invests in seed, early stage and high growth companies, recently sent me an email describing an online recruiting service they provide for their portfolio companies.  It's called CareerNet and it is a "a centralized listing of hundreds of job openings across Highland-backed companies."  A potential employee simply searches their database and then submits a resume. 

Online resources like CareerNet provides added value to Highland's portfolio companies, and exposes more job candidates to opportunities at start-ups.  It is also another example of an inexpensive online application partially replacing a higher cost service - in this case search firms - and providing small businesses with another channel for hiring employees. 

McKinsey on Management Practices that Work

The McKinsey Quarterly, a publication produced by the well known management consulting firm, has a short article and chart (subscription required) on effective management practices.  Key quote:

"What makes companies perform well? To find this holy grail of management studies, a McKinsey team analyzed upward of 100,000 questionnaires to uncover the practices of 400 business units in 230 companies around the world. The team eventually arrived at one winning combination: clear roles for employees (accountability), a compelling vision of change (direction), and an environment that encourages openness, trust, and challenge (culture). Nothing else came close in improving organizational performance."

Not surprising results, and even though the McKinsey research focused on large corporations the same factors - accountability, direction and culture - are also most likely the winning combination for small businesses. 

Turning Hobbies in Small Businesses

The Pew Center has just published the findings of a telephone survey about people finding hobby information online. This quote from one respondent caught my eye: "Because of the internet, we've been able to turn a hobby of collecting antiques into a business of buying and selling antiques."<

Hobbyist-turned-entrepreneur was a topic we covered in the first phase of our research on the future of small business for Intuit earlier this year. (See p. 13)

Full report: Pew Internet: Hobbyists Online

Aberdeen On Business Travel and Procurement

The Aberdeen Group recently sent me an email asking me to participate in a survey they are doing on business travel and procurement.  The email said:

"We’re conducting a new study on how business travel is on the rise and procurement skills are required to help contain costs."

Since one of my key job objectives is minimizing my business travel, it is not clear that I would be a good survey participant. 

But the trend they are looking at - rising business travel and travel costs - is real and companies are spending more money on business travel.  I find it interesting - but not surprising -  that in a world of email, cell phones, IM, online social networks, blogs, wikis, podcasts, webinars, online video, really cheap low end video conferencing and fairly expensive but really cool high end video conferencing systems (Telepresence and Halo) that business travel continues to grow. 

So while virtual social networks, software and systems can substitute for some business travel, face to face contact continues to remain a key part of most business relationships.