Small Business Labs

Avenue A:Razorfish Study on Online Consumer Behavior

Interesting report from the interactive marketing agency Avenue A:Razorfish covering online consumer behavior.  They also have a blog covering the topic.  They surveyed active online broadband users, which are no longer really leading edge users but they are ahead of the mainstream.  Because of this some of their data seems a bit aggresive - for example 70% of their respondents actively read blogs and almost 50% have uploaded video in the last month.  However, once you realize they surveyed advanced users (something they don't explain in the report but explain on their blog), the data becomes easier to understand.

Too  much information to cover, but if you are interested in online consumer behavior the report is well worth reading.   My one suggestion is skip the big report and read the 9 page summary report. 

Deloitte Study on Online User Reviews

Online reviews are an increasingly popular topic for studies.  Deloitte recently released a study showing that consumers are turning to online reviews in large numbers.  From the study press release:

"...almost two-thirds (62 percent) of consumers read consumer-written product reviews on the Internet. Of these, more than eight in 10 (82 percent) say their purchase decisions have been directly influenced by the reviews, either influencing them to buy a different product than the one they had originally been thinking about purchasing or confirming the original purchase intention. Interestingly, while the percentages were slightly higher for the younger generations, all age groups are reading and acting on online reviews at significant rates."

These results are consistent with other online user review studies, and show the growing importance of user reviews for both big and small businesses. 

Jupiter Launches Web Globalization Service

Jupiter Research, an online and web research firm, has launched a market research product aimed specifically at the companies that want to globalize their websites.  Here is the description from their website:

"Web Globalization advises companies that are looking to take their sites and brands global, providing them with the tools to succeed as they expand their offerings abroad."

Their blog also talks about the new service and mentions a really interesting demographic group Jupiter calls "globaphile", which they define as US:

"...online users who have both accessed content from abroad and translated content into English. This segment comprises some 17 million adults - the majority of whom are young and male."

This is a fascinating statistic.  Immigrants tend to start small businesses at a greater rate than native born Americans.  This statistic shows how strong the linkages are online between the US and other countries, and how online social networks easily cross borders - and lead to increased cross border trade. 

The American Prospect on Coworking; Coworking Location Map

The American Prospect has a good article on coworking.  Key quote:

"Just blocks away from its famous namesake, Independent's Hall is one of more than a dozen new "coworking" spaces that have popped up around the country in recent months. For $25 a day (or $175 a month for a 3 day/week commitment), you can drop into the space, use the wireless, meet with clients in the small glassed-in conference room, and, often, find folks to grab a drink with afterward. The feel is part dorm lounge, part ad agency and part cybercafe, and it's a hit. In its first month, the space has already had visitors from around the country; its opening bash drew more than 200 partygoers."

Related to this, there is also a Google map showing coworking locations.   The map is relatively new; it will be interesting to watch and see how many locations get added to it in the coming months.

Tim Berry's Baby Boomer Un-Retirement

Our baby boomer research - and everyone else's boomer research - shows that most boomers are not planning traditional retirement.  I recently traded emails with well-known business planning expert and blogger Tim Berry.  I was curious how he found the time to do so much work.  His answer was he was retired.

This came as quite a surprise to me since from the outside it looks like he runs a media empire.  Tim has multiple blogs, a consulting practice and a software company.  He actively participates in webinars, writes books, speaks at conferences, writes for traditional media, etc.,etc, etc. 

While Tim may not be the typical baby boomer, he is a great example of our generation's approach to retirement.  Tim and others like him is why we are - somewhat obviously I think - forecasting that retiring boomers wil start and work in small businesses in growing numbers. 

You can read about Tim's retirement in his blog post "Is This The Ideal Job?"

Nerd Values and Small Business

Interesting discussion on the coworking Google group (registration required) about whether or not coworking spaces should be for profit or non-profit.  The consensus of the group is that it doesn't really matter as long as the facility works. 

One of the interesting points discussed was "nerd values".  Key quote from group member Tara Hunt:

"Nerd values means..."Doing well by doing good." We don't think of ourselves as do-gooders or altruists. It's just that somehow we're trying our best to be run with some sense of moral compass even in a business environment that is growing."

Tara also points to an article where Craigslist founder Craig Newmark discusses nerd values. 

A theme that runs through our research is that values and life balance issues are extremely important to many entrepreneurs and small business owners - and a key reason they've chosen small business careers and entrepreneurship. I think Hunt's quote is a good one, and describes a much broader group of people than just nerds.

For more on coworking see this Business Week article or the coworking wiki.

Boston Globe on the Entitlement Generation and Entrepreneurship

The Boston Globe has a long and intereesting article on what they call "The Entitlement Generation", which seems to be anyone born after 1975.  It is somewhat critical of this group, pointing out things like "24 percent of college students in 2006 showed elevated levels of narcissism compared to just 15 percent in the early 1990s." 

