Small Business Labs

The 2011 Small Business CRM Leaders

For the 10th year in a row, CRM Magazine has released their annual list of the top customer relationship management (CRM) software vendors and products. 

CRM Magazine has 3 ratings categories - enterprise, mid-market and small business - and the top firms vary by category with one exception.  Salesforce.com dominates the leader board and is the highest scoring CRM company in all 3 categories.  Not surprisingly, Salesforce also won in the sales automation category. 

Another firm that did well in the small business ratings is SugarCRM.  It's an open source product and they won in the overall open source category.  Key quote on SugarCRM:

"Extending its winning streak to four years, SugarCRMswept 2011’s open-source category, scoring the highest marks in almost every metric. “Anytime you talk about open-source CRM, Sugar comes up; they’re by far the best known and by far the largest,” Fauscette says."

According to the CRM Magazine article, only 30% of small businesses have CRM systems in place.  I think this is primarily due to cost and complexity.  Historically CRM systems were expensive to own and hard to maintain and use.

But with the advent of cloud-based CRM systems costs are much lower and they are much easier to use and maintain.  Because of this, we are confident the next few years will see a strong increase in CRM system usage by small businesses.

BTW, SugarCRM has a nice white paper on buying CRM systems.  The 10 Step Guide to Buying the Right CRM Solution requires registration.

I was honored to be a judge again this year.  It's a lot of fun evaluating the systems and seeing how the industry and products evolve over time.

Shine - An Online Movie on the Entrepreneurial Journey

Shine is an online movie on the entrepreneurial journey.   Here's the description of the movie from the filmmakers:

SHINE began on May 6, 2009 when 12 video crews and over 400 entrepreneurs gathered in Seattle’s largest film production studio to share why they work long hours, for low pay, facing great uncertainty.

I think they've done a great job of capturing how entrepreneurs think about their path. 

By online video standards the movie is quite long at 24 minutes, but it's worth it. 

Small Business Optimism Hasn't Recovered from the Recession

American Express has been tracking the attitudes of small businesses and their owners for a decade via their Small Business Monitor surveys. 

They recently released a report summarizing changes in small business optimism over the last 10 years.  The chart below is from the report.

  

It's pretty clear that small business optimism has not recovered from the Great Recession.  Business has clearly improved over the last year, but the uncertainty around the direction of the economy makes it hard to feel good about business prospects.

Education and Lifetime Earnings

The chart below is from The College Payoff, a report from the Center of Education and the Workforce at Georgetown University.  It shows the more education you have, the higher your lifetime earnings are likely to be.

  

Having said that (and shown that), the report also points out that occupation often trumps education in terms of lifetime earnings.  This means lesser educated folks often make more than better educated folks.

But the overall message - education, on average, is good for lifetime earnings - is strong.  Here's their quote on this:

"The data are clear: a college degree is key to economic opportunity, conferring substantially higher earnings on those with credentials than those without."   

The Highs and Lows of Going Out on Your Own

Maybe it's Time for Plan C covers the ups and downs of starting your own business.  Oddly enough, it's from the Fashion and Style section of the New York Times. 

Key quote on career switchers who go out on their own:

The lures are obvious: freedom, fulfillment. The highs can be high. But career switchers have found that going solo comes with its own pitfalls: a steep learning curve, no security, physical exhaustion and emotional meltdowns. The dream job is a “job” as much as it is a “dream.”

My favorite quote comes from a solopreneur book photographer: 

“Even though I hate taking on all the responsibility myself and I’m often crazed,” she said, “the moment that I hold a book I’ve completed, it makes up for all the uncertainty of getting there.”

Our research on freelancers and other solopreneurs echo the themes of this story.  Becoming a solopreneur isn't easy and it's risky.  But for those that make it, it's highly rewarding. 

The Startup Incubator Boom (and Maybe Bubble)

According to Xconomy's 3rd annual Guide to Venture Incubators, there are 64 startup incubators in the U.S.  This is up from 34 in 2010 and only 20 in 2009. 

Startup incubators generally supply office space, educational resources, mentoring and small equity investments to their members.  Startups apply for the right to join these programs and the application process for many is quite competitive. 

Most startup incubators take an equity stake in the firms in their program in exchange for the services they provide. 

These programs tend to be based somewhat on the Ycombinator program.  They were one of the first startup incubators.  Xconomy has a nice summary of the Ycombinator program. 

Startup incubators are a specialized form of coworking facilities.  They're a good example of both the growing diversity of coworking facilities and the shift towards coworking as a style of work. 

In a related article, Xconomy suggests this rapid growth may indicate a startup incubator bubble. 

