Merry Christmas!

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A CHRISTMAS PRAYER
by Marty Robbins
Dear Lord I want to thank you
for what You’ve done for me
For all these many blessings
In a world that’s caught in grief and misery
No matter where I wander
I ‘m always in Your site
and so my thanks to You, My Lord
upon this Christmas Night
If all my prayers aren’t answered
then Lord, I understand
There’s others more deserving
Others Lord who need a helping hand
I pray you’ll guide and keep me
Ever near the light
And so My Deepest Thanks My Lord
Upon this Christmas Night.
I will be spending the next few days with family and friends as we celebrate Christmas. Have a blessed and merry Christmas.

Entrepreneurship and Family Business

Professor Frank Hoy from the University of Texas at El Paso has published an excellent article which has a critically important lesson for family businesses (note: you can get access to an abstract, but need to pay for the full article). He argues that, like any mature business, family firms must find ways to innovate and even redefine their businesses if they are to continue to survive in the marketplace.

Does family matter in corporate venturing? Converting the question, can a family firm survive without corporate venturing? Life cycle theory contends that it is normal for an organization to form, grow, mature, decline, and die. Long-term survival, especially through multiple generations, would require renewal through innovation to avoid decay and death. Strategic corporate venturing may be the answer for many family firms. To innovate and prosper, a family enterprise must contend with multiple life cycles, rarely synchronized, any one of which may be in a decline stage at any point in time.

The business model that created the initial success for the founder in all probability will not allow the business to survive over the long term in a dynamic market. Some of the same processes of innovation that created the business in the first generation may need to be repeated by subsequent generations.
My experience with family businesses is that there can be two sources of resistance to innovation (or what Prof. Hoy calls willingness to change) in family firms. I often see resistance from the first generation, where the founder may bristle at any suggestions about “doing things differently than we have done them all along.” But resistance to change may also come from subsequent generations, who may not have the entrepreneurial passion of the founder.
However, this article also got me thinking again about how we define entrepreneurship. The type of innovation Prof. Hoy refers to is sometimes called corporate venturing or corporate entrepreneurship. The argument for calling innovation in established businesses entrepreneurship is that it is the same basic process. And since we define entrepreneurship as a set of processes rather than in terms of a type of person, entrepreneurship can take place in a variety of different settings and contexts.
My concern is that this rather broad use of the term has led to the loss of any clear meaning to the word entrepreneurship. From a previous post in which I look at the issue of a definition:

Entrepreneurship has become sort of a generic term that describes all sorts of behaviors that involve being creative, being mischievous, being sneaky, breaking rules, not wanting to follow rules, and so forth. An example involving rules can be heard every day in large corporations. “I wish they would leave me alone. I am just being entrepreneurial.” These people are not starting any businesses; they just use the term as cover for not wanting to follow corporate policy. I actually heard a criminal described on a newscast as being entrepreneurial because he was somewhat clever and creative in his crime. At least in American culture, the term entrepreneurship has become blurred into any one of a large collection of basically anti-social behaviors. But, I suspect from conversations I have had with friends and colleagues from around the world that is not uniquely an American issue. In some cultures they avoid the use of entrepreneur, because it has developed the connotation of a sleazy, cunning con-man.
This is what can happen when terms take on a more generic meaning. The term loses specificity and really begins to have no clear definition. Entrepreneurship has become a trendy term that can mean almost anything you want it to in many contexts.

I do not mean to diminish the importance of the lesson for family businesses in Prof. Hoy’s article. The need for innovation and corporate venturing cannot be overstated for most aging family firms. But I do wish all of us would be more careful and narrow in our use of the term entrepreneurship. Let’s keep entrepreneurship as the process of business formation by privately held ventures.

