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Small Business Success Index 4

Index Score*   Grade
73 marginal
Capital Access 67
Marketing & Innovation 65
Workforce 76
Customer Service 88
Computer Technology 73
Compliance 92
*Index score is calculated on a 1-100 scale.

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Founder at Work: Tim Brady, First Non-Founding Employee, Yahoo

September 13th, 2010 :: Monika Jansen

Yahoo team 1994Last month, I decided to start sharing insights gleaned from the book Founders at Work by Jessica Livingston.  The interviews (with founders of technology companies from 37 Signals to Trip Advisor) provide an educational, behind-the-scenes look at how start-ups grew into huge companies.  Because I like to learn from others, I’ve decided to turn this into a monthly series.

First, a little background on Yahoo and Tim Brady:

Yahoo started out in 1994 as a bunch of links to research papers.  One of the two founders, Jerry Yang, was roommates with Tim Brady during their undergrad days at Stanford.  Jerry and David Filo, Yahoo’s other founder, asked Tim to write a business plan for Yahoo while he was getting his MBA at Harvard.  Once the business plan was finished, David and Jerry asked Tim to join Yahoo.

What you can learn from Tim Brady (2nd from left in photo), Senior VP of Network and Commerce Services at Yahoo, launch date 1994:

Advertising as business model.  From the very beginning, they knew they were a media company first and a web portal/search engine second.  As a result, their business plan was based on advertising to generate revenue.  HotWired, Wired Magazine’s online site, sold ads on their site, so the Yahoo team adopted the strategy for themselves.

Smart partnerships.  Netscape was the only browser back then, and they were only in the game so they could sell space on their servers.  They happily added Yahoo to their directory button, which sent Yahoo’s traffic through the roof.

Branding via graphics.  To build their brand, Yahoo added graphics.  I know, today it sounds so obvious, but in 1994 adding graphics to a website was a new concept.   Internet connections via slow-as-a-snail-stuck-in-molasses dial-up modems caused web pages tricked out with graphics to download even slower.  Yahoo knew that great graphics were integral to their branding, so they launched both graphics and ads at the same time to make a big impact.

Do what it takes to help your customers.  Unlike AOL, Yahoo understood that the Internet was (and still is) an open system and erecting walls was not the smartest operating plan.  If you couldn’t find something using Yahoo’s search capability, you were given the option to try searching on a competitor’s site, like Excite.  (I actually remember this feature!)  By helping their customers, Yahoo clearly conveyed that they had their users’ best interests in mind.

Seize new opportunities.  Yahoo is now known for its news, but they stumbled upon the business opportunity by accident.  Their first foray into News came the day Prime Minister Rabin of Israel was assassinated in 1995.  They placed the assassination on their front page, got great feedback, and pursued the opportunity to become a news outlet.

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Tweetchat on “The State of U.S. Small Business” Wednesday, Sept 15th, from 1-2:30 pm EST

September 9th, 2010 :: Steven Fisher

Are you a small business owner feeling burned out and struggling to find new ideas to grow your business? Come join us for a Network Solutions hosted tweet chat (#NetSol) to understand the current state of the U.S. Small Business, key challenges facing them in terms of marketing and innovation, access to capital and, more importantly, leave with some simple tips on how to overcome those challenges.

Steve King

Our guest tweeter, Steve King, eminent small business researcher and President of Emergent Research, a small business consulting company will unveil the top ten findings from the recent Network Solutions’ Small Business Success Index, Wave-4 and offer some simple steps to overcome roadblocks that stop you from being innovative. Join us for the Network Solutions tweet chat to understand:

  • The current status of U.S. Small Business across six key dimensions (capital access, marketing & innovation, workforce, customer service, computer technology and compliance).
  • Top ten findings from Network Solutions’ Small Business Success Index that affect your future growth.
  • What technology investments are deemed a priority for small businesses in the next two years?
  • How social media usage among small businesses has changed in the last year?
  • How to continue to be the innovation engine despite the current economic conditions?

Event Details:

When: Wednesday September 15th 1-2:30pm EST



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Planning a Business with a Sale in Mind

August 10th, 2010 :: Thursday Bram

When you start a new business, you can have a variety of exit strategies in mind. They can vary from leaving it to the next generation to going public. But one of the most common scenarios you can be planning for is to sell your business once you’ve built it up. Maybe you’re planning to sell when you’re ready to retire, maybe you know that you enjoy what you’re doing now but after a few years you expect you’ll be ready for a change. No matter the reasons, putting your business in a position that you can sell it easily simply makes sense.

