Small Business Labs

A Strong Middle Class - Biden Led Task Force Includes Focus on Small Business

President Obama announced a new government task force focused on making the middle class stronger. 

The announcement includes several references to small business and their first public forum is on green jobs.  Key quote from the White House blog:

"America's middle class is the economic engine of this nation. Our road to economic recovery begins with restoring the prosperity of working families and small business owners. That is why today, President Obama signed a Presidential Memorandum creating a task force dedicated to raising the living standards of middle class families – and he put the nation’s number two guy in charge, Vice President Joe Biden..."

Beyond the formation of the task force and the recognition of small business as a key component of our economy, the use of social media is quite interesting.  That the White House blog exists is an indicator of the increasing role social media is playing. 

And check out the informal language - "he put the nation's number two guy in charge.."  Very blog like.

Clickfree PC Backup

Since our focus is small business trends, we don't often post about specific products.  But I recently bought a Clickfree PC data backup unit, really liked it decided to write about it. 

I don't know much about data backup, except that I should do it.  And I don't want to know about data backup. 

Because of this, I outsourced the work associated with researching backup products to Ramon Ray's Smallbiz Technology blog.  They highly recommended Clickfree, so I bought one.

I brought it home and minutes later I had backups of all of our home and office computers.  No muss, no fuss, no fooling around with installations, software, etc.  You just plug it into your USB port and it does the rest.

Surveys on Optimistic Small Businesses

Last fall we conducted a series of interviews asking small business owners and managers about their views on the impact of the recession on their businesses. 

The most interesting result of this work was that well over half of the small business owners and managers talked about the opportunities they see.  And despite the recession, roughly 1/3 were quite optimistic about their business opportunities in the coming year.  We called this group Optimistic Small Businesses and posted on them last month. 

Over the last week several surveys have been released covering this topic.  Survey results released yesterday by Intuit show that 89% of the small business owners they surveyed said they see opportunities for their businesses despite the recession.  And 60% said they still believe their businesses will grow in the coming year.

Echoing this data, UPS released survey results showing that 86% of small business owners expect their company to be in the same or better financial shape in one year.  Also, only 10% expect to reduce employment over the next year.

Our research has consistently shown that regardless of the current economy, small business owners and managers are positive about the future of their firms.  This is still the case even in the face of a very difficult economic environment. 

Global Internet Passes 1 Billion Users

There are now more than 1 billion Internet users.  According to market research firm Comscore, the global Internet audience passed this mark last December.  

          

China has the largest population of Internet users with 180 million.  The U.S. is second, with 163 million Internet users. 

It is interesting to note that this excludes access from mobile phones, PDA's and Internet cafes.  This understates the number of users in developing countries, so if anything the 1 billion number is conservative. 

The always useful Marketing Charts has more detail.

Coach Versus First Class

This has nothing to do with anything related to this blog, but it was sent to me and I thought it was funny.

         

State by State House Stimulus Package Allocations

The Center for American Progress, an influential Washington think tank, released an interactive map that shows likely state by state allocations of the House of Representatives $825 billion Economic Recovery and Reinvestment Act. 

They also have a good summary of the proposed spending and a spreadsheet with detailed, state level data.

The map is the first in a series that will look at the state level impacts of the stimulus package.  They are also going to update the data based on legislative changes and clarifications. 

The map and data are quite interesting.  For example, I learned that my home state of California is likey to receive about $44 billion in federal stimulus spending.  This includes $8 billion for state deficit reduction.

The Obama administration is hoping to get the stimulus package finalized and passed by mid-February. 

Recession and Personal Services

A trend we've been following for years is the growth of personal service firms. 

These are firms that have created niche businesses by providing life support services to increasingly harried, time constrained and affluent consumers.

Examples include traditional personal services like gardening, house cleaning, fix-it services, nannies, cleaners, etc. 

It also includes career coaches, college counselors, dog walkers, personal shoppers and a wide range of firms that provide teaching and training services for kids and adults.

There has even been a butler boom over the last decade.

The NT Times article Outsourced Chores Come Back Home discusses the impact of the recession on personal services businesses.  Not surprisingly, they are struggling as consumers choose to do these tasks themselves to save money.

Personal businesses will be hit hard in this recession.  But the long term trend towards outsourcing tasks will survive this recession as consumers continue to outsource tasks they don't like or have time for.

Photo credit:  Wall Street Journal

Variable Cost Business Models and The Growth of Niche Markets

Early in the 20th century Henry Ford was among the first to understand the power of large scale industrial infrastructure. 

Ford's implementation of mass production methods to build economies of scale resulted in the rapid growth of Ford Motor Company.

Others embraced mass production techniques and soon most industries were dominated by large, vertically integrated corporations. 

After all, only big corporations could afford the large fixed cost investments required to build mass production facilities.

But by the beginning of the 21st century, controlling large scale infrastructures with high fixed costs was no longer required for business success in a a growing number of markets.  And in many cases, fixed costs had become a business liability.

New technologies had reduced the costs of starting and operating a business.  And outsourcing, partnering and business infrastructure service companies (UPS for logistics, contract manufacturers for production, Amazon on others for IT and web services, etc.) created the ability to start and operate businesses using a high degree of variable costs. 

Variable cost business models are having a major impact on the small business sector by greatly increasing the number and viability of niche markets.  Variable cost business models:

1.  Lower the capital costs required to enter and serve niche markets.  Lower capital costs also reduce the risk of serving niche markets.

2.  Provide niche producers cost advantages relative to their larger competitors. 

The chart above shows the classic cost accounting model for both fixed cost and variable cost business models.  Below the volume where economies of scale kick-in, variable cost business models enjoy a substantial cost and pricing advantage. 

The increasing use of variable cost business models is not the only trend driving the growth of niche markets. 

Customer are increasingly looking for good and services that meet their specific needs.  The Internet is allowing niche producers and customers to find one another more easily.  And technology is lowering the costs of serving niche markets.

Combined, these trends are making more and more niche markets economically viable. 

And we are seeing more and more examples of small businesses using innovative variable cost business models to exploit niche markets and out maneuver larger competitors. 

Pet Industry Trends

Our family has 4 dogs.  We also have a cat, but he really isn't our pet.  He simply chooses to live in the same house we do. 

But despite being an avid pet fan, I continue to be amazed at the amount of money spent on pets and the long term trend towards pets as children. 

This is why I always look forward to the annual Pet Trends post on Small Business Trends. 

This year's post focuses on the impact of the recession on pet spending.  But it also covers how "pet parents" are increasingly involving their pets in their lives.  Key quote:

"Pet parents are including their pets in their own lifestyles so visits to the spa, exercise regimes, and hotel-quality day care accommodations have become more common in urban areas."

I don't consider myself a "pet parent" and our poor dogs will never visit a spa or stay in a hotel-quality doggie day care facility.  But a growing number of pet owners do think this way, which is why Americans spent over $40 billion on their pets in 2008. 

Picture credit to Small Business Trends.

Gen Y - Natural Freelancers

Ypulse, a website/blog focused on youth marketing, has an interesting post on Gen Y's view of freelancing. 

Written by a seriously over achieving Gen Y college student, the article highlights reasons why "freelancing seems to be a natural thing for Gen Y."  Key quote:

"After making it through the incredibly competitive college admissions processes and completing four years of college, today's college graduates are a highly capable bunch. However, after emerging from the less structured campus life where their achievements were mostly fueled by self-motivation, an increasing number of young people are balking at the idea of getting a traditional job with a supervisor and an office hierarchy."