While we hear about the power of social media as marketing tools, especially for those trying to bootstrap their businesses, but just how effective is it?

New research from Utpal Dholakia and Emily Durham of Rice University takes a look at this question.
The study is featured in the March issue of the Harvard Business Review.

According to this study, companies that use Facebook and its fan page module to market themselves to customers can increase sales, word-of-mouth marketing, and customer loyalty.  

Dholakia and Durham surveyed customers of Dessert Gallery (DG), a popular Houston-based café chain. Prior to the study, DG did not have a Facebook presence.

The study, based on surveys of more than 1,700 respondents over a three-month period, found that compared with typical Dessert Gallery customers, the company’s Facebook fans:

•    Made 36 percent more visits to DG’s stores each month.
•    Spent 45 percent more of their eating-out dollars at DG.
•    Spent 33 percent more at DG’s stores.
•    Had 14 percent higher emotional attachment to the DG brand.
•    Had 41 percent greater psychological loyalty toward DG.

According to Dholakia, the results indicate that Facebook fan pages offer an effective and low-cost way of social-media marketing.

“We must be cautious in interpreting the study’s results,” Dholakia said. “The fact that only about 5 percent of the firm’s 13,000 customers became Facebook fans within three months indicates that Facebook fan pages may work best as niche marketing programs targeted to customers who regularly use Facebook. Social-media marketing must be employed judiciously with other types of marketing programs.”

Dholakia said Facebook marketing programs may be especially effective for iconic brands, which appear to attract a higher percentage of their customer base as Facebook fans.

Sramana Mitra offers a stinging criticism of how many business schools teach entrepreneurship in her column at Forbes.

Many business schools are only willing to teach their students about high growth, high potential businesses that can scale to tens and even hundreds of millions of dollars in revenues.  Those who may want to embrace students whose aspirations may be less lofty are dismissed by these academics as wasting their education.  I have called this approach, “entrepreneurship on steroids.”

My entrepreneurship courses are always taught from an inclusive perspective.  I have had alums who have created larger, high growth ventures.  I have also had alums who have bootstrapped their way to what fits their own definition of success.  As long as they employ sound business practices, stay true to their values and priorities, and strive for success however they define it, I am equally proud of all of them.

She rightly points out that many professors teach entrepreneurship from a narrow perspective because that is all they know.  She offers the example of Robert Hacker of Florida International University. “Hacker comes from a finance background, and when you are a hammer, of course,
everything looks like a nail,” says Mitra.

I also believe that too many who are teaching entrepreneurship have never made a payroll.  Maybe if they had to white-knuckle it from payday to payday for a few months like most start-up entrepreneurs they may appreciate that even modest entrepreneurial ventures require knowledge and skills that we can offer in business schools.

Mitra has labeled those of us who teach entrepreneurship with a bootstrapping bent “neo-entrepreneurship”.  She says we “appreciate the practical success factors of young entrepreneurs. Perhaps it is necessity that drives their curriculum design, as access to venture capital or even angel investors is elusive.”

I have never seen myself as part of any movement.  I am a pragmatist.  I see dozens and dozens of young aspiring entrepreneurs come through our program each year and want to prepare them as best I can for the world they will be facing when they launch their businesses. 

The number of self-employed and freelance entrepreneurs has seen steady growth over the past two decades. As recently as 2007 the Small Business Administration estimated that there were more than 21 million self-employed entrepreneurs without employees in the United States.

Many are predicting that this number will swell as a result of the recession.

The traditional work spaces for the self-employed are coffee shops, cafes and home offices.

More recently a new alternative has emerged, called co-working spaces, where self-employed people and freelancers can come together in a common space. Unlike traditional executive suites, co-working spaces offer more than just space and office support. Co-working space usually has a very open environment that fosters interaction, collaboration and even shared work projects.

Co-working spaces are a good option for many startup entrepreneurs. They also can be a good option for small businesses looking to move from a home office. In an age of technology where it is so easy to become isolated, the co-working movement has drawn those who work independently but still seek to be a part of a stimulating community.

Co-working spaces are being established all around the country. Some of the early co-working spaces, such as Citizen Space in San Francisco and Indy Hall of Philadelphia, have led the way in this emerging alternative work space environment.

A new co-working space, called CoLab, recently opened on Fourth Avenue in downtown Nashville.

CoLab started with its first location in Orlando, Fla., about 18 months ago.

CoLab started as a side business for founder John Hussey of Orlando. Within 18 months, CoLab has outgrown the original floor it had leased and has added a second floor. With the growing success in Orlando, Hussey looked to open in a different city.

“When opening CoLab Orlando, I immediately thought it was a good fit for Nashville because it’s an entrepreneurial town — the creativity of an up-and-coming town on the cutting edge,” Hussey said.

Kailey Hussey, a recent graduate of Belmont University and John Hussey’s daughter, is heading up CoLab in Nashville.

CoLab Nashville seeks to become a place for meetups, technology groups and entrepreneurs to come together for networking and collaboration.

Bootstrapping entrepreneurs seek ways to keep their overhead low, especially in these uncertain economic times. Co-working space may offer an alternative for entrepreneurs that helps keep the cost of space affordable for those trying to grow their businesses within a limited budget.

(This post also ran as my column this week in the Tennessean).

Belmont alums have scored a big hit with a new iPhone app.  Aloompa, a venture co-founded by Belmont alums Kurt Nelson and Tyler Seymour, has just introduced the Kenny Chesney app for the iPhone.

Kurt and Seymour were practicing entrepreneurs and entrepreneurship minors during their time here at Belmont.  They were students who used their time at Belmont to create a runway for their entrepreneurial pursuits. 

They were one of the two businesses granted a runway loan by the Belmont University Center for Entrepreneurship to help grow their first business, Just Kidding Productions, a video production venture they started during their undergraduate studies.

They used the success of that venture to bootstrap the start-up of Aloompa, which has introduced iPhone apps with a music focus.