Planning a Sale from Day One

Not all entrepreneurs think about their exit strategy when they’re starting a new business. After all, it makes more sense to think about a sale when you’ve actually got the company up and running. But the way you start your business can have a major impact on how you will be able to leave it. Something as simple as the business structure can slow down a sale, especially if there’s another party involved in the ownership (a partner or an investor). While thinking about a sale may not make you avoid partners, thinking ahead will allow you to set up a contract or an agreement that can minimize problems down the road.

Similarly, the processes and systems you put in place to operate your business can make a buyer more or less interested in taking over the management. The tools you use, in particular, are worth considering. For instance, you can put together a custom website for your business that requires a personal knowledge of HTML and more than a few hacks to work. Or you can make the whole thing easier to hand over to a successor whenever you choose to sell by using a well known content management system to create your site and make sure that everything about the site is by the book and easy to update.

Delegation is the Key

Ultimately, your ability to step back from the business and have it run itself will be one of the most important factors in the sale of your company. While you can sell a business that requires close supervision from the owner, buyers are likely to offer lower prices. That’s because it always takes a new owner some time to get up to speed — time that can translate to lost money if the business can’t hum along on its own. The more processes and systems you can put in place to make your business automatic, the easier it will be to sell.

As you plan your business, spend some time thinking about how vital you are to the process. If, for instance, you’re a consultant and the business is based on your abilities as a principal, you’re going to have to problems to overcome if you want to be able to sell your business eventually. That may mean hiring some staff who can handle the same projects you do or automating the process.

Image by Flickr user Ian Muttoo

Founders At Work: Max Levchin, PayPal

August 9th, 2010 :: Monika Jansen

Max LevchinThe book Founders at Work by Jessica Livingston provides an educational, behind-the-scenes look at companies that began life as start-ups and exploded into huge companies.  She interviews the founders of Hotmail, Apple, Yahoo, Trip Advisor, Firefox, and Adobe Systems, among many others, and lets them tell their stories: how they got started, the mistakes and smart decisions they made, what they wished they’d known, etc. 

In her introduction to the book, Jessica says all of the founders she interviewed shared one quality: perseverance.  That’s a trait most small business owners share, too. And because I like to learn from others (even while making plenty of mistakes on my own), I thought sharing insights from select founders each month on this blog might be fun.  So here goes:

What you can learn from Max Levchin, Cofounder and former CTO, PayPal, launch date December 1998:

Throw out business ideas that aren’t working.  Before PayPal became a web-based payment system, it offered a service for transmitting money via PDAs.  When Max and his co-founder, Peter Thiel, realized everyone was trying to use the website, which was just a demo, for transactions, a light went off.  Max and Peter made the decision to shut down the PDA service and focus on the web-based service.

If someone warns you about potential risks, listen to them.  Max was warned about fraud from people in the banking and credit card processing systems.  They did what they could to prevent fraud, but after 6 months, chargebacks started popping up.  (I had no idea what a chargeback was, so I looked it up on PayPal’s website: Chargebacks occur when buyers ask their credit card company to reverse a transaction that has already been approved.  Fraudsters game the system by requesting a refund on goods they purchased and received.) In no time at all, PayPal got swamped with chargebacks—to the tune of $10m in losses per month.  Because the problem was so severe, Max ended up refocusing his time and energy on the fraud issue.  PayPal had to hire investigators to help track down the sources of fraud, and he and an intern built an internal system called IGOR to finally bring chargebacks down to almost nothing. 

What Max wishes they’d known.  They had no idea that fraud would become such a huge issue and require so many resources—both time, money, and people—to combat it.  As Max says in the book, they are basically a security company pretending to be a financial services company.

Free is a powerful tool to fuel growth.  Because PayPal allowed non-members to receive money without being charged a transaction fee, growth went viral.  The catch: once the money was sent to you, you got an email saying you had to become a member to actually retrieve it.  Max said, “That’s the most powerful viral driver there is.  Free money available to you.”

 Endnote: Max has left PayPal and, like many serial entrepreneurs, he has moved on to found a new venture, Slide, which sells apps for Facebook.  He is also the Chairman of Yelp.

