So what’s worrying small business owners? Inflation!
While the Federal Reserve is focused on the problems of the large banks, small-business owners are worried about inflation according to the National Federation of Independent Business December Small Business Economic Trends report released today. Plans to raise prices to respons to higher costs rose from 21 percent in September to 26 percent of all owners in December.
“The historic relationship between inflation and the percent of owners reporting higher prices suggests that inflation will be showing some new, unwanted viability,” said NFIB Chief Economist William Dunkelberg.
Unadjusted, 27 percent of small-business owners surveyed reported raising average selling prices, up three points from November, and 12 percent reported lower selling prices, unchanged. This price cutting phase has lasted well over a year.
In case you didn’t believe me when I wrote my last post on my fear of renewed inflation, please take another look at it given this new development.
I am not guaranteeing that we will have a period of sustained inflation, but the risk is real enough to cause me great concern. My concerns have grown even stronger over the past few weeks with some of the talk in Washington about the need for an economic stimulus. If the politicians move in this direction, the odds of serious inflation and all of the pain it will create goes up considerably. Stimulating spending during potentially inflationary times like these is like throwing gasoline on the fires of inflation that are already burning due to oil prices, a tight labor market, and soaring grain prices.
Confusing Means and Ends
Entrepreneurship on steroids. That is what I call entrepreneurs who are consumed with raising as much money as they can, as fast as they can. When we confuse the means (raising capital and securing other needed resources) with the ends (building a sustainable business), we see entrepreneurship run amuck.
The goal of entrepreneurship is not simply to find the next big thing to lure venture capital or make a mad dash to a public offering. It is to create a venture that creates income and wealth for the entrepreneur and allows the entrepreneur to pursue other goals in life through this economic activity, be it creating more jobs in a better place to work, offering a better product to the customer, or making the world a little better place. The goal of entrepreneurship should be to build a good business — with legs — that will help build this entrepreneurial economy.
So on this theme I offer you one of the funniest, albeit somewhat depressing due its truth, videos I have seen in a long time: Here Comes Another Bubble v1.1 – The Richter Scale via YouTube.
(Thanks to Bruce Schierstedt for passing along this gem!)
Even Home-based Businesses Need a Plan
Recent estimates place the number of home-based entrepreneurial ventures in the US at around 13 million. A recent article at the Wall Street Journal suggests that home-based businesses need a plan as much as any other entrepreneur. But rather than being used to secure financing, this plan should be used to keep sanity and order in your home office.
Alvah Parker…a career transition coach…suggests at-home entrepreneurs write a detailed business plan that includes not just projections for the business itself, but also specifics on how you’ll manage working from home. This includes laying out a regular work schedule and describing in advance how you’ll handle specific scenarios, such as if a friend or relative calls during working hours or your child interrupts during an important phone call. You might even designate a time during the day or evening for household tasks, errands or recreational activities you’d otherwise be tempted to do during work hours.
And that reminds me… it is 2:30 and my plan for the day at my home office is to stop writing and take a walk with my wife and our dogs. I need to stick to my plan!
VCs Still Bullish
If you’ve ever interacted with a VC you might find it hard to imagine them feeling bullish about anything, but the latest survey released by the NCVA paints VCs as having a fairly optimistic outlook for 2008.
Venture capitalists are forecasting an active year for the industry with high growth in the CleanTech sector, an improving IPO market and fewer venture firms in 2008. These predictions are among the top line findings of the NVCA 2008 Predictions Survey. The results also show concerns about global investments in certain regions including China. Additionally, the industry believes fund sizes will become larger and returns for limited partners of venture capital funds will improve in both the short and long term horizons.
Vote for Andy
One of our students here at Belmont is a finalist for this round of ideablob.com voting. If you haven’t been to the site, think of it as a monthly American Idol for business ideas with voting taking place at the website.
Andy Tabar is one of our student practicing entrepreneurs trying to build his web-based business. It is easy to vote. Just go to the ideablob.com website and register. After you have go back to the main page for ideablob.com and vote for Andy’s entry “Expand my global tech company” idea. Please go to ideablob.com and vote for Andy!!
Happy New Year!
Here is a blessing for 2008 for all entrepreneurs around the world (with apologies to those in Ireland, to whom this may sound vaguely familiar):
May the market rise up to meet you.
May cash flow always be at your back.
May customers shine warm upon your face,
and opportunities fall frequently upon your venture.
And until we meet again,
May God hold you in the palm of His hand.
Here’s to another trip around the sun! Happy New Year!
Reading Income Statements
When you deal with something almost everyday it can become second nature to you. So it is with financial statements for those of us who pour over them in business plans, financial forecasts, and case studies. But for many entrepreneurs, even some with surprisingly large companies, financial statements are difficult to digest and interpret.
My column in this week’s Tennessean offers some tips on how to begin to understand and better utilize the information contained on a monthly income statement.
It is important to look beyond the numbers presented in the income statement and examine the percentages that each of those numbers represents. Look at major expenses every month to see what percentage of sales is being used to pay for each expense. Entrepreneurs who train themselves in how to read their income statements carefully will begin to see trends that will help them make decisions and solve problems within their companies.
What’s in a Title?
I have always tended to believe that the titles we assign to positions in our businesses are a cheap currency we can use to attract and reward employees. There were many times over the years that I actually asked a prospective new hire to suggest to me the title that would best fit what they would be doing in the position. As long as it helped accurately communicate what they did to other employees and outsiders that they interacted with in their work, I tried to be rather flexible.
The Wall Street Journal has a story that show just how far some companies take create titles:
Princess paysalot (payables, purchasing and asset manager), cultural curator (office manager) and supreme sorceress of syntax (copywriting team lead) are among the jobs at privately held board-game maker Cranium Inc….
The “cool” factor is one driver behind the trend. “Whenever someone sees my business card, they say, ‘Wow, you must work for a really cool company!'” says Mr. Tait, whose company has about 80 employees.
Recruiting may be another. “When compared to other companies, it makes us stand out,” says Robert Stephens, founder of Geek Squad, a 24-hour technology-services provider acquired by Best Buy Inc. in 2002. Some jobs at the company: counter-intelligence agent, double agent, mission controller, covert operator and public defender. Mr. Stephens calls himself chief inspector.
As long as a title does not misrepresent what someone does, cause too much confusion, or delegitimize the company to the outside world, have some fun!
I wonder what the university would think about this title for me — The Pied Piper of Free Enterprise…..
Entrepreneurs as Community-builders
Entrepreneurs today are not only the builders of our new economy, but also have the potential to help rebuild our society and culture. Here is one simple example of how entrepreneurs can be true community-builders sent to me by Ben Cunningham. From Deleware Online (via Crave Online):
[Pedro] Toala was paralyzed in June 2006, when kids tipped over the portable toilet he was using in a Wilmington city park. His spine broke when he fell….
[M]ost of [his] split-level house was inaccessible to a man in a wheelchair. He could not eat dinner with his family or go into the backyard with his son. Just getting in through the front door was difficult.
Early this year, Cher Przelomski and The Planning Factory, a special events company, decided to investigate how they could help the Toala family as a way of celebrating the firm’s 25th anniversary. The group first tried to interest producers of ABC-TV’s “Extreme Makeover: Home Edition.” When ABC officials declined, Przelomski and her colleagues organized their own version.
About 70 contractors and 60 volunteers responded to revamp the entire home and make it not only more accessible, but more beautiful, energy efficient and functional. Pettinaro Relocation provided a furnished apartment for the Toalas to live in until the work was complete.
The family was able to move back into their remodeled home in time for Christmas.
Merry Christmas!
