Home Wealth Project

Click here to see a table showing the numbers in greater detail (Excel -
.XLS file).

The Census Bureau recently released the results of the 2007 Survey of Business Owners, the government’s effort to examine American businesses every five years. The survey paints an interesting picture of what the average American business looks like.

The largest share of American companies is in the professional, scientific, and technical services sector, which accounts for 14.0 percent of U.S. companies. Construction accounts for the next highest portion at 12.6 percent. Manufacturing and agriculture, once the mainstays of American business, now account for 2.3 and 1.0 percent of U.S. companies, respectively.

The vast majority (78.8 percent) of U.S. businesses have no employees. And the share of businesses without employees now exceeds 90 percent in agriculture and arts, entertainment and recreation. The only sector of the economy where the majority of businesses has employees is accommodation and food services, in which 61.5 percent of businesses still have workers.

The average business generates over $1.1 million in sales, has more than 4 employees and pays an average compensation of over $41,000. However, when firms without employees, which have an average of only a little more $45,000 in sales and no employees (by definition) are excluded, average sales per firm rises to over $5 million, and average number of employees per business exceeds 20.

Wide industry variation exists in average sales and average employment. Average sales range from a little more than $96,000 in other services to over $25.1 million in utilities. Average employment varies from 0.7 employees per business in agriculture to over 107 in the management of companies.

One final point about the data is worth noting. The difference in economic impact of employer and non-employer firms is extraordinary. The 78.8 percent of businesses without employees only account for 3.2 percent of sales and none of the employment of U.S. companies. Employer firms are clearly much more economically important than non-employer firms.

What Does the Average American Business Look Like?

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How Companies Win: Transforming How You Look at Supply and Demand

Jan 1st

If business owners stopped wringing their hands about how things have changed and started looking at how things are, they just might see growth and opportunity beyond what they could ever have imagined.

Rick Kash and David Calhoun, the authors of How Companies Win: Profiting From Demand-Driven Business Models No Matter What Business You’re In, see opportunity instead of doom for companies of all shapes and sizes. They give examples of familiar companies like McDonald’s, Best Buy and Hershey’s. But there are lessons in there for small business as well.

It’s All About Demand

“Demand is what customers possess in terms of the needs and desires – emotional, psychological, and physical – they want satisfied, and have the purchasing power to satisfy. For companies, demand is ultimately about profit. At the end of the day, whoever satisfies demand the best, profits the most.”

For decades companies have invested millions in optimizing the supply chain. And somewhere along the line, what the customer wanted or what was important to customers got lost along the way. When the economy faltered and customers cut their spending, some companies noticed.

How Companies Win offers several case studies of familiar companies and brands to illustrate the before, during and after of their customer demand pool analysis and how it affected their businesses. Here are a couple of examples:

- McDonald’s transformed its business model. When sales faltered, they finally noticed that adults wanted healthier choices. And when they provided them, profits improved.

- Best Buy dug deeper within an already strong customer-centric strategy. They targeted their highest-profit customers and looked for ways that they could enrich those customers’ lives with the products they carried.

One of my favorite aspects of this book is the guidance that Kash and Calhoun offer readers in the form of questions you should be asking yourself. In my opinion, this is where small businesses will really be able to take advantage of big business strategies and tools. I say this because big companies have so much complexity in their organizations that for them, answering these questions would be a big and unwieldy prospect. But small businesses that aren’t as diversified will find these analytical tools really helpful and insightful.

Kash and Calhoun Are Masters With Data and Consumer Behavior

David Calhoun has been chairman and CEO of the Nielsen Company since 2006. Prior to that, he was the vice chairman of GE. Rick Kash is the founder of The Cambridge Group and the author of The New Law of Demand and Supply. Both of these gentlemen have the breadth and depth of experience with consumer behavior, economics and corporate management to guide you through this transformational topic.

Questions to Ask Yourself and Your Business

Like all good consultants and executives, Kash and Calhoun start with broad questions that will make you shift around in your seat because it feels like they are poking you in the ribs — or in the sore spots of your business. These questions highlight how quickly and easily we get pulled into the daily running of our businesses and servicing customers’ immediate needs, while not being as clear as we need to be on strategic issues.

- How precise is your customer targeting across your brands, products, services?

- Will customer targeting based on demographics or industry verticals be enough for you to win?

- Which of your customer targets creates the most profit?

- How precise is your understanding of which media deliver what results and what’s the right mix of media to deliver the best results?

There are many, many more questions — and one element they all share is the need to get more precise about the “who,” the “how much” and the “why” behind your customers’ purchases.

