Economic Updates

Here are the most recent economic reports from this week (from the Joint Economic Committee of Congress):
State Employment Statistics:
* Non-farm payroll employment increased in 32 states in December. The states with the largest employment gains were Florida (+12,100), Texas (+7,000), Georgia (+5,600), Colorado (+5,400), and New York (+12,100).
* Employment increased in 48 states during 2004. The largest gains in 2004 occurred in Florida (+172,300), California (+152,300), Texas (+124,800), Virginia (+79,500), and North Carolina (+76,400).
* Over the past year, the unemployment rate has fallen in 43 states.
Federal Budget:
* The budget deficit for fiscal year 2005 is projected to be $368 billion – that’s over $40 billion less than the fiscal year 2004 deficit. CBO projects an even smaller deficit of $295 billion for fiscal year 2006.
* As a percentage of Gross Domestic Product (GDP), the budget deficit will be 3.0% for fiscal year 2005 and 2.3% for fiscal year 2006, significantly lower than the 3.6% level reached during fiscal year 2004. These deficit-to-GDP ratios are significantly lower than levels reached in the 1980s and early 1990s. The most recent highs were 4.7% in 1992, after the Gulf war, and 6.0% in 1983. (In order to compare deficits across different years, it is important to account for the economy’s cheap topamax online capacity to absorb the deficits and the government’s ability to finance them. Both of these factors depend on the size of the economy. For this reason, economists typically measure deficits relative to GDP.)
* The ratio of publicly-held debt to GDP is projected to be 38.1%, a percentage that is still lower than the ratios the U.S. sustained for most of the 1980s and 1990s. Indeed, the debt amounted to almost 43% of GDP as recently as 1998. Since 1940, the highest ratio achieved was 108.6% in 1946.
Economic Expansion
Robust growth in consumer and business investment spending continues to fuel growth in the gross domestic product (GDP) and payroll job gains continue at a healthy pace. Payroll employment has expanded for 16 consecutive months and payroll job gains in 2004 totaled over 2.2 million. Energy prices rose again recently, after a sharp retreat from recent peaks of late October. Higher energy prices have pushed up the dollar value of imports while stagnant growth abroad has hampered export growth. As a result, the U.S. trade deficit hit a record high in dollar terms in November. Despite increases in energy prices last year, inflation remains tame. Forecasters continue to see low inflation along with strong and steady growth at least through next year.

New Twist in Peer-to-Peer Music

Even though from the outside the music industry seems like a wounded giant, it is proving to be fertile ground for entrepreneurs willing to think about new and creative ways of getting music from artists to listeners.
The latest of these new ideas just got venture capital funding, as reported by Red Herring.
“Mercora, of Santa Clara, California received million in Series A funding Monday from Silicon Valley’s Norwest Venture Partners, to finance its Internet radio network. Mercora IM (Individual Modulation) Radio, which uses streaming audio, lets users listen to music from other users’ computers.
“Just like any other peer-to-peer file-swapping service, Mercora allows users to search music by artist or song title. But unlike Kazaa or Morpheus, which have been hobbled by the wrath of the Recording Industry Association of America (RIAA) and several legal challenges, Mercora doesn’t allow users to download songs onto their computers.
“‘It is a network of radio stations that is basically converting your PC into a webcasting station in compliance with copyright laws,’ said Srivats Sampath, co-founder and CEO. With Mercora, every user becomes a broadcaster and their playlist becomes a channel, he said.”
Not only is Mercora rethinking music distribution, but they are even rethinking broadcast radio. This may not be the answer for this industry, but it is definitely the kind of innovation that may help reinvent how music gets from performers to their fans.

The UN is Moving into Entrepreneurship as Economic Development

The National Dialogue on Entrepreneurship reports on the United Nations’ growing interest in entrepreneurship:
“In 2000, UN Secretary-General Kofi Annan chartered a whole host of initiatives tied to the UN’s Millennium Development Goals, a package of plans to reduce poverty and promote new development by 2015. As part of this effort, a UN Task Force on Science, Technology and Innovation was set up; this group has just released a new report entitled Innovation: Applying Knowledge in Development. The report examines the role of science, technology, and innovation in meeting the Millennium Development Goals. The Task Force sees a big role for entrepreneurship, and it encourages UN members to do more to support the development and small and medium-sized enterprises. They also suggest that universities take a more proactive role in supporting development, via support for regional development projects, local support for business creation, and other community development activities.”
Let’s hope that these countries don’t decide to take too big a role in entrepreneurial development. The best they can is to work toward deregulating the entrepreneurial process in their countries. In many parts of the world, including many already developed economies, the hurdles and costs of entrepreneurship make business start-up too complex and too expensive to realistically expect entrepreneurship to spur any significant economic growth.