Building a Location-Independent Business

August 5th, 2010 :: Thursday Bram

The term ‘location independent’ is showing up all over these days, as are terms like ‘digital nomad.’ The general idea is that a small business owner can create a company that can support him, without requiring him to stay in one place. That means that travel is much more of an option for small business owners, along with a general flexibility that makes for more options for entrepreneurs.

But building a location-independent business is a little more complex than deciding that you want to head off to Bali for a few months. You have to have a foundation that allows for you to work from little more than a laptop and a cell phone. You also have to either be working in a field that requires minimal face-to-face interaction or that you can adapt so that Skype, email and phone calls are sufficient.

The Right Business

It’s easy to think that most businesses could never become location-independent. Every business has to be where clients can find it. But more and more, thanks to improving online tools, clients are going online. That, in turn, means that many businesses can, as well. It’s just a question of thinking about how you truly need to interact with customers or clients — and how they’re willing to communicate with you. An architect, for instance, may need to meet with clients in order to understand their needs for a projects, but that meeting doesn’t necessarily need to be in person. A video conference can serve the same purpose, without even requiring the client to come into the office. The actual act of creating architectural plans is all done on a computer as it is, making it a profession surprisingly easy to turn into a location-independent business.

It’s not always that simple. An IT professional, for instance, typically has to actually be around the computers he needs to fix. But that doesn’t mean that a location-independent business is off the table. Creating resources for the same clientele — such as automated tools for backing up a computer — can allow someone who is looking for an opportunity to get out of the office to do so. It’s a question of thinking broadly about your skill set and what options you have for providing services and products if you aren’t physically present.

The Right Systems

At first glance, it may seem that most location-independent businesses are limited to being one-person businesses. Managing employees across distances, however, has become a relatively easy matter. Provided that you’re willing to be flexible about time zones, it can even be surprisingly easy: scheduling meetings for individuals located all around the world is the hardest part. But with email and online project management tools, everyone can stay on the same page, even if one of you is asleep while everyone else is working.

Even better, a willingness to work with employees located elsewhere can resolve issues like having a physical presence for your company. If you need a warehouse to ship products from, you can hire employees anywhere there’s cheap warehouse space. You can have an employee check a P.O. box on a regular basis and generally handle the physical details of running a business if you aren’t comfortable with more automated services.

Image by Flickr user ableman

Avoiding Critical Business Mistakes That Lead to Failure

June 24th, 2010 :: Steven Fisher

FAILURE is the word that every entrepreneur must face head on if they are to succeed. There are two sayings that always stick with me when I speak about failure to fellow entrepreneurs:

  1. If you haven’t failed at all, then you really aren’t trying hard enough
  2. Failure is part of the process, just learn from it and don’t do it again

Now there are two types of failure – small mistakes that you learn from, move on and don’t make anymore; and critical mistakes that can be catastrophic leading to going out of business.

Recently, I came across this great article on “Eight Mistakes that Devastate Business Owners” and it really resonated with me. In the article they list eight mistakes:

  1. Keep your retirement savings intact.
  2. Avoid the lure of sole proprietorship.
  3. Read the fine print.
  4. Get insured.
  5. Get an employment contract.
  6. Protect your innovations.
  7. Don’t promise what you can’t promise.
  8. Check the books.

I know this list might seem obvious but if you are new to starting a business, think about this list for a minute. When you are in the middle of something you forget about these things or think “it will never happen to me”. All I can say is that from this list, over the 10 years I have been in business I have had three things come to bite me in the butt and while they were recoverable, if they were any bigger it would have destroyed my business and in some cases left me personally bankrupt.

They are all equally important and you should read the full article to get some great examples of when people don’t do these things. I guarantee you will be bringing these issues up at your next partner/board meeting.

Startup Fever with Six Million New Startups in the US in 2009

June 22nd, 2010 :: Steven Fisher

Six million. Wow. I heard this on a Marketplace podcast (you should subscribe to it if you don’t) that talked about this report out today from the Kauffman Foundation. It it they stated that start-ups hit a 14-year high in the middle of last year.

That is a big number and they got their core data from self-employment stats the Census Bureau and the Labor Department publishes, and sure enough, 2009 was a stellar year. It revealed that more than half-a-million people started their own businesses each month. And that is up nearly 5 percent from the previous year.