More Lessons from How Companies Win

There are so many lessons in this book that I couldn’t possibly list even a fraction of them here. Here are a few of the overriding lessons and themes that you’ll get out of How Companies Win:

- In a world where supply is efficient and demand is flat or contracting, understanding demand is the new imperative.

- Find your most profitable customers and get to know more about what they demand. Dig deeper into what they haven’t said that they want.

- Too much traditional segmentation is done based on past behaviors. This is a waste of time and money.

Is This Book for You?

You don’t have to be a multibillion-dollar organization to benefit from this book. In fact, small businesses are in a better position to use the lessons of How Companies Win, because they can more easily do the analysis that the authors propose. It will be much easier for a small business with several hundred or a few thousand customers to implement the concepts in this book than it will for any of the mega-corporations that are used as examples.

Marketers will rejoice at this book because it will open up a whole new world of segmentation possibilities and ideas for new product offerings. And managers and owners will get their fill of analytical questions and charts that they can use to mine their existing data.

Overall, How Companies Win (book’s website here) is an essential read for 2011.

How Companies Win: Transforming How You Look at Supply and Demand

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5 Books that Taught Me To Look at Everything Differently

Dec 28th

Posted by Home Wealth Project in Marketing Tips

5 Books that Taught Me To Look at Everything Differently

This content from: Duct Tape Marketing

This time of year it’s customary to read lists of business books deemed best in class for the year.

Today I want to share 5 books, none of which would be directly categorized as business books, that have helped shape the lens that I view my business, strategy, challenges and maybe even relationships.

Image: Sara Jantsch salt flats Bolivia

One of the greatest constraints that business people face is the inability to view things from a new point of view. Continuing to return to the box filled only with the ideas and experiences of our past or of that of our industry norm is what makes innovation, growth and creativity seems so hard.

Until you can explore and find new ways to view everything around you, everything that happens and needs to happen, I think you’ll may always feel just a little bit trapped.

Great artists and others that we might call creative are often blessed with the gift, or curse as it may be, of envisioning things differently, seeing negative space as the real potential, or finding patterns in nature and culture that give clues to massive discoveries in seemingly unrelated fields.

While the traditionally analytical business owner may not view themselves as naturally creative there is significant evidence that a new view of space and time can be acquired, much like glasses I think, if you’re open to it, and I would like suggest you must be.

Below are 5 books that I’ve turned to repeatedly to help me find ways to unlock new business perspective, precisely because they are not business books.

The Timeless Way of Building – This Christopher Alexander classic explains the idea of patterns in architecture. While architects are very familiar with this work, dubbed a part of the Oregon Experiment because of the study of patterns in building the University of Oregon campus, I am always blown away by the practical application of this one idea – A pattern is a way to solve a specific problem, by bringing two conflicting forces into balance. I think the study of patterns is such a fascinating way to view business, selling, systems, and customers.

The Calculus Diaries: How Math Can Help You Lose Weight, Win in Vegas, and Survive a Zombie Apocalypse – The Calculus Diaries is the fun and fascinating account of English major, Jennifer Ouellette’s year spent confronting her math phobia head on. With a fair amount of humor tossed in, Ouellette shows how she learned to apply calculus to everything from gas mileage to dieting, from the rides at Disneyland to shooting craps in Vegas-proving that even the mathematically challenged can learn the fundamentals of the universal language. I don’t turn to this book because I want you to learn Calculus, I think this book demonstrates how you can totally change your view of something when you start to look for practical applications. So many people can relate to the math phobia and I think there are many business phobias that need a new look – anyone hate selling?

Envisioning Information – Edward Tufte- This is visually gorgeous book that you might find on a coffee table or two, but this is no a book to just flip through. This is a book that you need to spend time with as it presents that best example of visual information design and the underlying principle that make the great ones sing. It’s easy to how this book should be required reading for any web page designer, UI designers, statisticians, cartographers, scientists, but today every business owner must be concerned with presenting dense information in a clear way and this books lets you see how to do just that.

The Ramen King and I: How the Inventor of Instant Noodles Fixed My Love Life – Anyone that has the nerve to jump into this entire list may find this book to be both the most entertaining and oddest. The book tells the autobiography from NPR commentator Andy Raskin and is part humorous, odd and spiritual. For me the best part was an introduction to the Japanese art of sushi. I’ll admit I’m not really a fan of sushi, possibly due to the fact that my sushi has come from a Midwestern grocery store, but this book opened my eyes to the wonderful, patient art. In the end Rasking realizes that in order to quell his demons he is going to have to face them and reassess how he looks at his life and that’s what this book has to teach many a business owner.