Garage Technology Founder Offers Advice to Start-ups

Guy Kawasaki, founder of Garage Technology Ventures, offers his words of wisdom for start-ups at Entrepreneur.com this month. Here are a few of the highlights:
– “Do you make meaning? Great companies change the world by fighting the status quo, inertia and ignorance. They make people’s lives better, fix the bad and perpetuate the good. Mediocre and unsuccessful companies start out only to make money. Here’s the acid test: If your company never existed, would it matter to the world?”
– Forget the 25 word mission statement. Kawasaki recommends a three word “mantra” to describe what you do. Getting down to three words would be the ultimate challenge for almost any entrepreneur I know. But, an intriguing idea!
– Understand the economic model of the business. How will it make money?
– “If it takes five years of industry experience to begin to understand what you do, you’ve got a problem. Your parents should be able to explain your product or service. Your grandparents should be able to use it.”
– Find a niche.
He also offers his view on writing a plan, recruiting staff, raising money, and more. A great read for entrepreneurs at any stage of development from a guy who has seen a lot of deals.
Interested in more? His book is a treasure.
(Thanks to Bruce Schierstedt for sending this along).

Collegiate Entrepreneurs

One of the programs we are very proud of here at Belmont University is our student created, student run retail businesses. Three different groups of students were chosen from at least a couple of dozen proposals to occupy three prime retail spaces on the edge of our campus, Each space is at least 1000 square feet, and the University along with local foundations helped to provide funding to make each store possible. Becky Gann, Program Coordinator for our Center for Entrepreneurship, oversees these and all of our other co-curricular programs.
The Tennessean ran a story this past Sunday marking the opening of the third business in the space. It is called Feedback Clothing. Unlike our other two stores, which are “owned” and operated by student organizations, this business was developed by an independent group of students.
feedback opening.jpg
These students have already had some of the lessons we hope to offer them through participation in our programs.
“One of her partners in Feedback Clothing Co. had just quit to take a better job, downsizing the management team — and staff, for that matter — from three people to two. The computer and cash register weren’t going to be ready for Friday’s opening, necessitating some ‘old-fashioned’ money collecting. Alexander’s grandparents and 9-year-old brother were happily helping hang T-shirts and put together furniture.
“‘We’re making it work,’ she said. ‘It all comes together eventually.'”
We also offer students who have started their own businesses access to our Student Business Hatchery. It offers students access to space and equipment, such as a copier, fax, computers, etc.
We also bring these student entrepreneurs together weekly, along with those running the retail spaces, to serve as a peer advisory group. There are over two dozen students in our Hatchery and Practicing Student Entrepreneurs programs, and the number is growing every month.
We are expanding these programs through support we are getting from the Coleman Foundation. Our goal is to support students from any major across campus who have entrepreneurial aspirations and ambitions.
Students today are so very different than even those I saw when I got back into teaching seven years ago. They understand America is now in an entrepreneurial economic growth period not seen in decades. They embrace opportunity with enthusiasm and confidence.
What a gift it is for me to be able to help them realize their dreams!

Wherever You Go?

Entrepreneur.com recently offered a guide to the myriad of technology that can link you and your employees to your business twenty four hours a day, seven days a week, and around the globe.
“From home offices to hotel rooms, technology is the wind beneath your business wings, the premium gasoline in your work tank, the foundation of your building-you get the idea. Slews of laptops, wireless solutions, remote software and cell phones await your use.”
True. But, technology can also become the chains and shackles that make many entrepreneurs feel like slaves to their businesses. The very freedom that such technology can create also leads to resentment, burn-out, and fatigue in many entrepreneurs. For many, the only escape is when the flight attendant closes the airplane door for take-off. Alas, even that escape may soon be taken away if cell phones are allowed for use on commercial flights.
I would like to offer some possible “connection free” zones that entrepreneurs can create to restore a little sanity to this high-speed world:
-Church
-Your daughter’s dance recital
-The bathroom
-The golf course
-Your son’s choir concert
-Dinner our with your wife
-Family reunions
-Movie theaters
-The tennis court
-The dentist’s office
-Family vacations
-Walking the dog
-Public rest rooms
-College campus visits with your teenagers
-Family dinner
Connectivity is an amazing tool that can allow businesses to grow more effectively. You can keep better communication and coordination with branch offices, traveling staff, customers and suppliers.
But, give yourself some time for family, for rest, and for leisure. Disconnect from the connected world. You, and your business, will be healthier.

A Really High Risk Business

Red Herring reports on what is truly one of the highest of all high risk ventures.
“The mobile market might be a cut-throat business, but try running a cellular company while insurgents bomb base stations and industry officials are murdered on route to work.
“That’s the world of Iraqi wireless carrier AsiaCell, which has managed to convince 442,000 subscribers to sign up for service in northern Iraq.”
Now that is what I call the entrepreneurial spirit!

Managing Uncertainty

“You never know what…the gods will throw your way. A war? A recession? Technology evolving and obsolescing before your eyes? Excessive growth? There’s no end to the obstacles your business may encounter.” This sobering set of scenarios is posed in a recent article from StartupJournal passed along to me by Mary Beth Groce.
Their recommendations are good advice for any growing business. A clear strategy, flexibility, realism, ethics and a strong network are some of the qualities that they found in companies that weathered such challenges.