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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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Innovation Articles

Book Review: The Power of Pull

October 27th, 2010 :: Monika Jansen

As I read through The Power of Pull, I realized something: This is written for people who work for or lead medium-sized to large companies, because we small business owners and entrepreneurs already know everything in this book.  As fabulous as it is—it is very well written and has some awesome endorsements from Bill Clinton, Newt Gingrich, and Eric Schmidt, among other big names—you don’t need to read it.

In the book, authors John Hagel III, John Seely Brown and Lang Davison argue that we’re moving from a push world to a pull world.  In marketing, we talk about push and pull often.  In the old days, companies pushed messages out to a huge audience, some of whom were in their target market, some of whom were not.  You just hoped your potential customers were getting it.  Now, companies pull in their target market to their messages via social media, blogs, and interactive online experiences, like games.

So, we’ve been living in a push world, where needs are forecast, efficient systems are designed, and scripted and standardized processes are de rigueur.  (Think the public school system.)  The pull world, on the other hand, in the one small business owners and entrepreneurs live in: It is flexible, changes quickly, and uses digital technology to turn challenges into opportunities.

An entire section of the book, in fact, could have been titled “Why You Need to Network.”  Instead, it was devoted to three definitions of pull:

  1. Pull helps us find and access people and resources when we need them. We use platforms like social networking and search engines to significantly increase our access.
  2. Pull is the ability to attract people and resources to you that are relevant and valuable, even if you’re not looking for them.  This is more about serendipity than search: Simply increase the number of encounters you have (more networking!) and then set up meetings with the people you could potentially partner or work with.
  3. Pull is tapping into our ability to achieve our potential and grabbing onto new opportunities, partnerships, and collaborations that emerge.

As I said, we small business owners and entrepreneurs are already doing all of the above.  But here’s something to keep in mind.  There are three factors that feed into the power of pull: trajectory, leverage, and pace.  In other words, we need to know where we’re going (have your business and marketing strategy in place!), be able to connect with others when needed (be an active player within your network, and for Pete’s sake, keep networking!), and move as quickly as the change that’s happening around us (social media and technology, anyone?).

P.S.—Eric Schmidt, mentioned in the first paragraph, is the Chairman and CEO of Google.  But you knew that, right?

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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The Drawbacks of Early Adoption

August 17th, 2010 :: Thursday Bram

Every business owner wants to be out in front of the pack, whether that means adopting a new process or picking up new gadgets. But early adoption can cause problems, especially in a smaller business that may not have the time or ability to test out new processes before making them standard.

Early adoption can let you get the drop on your competition, but there are potential problems that go along with it. Some of the most obvious examples come from tech gadgets — the people who picked up the iPhone 4 can attest to the downside of being among the first buyers just based on their antenna issues. But similar problems occur in business, as well. Even something as simple as a new machine that doesn’t work exactly as it should can slow down your business as you look for ways to fix new problems.

Conservative, But Not Too Conservative

Entrepreneurs are used to risk — after all, starting a new business from scratch can be more than a little risky. But when it comes to changing the way you do business, a little conservatism can come in handy. A certain level of reluctance when it comes to adopting new techniques or technology can be useful. Being first in line may allow you to get the drop on your competition, but it also means that your competition has a chance to see where things go wrong before adopting those new steps themselves. If you let someone else go first, you’ve got a chance to see where someone else goes wrong.

Once you’ve got a good idea of how to avoid those problems, though, it can be well worth the effort to be second. There are plenty of situations where the second company to get into the game is the winner — just think about how Sony released Betamax, only to be trumped by JVC’s VHS tapes. Sony was first to market, but JVC was able to take advantage of almost two years of observing Sony’s sales efforts. An observation period allows you to see the problems and even more opportunities to move forward, without have to break that ground yourself.

It’s Okay to Be a Pioneer Sometimes

Despite the drawbacks of being an early adopter, the benefits can sometimes be enough to make it worthwhile. If, for instance, you really are pioneering a new technique, you may have an opportunity to get years ahead of your competition if you do things right. There will always be risks in making a change, but if you’re a business owner, you can’t be afraid of risks. All you can do is look for ways to improve your business and reduce the risks as much as possible. That can mean waiting for someone else to jump in the pool first, or it can mean changing the situation so being the pioneer won’t cause you problems. There’s no metric for being sure that a situation is ideal, of course, but if you are sure you can turn early adoption into a benefit, it may be worthwhile.

Image by Flickr user MattHurst

Are You an Entrepreneur, or a Small Business Owner?

April 7th, 2010 :: Monika Jansen
Orange and gray gears


Innovation is the wheel that keeps the business world turning.  Without it, we’d be living in energy inefficient homes, driving cars that run on leaded gasoline, and wearing parkas that don’t really block wind or keep us dry in a downpour.  Innovation is that little—and sometimes big—something that separates entrepreneurs from small business owners.

In this, the final of a three part series based on a conversation I had with CPA and small business consultant Jason Howell, I share with you Jason’s thoughts on entrepreneurship, which are in turn based on Peter Drucker’s writings and thoughts.    

