Dr Jeff Cornwall

Many of the myths about small business are being rebuffed. One myth was that although small business employs a growing number of people, the pay rates are sorely lacking. The truth is that small business now pays about 90% of big business, while offering more flexible working conditions. They are able to compete for some of the best people with a combination of good pay and desirable working conditions.
Another myth is that innovation in our economy comes from VC backed high growth ventures, large corporations with big R&D budgets, or government backed research, but rarely from small businesses.
A new study just released from the NFIB (all of their studies can be found here) shows the fallacy of this myth.
“Small businesses produce a significant number of innovations,” said NFIB Research Foundation Senior Research Fellow William J. Dennis. “Smaller enterprises appear particularly adept at major breakthroughs in contrast to more incremental or evolutionary changes.”
Even small businesses that are not deliberately attempting to discover innovations employ at least one person, including the owner, whose primary job is to develop new products, services or designs, the study found. Twenty percent say they have one or more people assigned in such activity, suggesting that the owners consider the creative function to be valuable to the business.
Three-fourths of those surveyed said they specifically encourage employees to suggest ideas for new products or services, or to seek better ways to produce and distribute what their company sells. More than half of those who do inspire buy topiramate online uk workers to be innovative offer recognition, bonuses or both to those who succeed.
In the year leading up to this study, more than two-fifths (42 percent) of all small businesses surveyed reported introducing at least one new or significantly improved product, service, process or design into their sales inventory.
Design is a major innovative focus, the poll found. Twenty-one percent of small firms market design, which is profitable. Almost two-thirds (60 percent) of those marketing design said it generates half or more of their sales.
“Patents and copyrights often proxy for innovation in business,” Dennis said, noting that some 5 percent of small-business owners hold a patent (in their name or the firm’s name) that they actively use in their business activities. Manufacturers hold one-third of patents.
Copyrights are more common: 13 percent hold at least one. Data from the survey show that once small firms reach the 10-employee level, copyright acquisitions rise notably. Almost 20 percent of firms that grow to this point own one or more. Manufacturers and those in knowledge-intensive industries such as information and professional, scientific, and technical services are the most frequent holders.
It is critical that entrepreneurs remain , in a word, entrepreneurial. In most cases it is change that created the original opportunity for their business. If they fail to remain innovative, the very changes that gave their business birth could soon make them irrelevant in the market.
“Change is the constant, the signal for rebirth, the egg of the phoenix.” (Christina Baldwin).

Last month the NFIB Small Business Optimism index took a rather disturbing turn downward. However, the April index (released today) bounced right back on reports of strong profits, sales, capital spending and job creations plans.

More than one-fourth of those surveyed (28 percent) plan to create new jobs over the next three to six months, while just 4 percent plan reductions, a seasonally adjusted seven point rise over March. Overall, job creation plans in all industry groups were strong, especially in manufacturing and construction. The strongest regions were Mountain, Mid-Atlantic and South Atlantic states.
Seasonally adjusted, 11 percent reported employment increases in April, but 14 percent had reductions. Those expanding employment more than offset the impact of reductions, producing a net gain of 0.2 employees per firm. Nearly half (49 percent) hired or tried to hire one or more workers; 84 percent of those could find few or no qualified applicants for unfilled positions; 31 percent reported unfilled openings, an eight point surge from March.

This is good news for our economy, since small business has created 77% of all new jobs over the past two decades in the US.
The NFIB calls the dip in optimism in March a “fluke.” However, they do caution that there are some signs of inflation, which could throw a monkey-wrench into current economic expansion.

We see start-ups happening in growing numbers among two age groups: The Entrepreneurial Generation (born after 1977) and the Entre-Boomers (born between 1946-1964). So what about those in between? Are the Generation X folks just not entrepreneurial?
According to the data, they are not started businesses at rates equal to those who came before and those who came after them. But, it may be in large part due to their stage in life. They are at the age where they have young families and large mortgages. The thought of quitting the security of their current jobs, although maybe just a illusion, keeps them from taking the plunge even if they have the urge and the right business opportunity.
An article from Business 2.0 offers a plan in “5 ways to start a company (without quitting your day job).”
1. Use Your Salary as Funding
Cut back a little on your discretionary spending and pretend the raise you just got didn’t happen and use that money to slowly fund your start-up. I offer similar advice to young entrepreneurs. I tell them that since they are used to living as poor college students, keep living that way for a few years when they start work and they will be amazed at how much they can save or have available for their business. Remember, the average start-up in the US gets us and running with only about $6,500.
2. Turn Common Complaints Into a Business Plan
So many aspiring entrepreneurs come to me wirh the will, but without the idea. I tell them to stop trying so hard and find a business that builds on what you know about. If you are working, find things that are not working right in your company or your industry and try to figure out a business to take care of that problem. As Barry Moltz likes to say, the best business ideas are those that take care of “people’s pain.”
3. Make Your Boss a Beta Tester
Quite often your good ideas are not in the plans of your employer. If you are honest with them, they may let you develop the business and give you some transition time. Good people are hard to find, so they may be willing to be flexible. It happens more than you’d think.
4. Take Advantage of Your Company’s Reputation
Investors want to see a track record when they look at supporting new businesses. Even though you may not have start-up experience, you have a resume and your employer’s reputation can rub off on you. Bankers will even occasionally fund a start-up if the resume of the founder is strong enough.
5. Convert Your Employer Into a Business Partner