Thomas Friedman's Darwinian Theory of Everything

If you haven't read Thomas Friedman's piece A Theory of Everything (Sort Of) in Sunday's NY Times, I suggest you do. 

I don't think Friedman covers new ground in the article.  But he succinctly articulates how IT, globalization and hyper-connectivity are combining to change the world - and the problems and unrest these changes are leading to. 

Amazingly, he does this in a page and half. 

Key quote on what this means for productivity:

"The merger of globalization and I.T. is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers."

Key quote on what these productivity gains means for people:

"... to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before. All this technology and globalization are eliminating more and more “routine” work — the sort of work that once sustained a lot of middle-class lifestyles."

One theme we're constantly struck by in our trends research and analysis is how Darwinian the world of work and small business has become - and how it's likely to become even more Darwinian in the future.  Friedman's article captures this trend better than anything else I've read. 

Women in Management - How Far We've Come, How Far We Have to Go

The chart below is from Catalyst, a nonprofit membership organization focused on expanding opportunities for women and business. 

   
 
The chart clearly shows how few women there are in senior management and on the boards of public companies. 

While it's clear we have a long way to go in terms of senior exec gender equality, I'm also struck by how far we've come.  Despite being less than half the workforce, women now hold over half of the management and professional jobs.

While I don't have the data handy to check, no doubt this is substantially higher than in the 70s and 80s. 

Two other things hit me about this chart:

1. The trends driving the she-conomy continue to gain strength.
2. Women managers and professionals who are blocked from moving up will continue to turn to small businesses and entrepreneurship for opportunities.

My Health Care Risk Shift Mistake

I recently personally experienced one of the trends we follow - The Risk Shift.   The bottom line: I spent over $800 for x-rays that should have cost me $37.  Let me explain.

Over the last few decades a series of economic, political and social changes have resulted in the shifting of risk management responsibilities from institutions to individuals.  Companies have shifted responsibility for retirement, career planning and health care to employees and government at all levels have reduced social support services. 

Health care is a great example of this shift.  Consumer-driven health care - where the consumer plays a key decision-making role regarding the health care they receive - has greatly expanded over the last decade and is widely forecast to continue to grow in importance.  In addition to shifting decision making to consumers, it also shifts some of the health care cost risks. 

As a small business owner, my health insurance is consumer-driven.  We have a high deductible plan and a health savings account (HSA). These plans are both cost and tax efficient, but in exchange it's my responsibility to be a knowledgeable health care consumer. 

Back to my story. 

I recently needed x-rays.  My doctor gave a list of walk-in x-ray clinics to choose from.  I picked one based on convenience (the x-rays were negative).  The bill, which came a week later, was $841. 

Quite shocked at the price I looked into it.  I discovered that without realizing it I'd gone to a facility that's part of a nearby hospital.  Because of this, I was charged hospital rates. 

Had I gone to a walk-in clinic that wasn't part of the hospital, it would have been much cheaper.  For example, the x-ray facility located next door to the one I visited would have charged me $37. 

No one - my doctor, the folks at the clinic (which had a different name than the hospital) - bothered to point out the huge price disparity.  Instead, I was expected to know that the same, simple x-rays range in price from $37 to $841.   

And I should have - which my wife quickly pointed out when she saw the bill (she also realized it was a risk shift mistake and suggested I write this article). 

The Risk Shift is a powerful and growing trend that impacts almost everyone. 

It's also creating new opportunities for businesses that can help individuals and families navigate their increasingly complex lives.  The growth of financial advisors, elder care specialists, college coaches, health insurance brokers and many other professions is at least in part due to the risk shift. 

We cover the Risk Shift and what it means for financial institutions in a article on Banking.com, and it's one of the 20 key trends in the Intuit 2020 Report. 

Do Online Social Networks Make Us Better Social Beings?

The Smithsonian's How Technology Makes Us Better Social Beings covers research showing that online social networks like Facebook may make us more social.  Key quote:

“There has been a great deal of speculation about the impact of social networking site use on people’s social lives, and much of it has centered on the possibility that these sites are hurting users’ relationships and pushing them away from participating in the world,” ..... “We’ve found the exact opposite—that people who use sites like Facebook actually have more close relationships and are more likely to be involved in civic and political activities.”

The study the article references found that Facebook users:

• Are more trusting of others
• Have more close relationships
• Get more social support
• Are more politically engaged

Interesting stuff.  It also fits nicely with some of the work we've been doing that shows online networks are leading to more local interaction. 

The research was conducted by University of Pennsylvania sociologist Keith Hampton and Pew Internet.  The full research report can be found at Pew Internet.