But it also praises this generation and points out how entrepreneurial they are.  Although even there, the compliment is a bit back-handed.  Key quote:

"All of this would seem to suggest that this generation, which is flooding into the workforce, will create chaotic, unpleasant, and utterly unproductive work environments that will drive many a good business directly into the ground. But there's another very real possibility. It may be that this much-reviled generation will revitalize the economy and ensure the prosperity of America for years to come. Painful as it sounds, in the not-too-distant future, we may owe a debt of gratitude to these narcissists."

I've had the opportunity to participate in a fair amount of research on Gen Y and young adults over the years.  I've also worked with quite a few young enterpreneurs and young adults in Silicon Valley.  Based on both my research and work experiences, I think the Entitlement Generation is a generation of enormous talent.  They are smart, aggressive, innovative and make things happen.  I wish I entered the workforce with their skills and abilities. 

Yes they have big expectations - and yes they can be difficult to deal with - but they also have what it takes to deliver.  Jeff Cornwall, the Director of Belmont University's Center for Entrepreneurship, calls them "the greatest entrepreneurial generation ever."   We agree with Jeff. 

Boomers Tapping Nest Eggs to Start Small Businesses

The Wall Street Journal has an article titled "How Baby Boomers Tap Nest Eggs to Fund Ventures."  The article is pretty much as it sounds from the title.  Key quote:

"But boomers are discovering they have a crucial advantage over younger businesspeople: They can draw on decades' worth of savings to fund their start-ups. And that means much more latitude. Boomers don't always have to spend valuable time and energy lining up loans. And they aren't stuck making onerous debt payments on top of other business costs."

This matches our research.  However, after we released our research on this topic Suzy Orman pointed out that this is potentially risky in her article "Protecting Yourself When You're Self Employed".  Key quote on this trend from Orman's article:

"This worries me. Whether it's living off of an emergency cash fund while launching a business, raiding retirement funds, or tapping home equity, far too many entrepreneurial wannabes empty their piggybanks without really thinking through the potential risks they're taking."

She goes on to talk about how to limit risks, as does the Wall Street Journal article. 

Baby boomers are going to start businesses at increasing rates over the next decade.  They will tap their savings to do this, as well as leverage their contacts and experience to create these new businesses.  As both articles point out, managing the risks associated with later life entrepreneurship is extremely important and should be taken into consideration as part of any boomer new business plan.

For more on baby boomers and entrepreneurship, see "The Changing Face of Entrepreneurship".

Nokia Acquires Navteq - Location Based Services the Driver

Nolia announced they are acquiring digital map company NavTeq for $8.1 billion.  Here is Navteq's company descripton from their website:

"NAVTEQ digital map data offers accuracy, detail, reliability, and flexibility. Continuously updated to maintain its freshness and precision, NAVTEQ digital map data not only enables door-to-door routing throughout Europe and North America, it contains millions of Points of Interest (POIs), making it easy to locate everything from restaurants to hospitals and gas stations. You’ll find NAVTEQ data onboard most navigation-enabled vehicles produced in North America and Europe and on all the top Internet navigation sites."

Normally I wouldn't post on a big company acquiring another big company.  But the reason Nokia is spending a robust (and dilutive) 12x Navteq's revenues is the opportunity to participate more deeply in location based services.  Key quote on Nokia's acquisition reasons:

Nokia's President and Chief Executive Olli-Pekka Kallasvuo said "location-based services are one of the cornerstones of Nokia's Internet services strategy. The acquisition of Navteq is another step toward Nokia becoming a leading player in this space."

Location based services are going to be increasingly important to small businesses (see our forecast report "The Connected World of Entrepreneurs" for more on this topic).  Nokia's acquisition of Navteq is another example of how important locaton based services have become.

Economic Stability and Small Business

The Economist has an article on economic stability called " The Turning Point - Does the latest financial crisis signal the end of a golden age of stable growth?".  The article discusses the long period of relative economic stability the US has experienced.  Key quotes:

"Much of the focus—in good times past, as well as bad times present—has been on America, where fluctuations in economic growth have fallen by around half since the early 1980s. In upswings the economy's growth rate has varied by less from one quarter of the year to the next and from year to year. Recessions have been rarer, shorter and shallower." 

The article states the main reason for this period of stability is the US and other economies are much more flexible than in the past.  They point to three main reasons for this:  improvements in managing stocks of goods; the financial innovation that expanded credit markets; and wiser monetary policy.

I would add the increasing role of small and personal businesses as a key driver of increased economic stability.  My reasons are:

1. Small businesses are very agile and flexible, and react quickly to changing economic conditions.  This adds to economic stability.
2. The growth and acceptance of small and personal businesses provides dislocated workers with alternatives.  Consulting and temporary work are increasingly common, and starting a business is easier and cheaper than in the past.  Many of the small business owners we've met started their business after losing a corporate job - and the vast majority of these people were never "unemployed" in the traditional sense. 
3. The growing number of small businesses provides economic stability through diversification and portfolio effects. 

Several academic studies have pointed to the role small business play in decreasing economic volatility.  Our posts Small Business Volatility Decreasing and Small Business Survival Rates discuss two related studies.