The Art of Learning: An Inner Journey to Optimal Performance – Josh Waitzkin – Waitzkin is a world champion chess player and subject of the 1993 movie Searching for Bobby Fisher. In this memoir he reveals how his skill with chess can be applied to the much more seemingly physically demanding sport of Tai Chi. He took the sport up in an effort to experience that process of learning something anew and had no intention of competing. For five years straight he was the Tai Chi Chuan Push Hands Middleweight National Champion. In The Art of Learning he shares how anyone can learn how to tap new perspectives to create optimal performance.

Are there any books that have had this same impact on your thinking?

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Look Up in the Sky: It’s a Super Angel

Dec 24th

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Venture capital has gotten harder to obtain in the recession years (VCs, like everyone else, have gotten more conservative with their investments). That’s why today’s innovative startup entrepreneurs are seeking financing from a new type of source: the “super angel.”

Halfway between traditional angel investors and venture capitalists, super angels combine the traits of both in a way that makes them well-suited to help today’s innovative entrepreneurs. Knowledge@Wharton recently took a look at what’s going on in the super angel arena. Here’s what you need to know:

Like angels, super angels are often former entrepreneurs. What’s different is that many of them came out of groundbreaking tech companies, such as Google and PayPal, giving them insider insights into what makes innovative business ideas succeed or fail.

Unlike angels, who invest their own money, super angels pool their money with that of friends, family and wealthy private investors. This means they typically invest more than angels, but less than VCs. Most super angels manage funds of $10 million or less; their investments in individual companies range from tens of thousands of dollars to $1 million, but usually fall below $500,000.

While VCs focus on companies at many stages of development, super angels generally concentrate on seed-stage businesses that can prove their viability in six months to a year. They are looking for innovative ideas and startups that can run lean and mean.

Super angels invest in industries with low startup and operating costs, including: mobile and web-based software, social networking tools and platforms, and Web-based advertising and media.

Super angels are highly active. One angel cited in the article invests in an average of four firms a month; another says funding 60 companies a year is not unusual.

Because of this high rate of activity, super angels are more likely to sell a business quickly—which has led some VC experts to criticize super angels for not giving entrepreneurial innovation time to mature. The evidence doesn’t support this claim, according to Knowledge@Wharton. Here’s why: because they invest less to begin with—super angels don’t have to look for a huge payoff the way VCs do. True, they may sell a company quickly to reap a profit—but they may also hang on for years until the company is ripe for exit. Super angels were among the first investors in Twitter and Facebook, and are still invested in both companies.

As institutional capital flows into more super angel funds, they could move beyond investing small amounts in startups and begin financing innovative firms in the growth stage. Still, given the entrepreneurial roots of today’s super angels, there’s slim chance they’ll ever lose their passion for the scrappy, innovative startup.

Editor’s Note: This article was previously published at OPENForum.com under the title: “It’s a Bird, It’s a Plane, It’s a Super Angel.” It is republished here with permission.

Look Up in the Sky: It’s a Super Angel

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Top 8 Traits Employers Look For

Nov 28th

Posted by Home Wealth Project in 2478

When looking for employment you should keep in mind the needs of potential employers. Of course you want the job – but what do employers want from you?

1. Loyalty – Loyal employees are the backbone of any organization. Look at your resume (or LinkedIn profile), does your work history seem like that of a loyal employee? If there are short term roles listed make it clear they were temporary jobs. Jobs not relevant to the role can be omitted. At interview do not gossip or share details of previous employers, colleagues or mutual acquaintances – indulging in tittle-tattle will make you appear disloyal.

2. Honesty – Employers need to be able to trust you. Never pad you resume, be honest about qualifications and experience. Nothing is more likely to make you appear dishonest than being caught in a half truth at interview.

3. Punctuality – Bosses need to know their workers will be at their posts on time every day as poor timekeeping can cost a company customers. Demonstrate good timekeeping by turning in your application form on time. If given an interview appointment make sure you arrive at least ten minutes in advance of you allotted time.

4. Determination – People who want to do well are much more likely to work with passion and gain results for their employers. When given the chance to question a potential employer at interview, don’t be afraid to ask about opportunities for advancement, as this will display determination and alert the interviewer to your desire to succeed.

5. Flexibility – The ever changing face of business means employers need workers who are willing to move with the times, adapting to the evolving demands of their role. Use your application form to demonstrate how you have been flexible in previous roles – if you took on extra responsibilities or undertook additional training make sure you let them know.