For those of you who are only vaguely familiar with Peter Drucker’s name, he was a writer, management consultant, and self-described “social ecologist.” (He passed away in November 2005.)  I’ll let Wikipedia take over from here: “He…explored how humans are organized across the business, government, and the nonprofit sectors of society.  His writings have predicted many of the major developments of the late twentieth century, including privatization and decentralization; the rise of Japan to economic world power; the decisive importance of marketing, and the emergence of the information society with its necessity of lifelong learning.  In 1959, Drucker coined the term “knowledge worker” and later in his life considered knowledge work productivity to be the next frontier of management”.  (The hyperlinks were supplied by Wikipedia, too.)

Peter Drucker described an entrepreneur as someone who innovates.  He or she looks at a product or service in a different way and reinvents it to offer something new.  A small business owner, on the other hand, is simply someone who owns a business and replicates what others have done. 

As Jason pointed out, entrepreneurs make a difference in the community, the country, the industry, and/or the world.  There was already light, but Thomas Edison transformed our concept and use of light when he invented the light bulb.  There was already a process in place to build a car, but Henry Ford took it to a whole new level when he invented the assembly line.  Everyone who gets into business does so to make a difference on some level. Maybe that difference is not as life-changing as inventing, say, the microchip, but one that makes a difference nonetheless.

“If someone laughs at your idea, it’s probably a new one.”  Jason couldn’t remember who said it, but I think it’s a great quote.  Even though there’s a fear of innovation and the change it will bring, innovation attracts people.  Think about big, innovative companies who have truly changed the way we live or do things.  Microsoft, Google, and Apple immediately spring to mind, probably because I use their products/services on a daily basis.

But there are lots of smaller companies out there that have changed how things are traditionally done in their industry too.  Check out Wexley School for Girls, which is not a school, is not for girls, and was not founded by someone named Wexley.  It’s a very different kind of ad agency based in Seattle, WA that has one of the funniest, coolest, hippest, wow-est, and most irreverent websites I have ever visited.  I don’t even know them, but I love them.

If you’re company does things differently, find those first adopters, those people who will appreciate and embrace your different-ness, who will love your new product or service.   You never know how being innovative could change your life—or the world.

Innovate or Perish. Small Businesses are Having a Tough Time Innovating.

March 8th, 2010 :: Steven Fisher

Network Solutions and the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business released the findings of their Small Business Success Index survey on February 16.  The index is designed to track the competitive health of the small business sector over time, and the results are always interesting.  Scores in 6 categories are graded; innovation got a C-.  Let’s see why:

Innovation is Not Just About Creating a Cooler Widget. It is about Business Innovation Overall.

When many people hear the word innovation they immediately think of products like the iPhone that change the landscape and innovate an industry. While not every business can create a product like the iPhone, they can innovate. Slightly less than half of small businesses are successful in innovation. This is around the areas business process innovation, which includes coming up with new ideas before competitors and finding ideas to increase revenue.

The most recent SBSI wave examined marketing and innovation in greater detail, including the methods used by small businesses to attract new customers. When asked about six common categories used to obtain new business, the most common method – relied on by over a third of small businesses – is traditional print advertising such as newspapers, trade journals, and magazines. After this, email marketing is the second most common method used by a quarter of small businesses, and social media marketing which is used by a fifth. Half of small businesses do not use any of the six standard categories for marketing leads, but the majority of these “other” channels consists of reliance on referrals and word of mouth; this includes direct referrals, leads that come to the business because of its general reputation, or referrals by other businesses. Besides referrals, “other” types of marketing methods tend to be idiosyncratic methods related to the business such as:

  • Walk- in traffic
  • Outdoor advertising such as signs and vehicles
  • Farm markets, craft shows, etc.
  • Conferences, trade shows, and meetings (e.g., the Chamber of Commerce)
  • Agricultural commodities markets
  • Directories (print and online)
  • Personal selling and cold calling
  • The GSA Schedule for federal government business
  • Volunteering in the community

The Economy has Been an Innovation Catalyst

An interesting thing I saw in the SBSI is that the economy has a silver lining in a dark cloud. The recession has had some positive effects on small business innovation, including leading them to:

  • Find more efficient ways to operate (72 percent)
  • Find new products and services to meet customer needs (47 percent)
  • Become a better team (43 percent)
  • Reduce inefficient or unnecessary staff (31 percent)

The Economy: A silver lining in a dark cloud. The recession has had some positive effects onsmall businesses, including leading them to:· Find more efficient ways to operate (72 percent)· Find new products and services to meet customer needs (47 percent)· Become a better team (43 percent)· Reduce inefficient or unnecessary staff (31 percent)

The Bottom Line: Innovate or Perish

So you now know that innovation is not just for making newer cooler electronics or widget. It is about innovating with your processes, learning about how to go against your competitors and use tools like social media to stand out. To survive you must innovate or perish. That’s it. So what are you waiting for?

Download the SBSI Report Right Now

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