This is one of those numbers that confirms two things – people start businesses in recessions and that the United States is a startup nation. Granted, this number was up due to higher unemployment but it shows us that when we are faced with a new challenging situation we won’t sit still. In fact, many new entrepreneurs I have talked to looked at their layoff with a severance package as the final kick in the pants they needed to start their business and achieve a life long dream.

One of the big trends in this report is that many of these people are part of the emerging Homepreneur trend which Emergent Research covered in a recent report. Even though they might be small, these small business are the engine of job growth in the United States.

Here are some highlights from the findings:

  • Groups ramping up startups include African Americans and folks 55-64.
  • Advantages include: cheap talent, cheap rent, reduced competition.
  • Failure rate stable as in other years: 50% in the first 5 years.
  • Small business credit cards cost more than before – a 14% increase vs. the consumer increase of 2.5%
  • Small business credit cards not protected by new consumer protection laws passed by Congress

I am excited to see more startups that have launched with no equity out the door, or by early revenue from solid deal flow that helps them grow organically. Since they have built their business in a tight credit market not getting capital has forced them to work with what they have instilling a discipline that will serve them well.

Thinking About Becoming an Entrepreneur or Taking Your Business to the Next Level?

We have two great resources you should check out – the Small Business Success Index and “The Rise of the Homepreneur“.

The Rise of the Homepreneur” which discusses the findings of the report “Homepreneurs: A Vital Economic Force” which is a new report published by Emergent Research, a small research and consulting shop in Lafayette, Calif. “We’re seeing more and more home-based businesses that are real businesses,” says Steve King, who coauthored the new report with Carolyn Ockels. To prepare the report, they analyzed U.S. Census data and Small Business Administration research, along with data from our very own Small Business Success Index, a survey of 1,500 companies sponsored by Network Solutions and the University of Maryland’s Robert H. Smith School of Business.

The Small Business Success Index™ (SBSI) is in its third wave of the report, sponsored by Network Solutions® and the Center for Excellence in Service at the University of Maryland’s Smith School of Business. To download a copy of the Small Business Success Index and also find out how your business scores on the six key dimensions of small business success, visit

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The New Business Plan

June 11th, 2010 :: Monika Jansen

As I’ve mentioned in this space before, I did not write a business plan when I started my business.  One of my strengths is also one of my weaknesses: I am terribly impatient. I like to do; I do not hem, haw, and stall.  From my point of view, writing a traditional business plan is a total waste of time for small business people like me. I am a one-woman shop, registered as a sole proprietor, and happy to stay small for the time being.  Traditional business plans are for companies that need a lot of financing, are highly scalable, and entering a competitive—or soon to be competitive—marketplace.

(Before you start posting comments about the importance of having some kind of plan in place, keep reading.  I do agree that it is absolutely important to articulate your business goals, the competitive advantage of your product(s) or service(s), and your sales and marketing strategy.  I will even admit that I wish I had done two things when starting out: researched my competition so that I priced my services appropriately from the get-go, and really thought about which industries I’d prefer to work with and which projects I enjoyed writing and editing the most so that I could build up expertise faster in those areas.)

The always provocative Seth Godin recently wrote a great blog post on a modern business plan.  He argues that traditional business plans are boring and simply demonstrate the ability to do as expected.  His business plan would include only five sections: Truth, Assertions, Alternatives, People, and Money.   Based on his outline, I think his idea of what constitutes a good business plan would be much more useful for people starting and running small businesses.  Seth’s modern business plan really gets you thinking about how to be an entrepreneur and create something new and of great value, rather than just a small business owner who is doing something that’s already being done.

Truth: This part lays out the way your industry operates, for good and for bad, right now.  What needs are there, who are your competitors, how have they succeeded and failed?  Include short case studies or stories, spreadsheets, charts, graphs, whatever it takes to illustrate your point(s).

Assertions: As Seth describes it, this is the heart of all business plans, because this part describes what you’re going to do and how that is going to change things.

Alternatives: Because everything we hope to do doesn’t always work out, this section describes your back-up plans.

People:  No resumes here.  Write what characteristics you and your team possess to ensure things keep moving forward when things are going well and when things are not going well.

Money: This section is exactly what it sounds like.  It’s the part that puts me to sleep, but it is vitally important to know how much money you need to be viable and how you plan on spending it.