6. Smart Appearance – Whether you will be working in a formal or casual environment, it is important to take care with your appearance at interview. If you look scruffy employers may ignore your skills, assuming that someone who doesn’t take pride in themselves will be unlikely to take pride in their work.

7. Positive Outlook – Employers want go-getters on their team. Showing a positive outlook at interview is essential. If you have been made redundant from a previous role, don’t bemoan your fate to a potential boss, instead explain how excited you are to be exploring new opportunities.

8. Communications Skills – Communication skills are key. Ensure your application and resume are grammatically correct, ask a friend or family to look them over for you to help catch any typos or errors. At interview think before you speak, choose your words carefully and ensure they convey the message clearly. Don’t “um” and “ah” – it is better to take a few seconds to compose an answer than to say something stupid.

Demonstrating these eight key skills can help you land your dream role, and displaying these traits in your daily working life will make you stand out over other employees when the opportunity for advancement arises.

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Small Business Saturday: Inside Look

Nov 26th

Earlier this week I posted an announcement asking for your support for Small Business Saturday. November 27, 2010 is Small Business Saturday.

Susan Sobbott This initiative is spearheaded by American Express, and it’s really picked up steam in a short period of time. I was surprised to see that as of this writing (Friday morning), there are over 1,000,000 Facebook followers of the Small Business Saturday Facebook page. When I put the article up a few days ago (Tuesday morning), I checked and there were just over 800,000 followers at that time. So you can see how fast support has built.

As many of you know, I have been a long-time contributor to the American Express OPENForum site, and was able to get a few minutes of time with Susan Sobbott (pictured left), President of American Express OPEN, in an email interview. I asked her about Small Business Saturday and her insights behind it. Here is that interview — it’s a quick read and I think you’ll enjoy this brief behind-the-scenes look:

Question: Why this particular initiative?

Susan Sobbott: We’re launching Small Business Saturday to help raise awareness about the critical role small business plays in cities and towns across our country. We know the role they play in the economy, creating 65% of net new jobs over the past two decades. But they also play a critical role in our communities. According to Civic Economics, every $100 spent in locally-owned, independent stores, $68 returns to the community through taxes, payroll and other expenditures. We want to help make more people aware of the importance of small business and to drive more support for these businesses.

Q: How did American Express OPEN’s involvement come about?

Susan Sobbott: We see Small Business Saturday as responding to a need we’ve heard from small business owners, which is that more than anything else, they need more customers. But in addition to our involvement, more than a dozen organizations are helping to get the word out, including The 3/50 Project, Business Matchmaking, Count Me In, eWomenNetwork, Facebook, and Yelp! You can find the full list at smallbusinesssaturday.com/advocates.html.

Q: What are some ways we can all support small businesses in our communities? This may sound like a strange question, but some people may not spend much with local small businesses and may have trouble thinking of ways. So please name some products or services that consumers need where they can spend $50.

Susan Sobbott: Of course, there are those small businesses that you might already visit regularly and thus come more easily to mind, like your dry cleaner, hair stylist, floral shop, or local restaurant. But we hope that Small Business Saturday reminds people to think of locally owned businesses for their holiday shopping, as well. This could mean shopping with an independent book seller, a small boutique, or a local bike shop.

Q: For business to business expenses – what are some ideas for supporting local businesses for B2B expenses?

Susan Sobbott: For the holidays, businesses might consider looking to small businesses for gifts or gift certificates for customers or employees, or restaurants or catering for holiday parties. But we hope that everyone will think beyond the holidays, as well, to small businesses that may be able to serve your needs on a more regular basis, such as a local printing and copying shop. Maybe you look to them for your holidays cards and then continue to work with them throughout the year.

Q: Susan, you once told me during an interview at an Inc. 500 event about working in your family business while growing up. Tell us about that and what you learned from the experience.

Susan Sobbott: There’s so much I learned working in my family’s trucking business, probably most striking being the importance of customer relationships. In a small business, there’s not only more of a one-to-one relationship with your customers, the role they play in sustaining your business is just more apparent. You realize very quickly how dependent you are on customers. It’s a lesson I’ve carried with me and have tried to instill in our employees. At OPEN, we have created a number of opportunities for our employees at all levels to meet and learn from our customers. It’s important to see and hear first-hand the impact we can have on their business.

Q: Aside from participating in Small Business Saturday, what else can businesses and consumers do to support small businesses?