In 2002, when Jeff Hilbert was managing the design services division of Coventor, a chip-design software company in North Carolina, his unit was slated for the chopping block. However, Hilbert noticed that he had recently been winning a lot of business from wireless chip companies, so he asked Coventor to let him spin off the unit as a stand-alone company.
The board went for it and gave the startup — now called WiSpry — $6 million worth of patents and other intellectual property, seven employees, several hundred thousand dollars, and an office in Irvine, Calif., all in exchange for shares in the company.

Although this path to start-up is a little less common, I am currently working with two of our MBA alumni who are pursuing similar deals.
So come on Generation X! Show us your entrepreneurial spirit!

interim thoughts is this week’s host of COTC.

As I wrote in a post from yesterday, word of mouth must be a very active strategy for a small business. It rarely just happens. Clearly one way to motivate your customers to tell others about you is to treat them so well that they just have to tell others about you.
Guy Kawasaki has a great post from a couple weeks back on customer service. It all starts with the culture of your business, and the culture starts with you. Your employees will follow your lead on how customers should be treated. The customer relationship must be built on integrity, open and honest communication, and offering service that exceeds all of their expectations. Don’t forget that you help set those expectations on the front end, so don’t over-promise or “over-sell” what you can give them.
If you can follow Guy’s tips with your customers, you will give them something they want to talk about.

A key aspect of success for many entrepreneurs is learning how to sell. Your product or service will rarely sell itself. Passively relying on word of mouth is too often a cop-out for entrepreneurs who are intimidated by the thought of having to sell. Cold calling on potential customers can be particularly difficult for many of us. StartupJournal has a good short overview of how to begin the process of making effective cold calls and how to use your customers to make cold calls for you. Word of mouth must be managed and cultivated and this is another tool to help spread the word about your business.

Get your customers to cold call for you, says Stephen Watson, instructor and operator of Silent Dragon Martial Arts School in Branford, Conn. The path to new customers “is through my newest, most excited customers.” Their enthusiasm will lead them to talk to their friends about me, says Mr. Watson, and that is essentially doing cold calling for his business.

I wrote a post about Kelly Perdew’s talk to the students at the Delta Epsilon Chi Conference (college level of DECA) the other day. Kelly (past winner of The Apprentice) has a great blog that focuses issues such as leadership. I highly recommend that you visit his site. It is quite thoughtful and well written.

I wanna thank everyone who ever told me no,
Pack it up and get back home,
It kept me going knowin’ I would prove them wrong.
Yea I knew it all along,
Without ‘m I might have given up a long time ago, and so,
I wanna thank everyone who ever told me no.
Buddy Jewell

Because we live in Nashville, I am often reminded of how much failure goes into creating success. From the outside, it seems that music stars just suddenly appear on the scene. The truth is that for most of them it took years of hard work and many, many failures to finally find success.
The same is true for entrepreneurs. Most highly successful entrepreneurs will tell you that along the road to success in their businesses they were often on the brink of failure. But they persevered. They found a way to make payroll. They found a way to make that critical sale. They found a way to keep the wolves away from the door just long enough to make it through the tough times. They found a way to pick themselves up from a business that did not succeed and move on to the next one that might. As Thomas Edison once said, “Many of life’s failures are people who did not realize how close they were to success when they gave up.”
Our culture seems to be drifting into an alarming view of success and failure. We seek quick or even instant success. I see it in entrepreneurs who look at their businesses as deals to yield a quick, short-term windfall rather than as a sustainable source of income and good jobs. We seek our fortunes through lotteries and lawsuits rather than hard work.
We also try to protect ourselves from any adversity or failure. There are the “helicopter” parents who hover over their offspring trying to shield them from any chance of failure, even as these children become young adults. We have politicians who have created the illusion that government is there to protect us from any harm and to rescue us from all adversity. America has become a society of people who blame everyone and everything else for our own failures.
We seem to have forgotten that failure, in fact, builds character. And it is the fear of failure that inhibits creativity and keeps us from learning.

Don’t be discouraged by a failure. It can be a positive experience. Failure is, in a sense, the highway to success, inasmuch as every discovery of what is false leads us to seek earnestly after what is true, and every fresh experience points out some form of error which we shall afterwards carefully avoid.
John Keats

You will fail. Failure is a prerequisite for success.