With More Access to Credit Comes More Debt

Now that credit card companies have discovered the small business market, small business owners are taking on more debt.
The number of small business loans outstanding under $100,000 increased 25 percent between June 2004 and June 2005, according to a report released today by the Office of Advocacy of the U.S. Small Business Administration. The increase came mostly from credit card use by small business. The report also noted that the number of small business loans outstanding between $100,000 and $1 million increased 5 percent during the same period.
“Access to credit is vital for small business survival,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “That is why we produce our annual lending report, so that trends in small business finance are made clear. One evident trend is the increase in the number of micro business loans outstanding. Coupling that increase with the small increase in the dollar amount outstanding of those loans shows that the small business credit card market continues to be quite dynamic.”
The report also ranks lenders in each state by their small business lending activities, as well as ranking large national financial institutions. The report includes data on American Territories as well as the states. A complete ranking of lenders, including prior annual reports, is available. Lenders are ranked on their overall small business lending, not by lending under SBA programs.
However, with increased use of debt comes more risk should the economy slow down. Just because entrepreneurs have access to funding does not always mean that they should use it.

Baby Boomer Careerists From the Eyes of the Entrepreneurial Generation

The generation whose leading edge is just coming into the work force, the ones that many of us call the Entrepreneurial Generation, are sick and tired of the simultaneous bragging and whining that we Baby Boomers constantly offer up when talking about our work and careers. They are the children of the tale end of the Baby Boomers — and they are angry and they want to make changes in our culture.
One of my students offered this comment to a post I wrote on Character last summer:

There are many things that help forge our character and values. My generation, from what I’ve seen, is really focused on keeping family first, even before career. Some say that this is because we watched so many baby boomers screw this whole family thing up. My take on it is that because the baby boomers sometimes grew up wanting, they determined in their minds that their families would want for nothing. Unfortunately, my generation has all they want, but grew up with workaholic parents who were absent in their lives. I believe we’re searching to find that balance between family and career.

Penelope Trunk, who writes a blog called Brazen Careerist, offered her take yesterday on a Harvard study on “extreme careerists” (who are most often Baby Boomers):

I cringe every time I read an interview with a “Successful Mom” who works a 70 hour week and can miraculously balance her kids and husband’s 70-hour week as well. All of this womens magazine [stuff] is self-reported, and what mom or dad is going to stand up and say they are destroying the kids by working long hours?…
Here’s what the Harvard Business Review article should have said: The long-standing practice of baby boomers to have dual-career families with no one home for the kids is bad for the kids, even if the parents are enjoying themselves. Fortunately, the post-boomer generations recognize the problem and plan to not repeat it.

And if you think her words sting, make sure to read the comments that follow her post!
Cal Thomas’ quote on the mess we Baby Boomers have left the generations that follow us are worth repeating:

My generation has been obsessed with making money and acquiring things in place of investing necessary time on marriage and children. The message the kids get is that if marriage is mostly about accumulating wealth and acquiring stuff, they can do that without getting married.
Family trees are beginning to resemble kudzu…

Other countries and cultures around the world are not the only people ready to rebel against today’s American culture — so too are the young adults who are inheriting it.

Near Record Hiring Reported by US Small Businesses

Almost one out of five small businesses plan to hire new employees over the next three months, according to the latest survey from the NFIB. With the exception of the “dot com” boom, the survey indicated the highest job-creation level in its history: during the next three months, 18 percent plan to create new jobs, while only 6 percent plan reductions, yielding a seasonally-adjusted net 19 percent (net 12 percent seasonally unadjusted) planning to create new jobs. Job-creation plans are positive in all industries. In addition to these new job openings being planned, more than 50% of the small businesses surveyed report trying to fill existing positions. But, they continue to report difficulties, with 80% report few or no qualified applicants.
Traditional business media seems to be a collectively puzzled by our true economic conditions. Why given the bad news coming out of so much of traditional corporate America do we still have such strong employment and a growing economy? The answer — when you only focus on half of the economy you are going to miss some important data. GM lays off 10,000 workers and it is major headlines. Small businesses add 100,000 new jobs and it goes almost unnoticed.