Susan Sobbott: It’s great if we can get the people who hear about Small Business Saturday to shop at their favorite local businesses on November 27, but it doesn’t stop there. Small Business Saturday can be the first of many days when businesses and consumers consciously make the decision to consider shopping small. Even better is if they tell their friends, family, and colleagues about the initiative so that they, too, can think about shopping at small businesses.

Thank you, Susan Sobbott, for taking the time to give us that background about Small Business Saturday and how to support small businesses.

And I urge each of you to buy from a small business — in fact buy from many small businesses — on Saturday November 27, 2010 and for the rest of the holiday season.

Also, if you go over to the Small Business Saturday Facebook page and like it, American Express will donate $1 for each person liking the page, to Girls, Inc. an entrepreneurship organization for young women. If you click below you can immediately Like the page:

Please note that I am a contributor at the OPENForum.com site and that OPEN is a sponsor of the Financial Management section of this site.

Small Business Saturday: Inside Look

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Holiday Travelers, Here’s Something to Look Forward To

Nov 19th

Posted by Home Wealth Project in 2478

Image found on the Drudge Report

Shameless plug: Read about Ron Paul’s American Traveler Dignity Act.

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How Small Businesses Use Web Apps – and What to Look For

Oct 9th

1 comment

This series is commissioned by UPS.

Not long ago, Google CEO Eric Schmidt made some startling observations about small businesses and Web-based applications. During a speech at the TechCrunch Disrupt Conference, he said:

“Twenty years ago when you were setting up a small business, you had to go and buy a personal computer or a small server … and you had to have an IT professional and you had to run it in-house.

The right thing for a small business to do now is to not have any computers except the things which are on people’s desktops and on their smartphones … and do everything in the cloud. … The components would be an email system, a calendar system, a sales force automation system, and then the stuff that’s vertical for whatever their business is.”

These comments capture the fundamental change that small businesses are going through, within the past decade. Increasingly, we small businesses are transitioning our computing needs to a “cloud computing” model. While I don’t think it’s possible for all small businesses to eliminate local servers and use software that is completely in the cloud as Schmidt suggests, one thing is clear: gradually, year by year, we are headed in that direction.

Today you not only can get email and calendar applications “in the cloud,” but you can find any number of other business applications:

document creation, spreadsheet and presentation
HR and payroll applications
inventory management
accounting
invoicing and payment applications
email marketing services
project management apps
CRM software
helpdesk
and much more

In fact, The Small Business Web lists 26 different categories of Web-based software applications in its directory of nearly 200 apps for small businesses.

Advantages of Cloud Computing

The growth of cloud computing is a definite positive for small businesses, because of key money-saving advantages.

Usually there is no large up-front expense in the form of a hefty software license. Instead you pay a much smaller monthly service fee. This allows you to spread out your costs, and eases your cash flow.

You also are relieved of the complexity and expense of loading and maintaining software on your own computers. All you need are computers for end users to access the application with an Internet connection and a Web browser. And since you don’t have to maintain the software internally, you can by with a smaller IT staff (or perhaps get by with no in-house IT).

What to Consider When Choosing a Cloud App

But as more software moves to the cloud, certain considerations take on greater significance. Here are 3 things to consider when choosing Web-based software applications

(1) Does the software app integrate with other software or apps we have? – Most apps tend to do a narrow set of functions. If you’re trying to automate your entire business or a process end-to-end, you will probably have to piece together multiple software apps from different providers. If the online software services do not interoperate with one another, you and your staff could end up doing manual work to move data from one system to another via spreadsheets or by keying in the same information into multiple systems. Or, you’ll have to go through the expense of paying for software development to make different packages interoperate.

The Small Business Web helps with some of this issue. In its directory, it indicates which software apps integrate with other software apps. It also indicates whether there’s a published API — that way, if you do have to code some software in order to move data from one app to another or make two software packages integrate, the task will be easier, cheaper and faster.

(2) How secure is our data going to be? – With Web-based software services, your data used in the applications will be sitting on a server somewhere “in the cloud.” In other words, your data will be in the hands of another company. Inquire of the company what they do to keep data secure and private.

It’s an important question to ask, but hard to get answers you can verify. One way to satisfy yourself is to search in Google to see if there have been public reports of security breaches involving the company. Also, consider the size of the software provider. Large companies tend to have audit and insurance requirements that force them to assess their processes and put in place safeguards against data breaches. Small providers and startups may have looser (or nonexistent) policies and procedures for handling your data.

(3) Will the vendor be around for the long haul, and continue supporting and enhancing the app? This is important to ask for any software, it takes on new meaning when a company has your confidential data.