Have You Made Your .CO Pitch? Deadline for the .CO PItch Contest is 6/14

June 10th, 2010 :: Steven Fisher

So, have you pitched your idea for a new business, blog or website yet? The deadline is approaching and the contest winners will be announced soon. You still have time to get in your entry by June 14, 2010 and you could win $50,000 and the ideal .CO web address* to make it a reality.

Recently, we announced the global launch of the .CO domain and this .CO pitch contest.  As a quick refresher, the site Pitch.CO has a contest asking for your best business idea pitch and you can win $50,000. Here are the details:

Pitch it

Whether you’ve got a full plan ready to launch or just a few half-baked ideas drawn on the back of a napkin, it’s time to make your pitch! Clear your calendar for 30 minutes, get ready to focus and put your best pitch forward. Don’t worry about making it perfect – just have fun and make it happen. You’ll need the following details:

  • A 60-second video or an image that will inspire

    Nothing gets people inspired like hearing a great new idea directly from you.

  • A catchy title for your idea

    Half the battle in any contest is getting people to pay attention. How will you do it?

  • A little plan

    This is where the rubber meets the road. How does your idea come to life (in 1,000 characters or less)?

  • Your ideal .CO web address

    This is your chance to get the .CO web address you really want – choose wisely.

  • Tell us about you

    Charm the voters and judges with a little story about yourself and your background.

Promote It

Once you enter the contest, use our easy promotional tools to start marketing it everywhere. Share it with your friends, update your status, tweet about it, call your relatives, tell a stranger, whatever it takes to get people to vote for your entry on! The top 30 vote-getters will be advanced to the finals where they will join a maximum of 8 pitches selected by the judges. You can learn more about the great panel of .CO pitch judges on the .CO Pitch Site. Voting ends on June 14, 2010 at 11:59pm EST.

Win It

Grand Prize (1)

$25,000 in cash
$25,000 in web design/development services
1 ideal .CO web address to build it on*

Runner Ups (5)

$500 in cash
1 ideal .CO web address to build it on
*Subject to the .CO Launch and Registration Rules

Enter to Win!

So let’s get started! Go to or click on the button below. Good luck!

Disclaimer: Any .co domain including those mentioned in your contest entry may be registered by any member of the public after the sunrise period ending on June 10, 2010.

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Convincing Your Family of the Wisdom of Running Your Own Business

June 2nd, 2010 :: Thursday Bram

When I told my family that I was starting my own business, there were some dire predictions. I think one of the nicest was the suggestion that I stock up on ramen ahead of time, just in case. And this was from a family where only one of my relatives — an aunt — was working for an employer. My family is all entrepreneurs.

Getting the Family on Your Side

While you don’t necessarily need your family’s support to start a business, it’s nice to have them on your side. It took me more than two years to convince my family that I probably wouldn’t starve without an employer. It didn’t matter how much I was earning each month (although plenty of relatives would ask, suggesting that I should never count on getting such a good month again).

Despite my family’s feelings about the likelihood of my success, they were generally supportive. My dad sat me down and gave me the benefit of his many years in business, as did my grandfather. I got a few connections for clients — although I’m still not sure if most of my family actually understands what I do, aside from banging on a computer keyboard all day. I even got some hand-me-down furniture. All in all, my family did their best to make sure that my business was a success.

Getting family on your side is a very different matter, though, depending on the family you belong to. With my family, it was a matter of discussing the pros and cons, being willing to consider potential problems and generally showing that I wasn’t a starry-eyed idealist. In other families, though, showing your passion may be a necessity for winning them over.

Convincing Your Family You’ve Succeeded

There will always be a few relatives who don’t think that my successes so far actually mean that I have a thriving business. I’ve come to the conclusion that their opinions are lost causes. But I’ve slowly shown my family that I am doing well. For some, that was landing a name-brand client. For others, it was seeing my name in print in a big name publication.

But the big difference seemed to be the fact that I’ve just kept on working, pushing through — the longer the I’ve stuck with the business, the more that folks have taken me seriously as a business owner. Sticking with it has convinced them that I’ve made the right choice, at least for me.

If you commit yourself to your business, more often than not, other people will come to understand that you’re in things for the long haul. It’s not a sure bet — there are always some people who are bent on being negative. But as you achieve milestones, you’ll find that folks will realize the importance of your business to you. They’ll come to see your business as the right choice for you.

Image by Flickr user knmurphy