Does small business help grow the economy?

The majority of American jobs are created by small business.  Over the past 17 years, small business has created 65% of new American jobs.  The US government classifies businesses with fewer than 500 employees as small businesses.

On April 5^th, 2012, President Obama signed the “Jumpstart Our Business Startups” (also known as the JOBS Act) into effect.  It is a bill that will make it easier for startups and small businesses to raise funds, especially through online crowdfunding.  Crowdfunding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet to support efforts initiated by other people or organizations.  The bill passed Congress through a 73-26 Senate vote and a 380-41 House vote, including an amendment designed to protect crowdfund investors in order to make it easier for startups to access financing.

The JOBS Act should help the current unemployment rate by making funding more accessible to startups.  Experts believe it will be the main factor driving the increase in new companies being founded and of course, with that comes the need to hire new staff.

Small business drives the U.S. economy by providing jobs for over half of the nation's private workforce. The latest figures from the SBA show that small businesses with fewer than 20 employees increased employment by 853,074 during 2011-2012.  Small businesses are job creators and create 60-80% of new net jobs.

The Small Business Administration (SBA) announced that small businesses make up more than 99.7% of all employers.  Other reasons the SBA loves small businesses is that they also create more than 50% of the nonfarm private gross domestic product (GDP).  Additionally, the 22.9 million small businesses in the United States are located in virtually every neighborhood.  Small businesses employ about 50 percent of all private sector workers and home-based businesses account for 53% of all small businesses.  Another interesting statistic is that four years after start-up, half of all small businesses with employees remain open.

So how else can small businesses really help boost the economy?  Local economies realize distinct benefits from the activities of local and small businesses.  “Small businesses, in turn, can realize competitive advantages by employing a local focus in their service and marketing activities. Major benefits of business in the local economy include a boost in employment and discretionary income in the community, tax income increases for local governments and a loyal customer base for businesses.”  Employing people in the local economy boosts the employment rate.  Additionally, businesses pay a significant portion of all taxes in the United States, including income tax, property tax and employment tax.  “Having more businesses in the local economy can boost tax income for local governments, bringing in more money to repair roads, develop schools and improve public services.”

As stated in today’s blog, small businesses do indeed help boost the economy and things are looking up with the passage of the JOBS Act by President Obama.  That does not mean there is still not a lot of work to be done by Congress in order to help small businesses succeed but things are looking up.  For the past few decades, small business has been the cornerstone of American employment and those numbers should only continue to rise.  Small businesses are key in helping local economies grow and creating new jobs.  I hope today’s piece has given you more insight into how small business can indeed improve the economy and the strides the government is taking to make that a reality.

Here are some articles on small business and the economy you might want to check out:

“JOBS Act to jumpstart the economy”: http://www.forbes.com/sites/work-in-progress/2012/04/05/jobs-act-to-jumpstart-the-job-market/

“How small business grows the economy”: http://bradsugarsblog.com/how-small-business-grows-the-economy/

“How many jobs does small business create’: http://www.businessweek.com/smallbiz/running_small_business/archives/2011/10/how_many_jobs_do_small_businesses_create_depends_what_small_means.html

Until next time…

Planning for the unexpected in business....

In business, you must always remember to expect the unexpected.  It might sound cliché, but it’s the honest truth.  While you can’t plan for every problem that may occur, writing some flexibility into your business plan is a good place to start.  As is obvious, your customers are the most important part of your business and you want to ensure that they don’t incur an interruption of service given any unforeseeable problems that might arise.

Contingency and continuity plans are a must in business.   It might sound silly but you should be prepared for anything: earthquakes, fires, floods, cyber attacks, hurricanes, tornadoes, utility outages, disease, terrorism, riots, protests, crime, fraud, theft, accidents – anyone of these could have a significant impact on your business.

The purpose of having a back-up plan or in essence, a “Plan B” is to provide options on how your business will operate efficiently in a crisis and minimize the potential loss of revenue and future business opportunities.  Such a plan is often developed by identifying what events could possibly impact your normal flow of operations and the way your business runs on a daily basis.  Look for ways or develop strategies that make it possible to overcome breakdowns so that you can continue doing business as usual.  Your plan should consider what the short term options are for you to continue doing business and also include a step by step guide of what you do in any given scenario.

“A continuation plan is a document that outlines how the operations of your business will continue running through major disruptions.”  This plan is the blue print of how your business will continue through any crisis that presents.  The plan should describe how you will minimize interruptions to your business and the ability to provide service to your clients as well as how to minimize financial loss.  “It includes action plans on how you will be able to resume core business functions and critical operations within a specified time after a disaster.”  A sound continuity plan will soften the financial blow but you also might want to consider taking out an insurance policy as a backup until you are fully operational again.

At some point, you might have to deal with the replacement of management or key personnel.  A plan should include what would happen if there were a change due to death or retirement.  “All businesses should consider life or disability insurance for each and every owner and any key person involved in the business.”

Especially for small businesses, all copies of key documents should be stored at an offsite location.  “The information contained should include details of who owes the company what, any outstanding loans, the contact information for all lawyers and accountants, insurance documents (in the event the company owner or key man dies) and any other shareholder documents.”

Remember, communication is key.  Your continuity plan should outline how staff members should contact each other in the event of emergency and should give those staff members an idea of what tasks they should prioritize.  For example: “If your server fails, where can the backups be found?  If bad weather stops supplies reaching your factory, how long can you operate on the existing supplies?  Should the priority be finding new ways to get supplies in, or should you help your customers make alternative arrangements?”  Once you’ve drawn up your plan, make sure that your staff knows about it and that they understand it fully.  There’s no point in having a plan if it’s locked away in a safe that only you have access to and nobody realizes it exists. You should revisit the plan frequently and make sure that it is up to date, accurate and reflects that status of your business.

“The best place to start is with one of the basic checklists provided by the government. The checklists are quite basic and focus almost exclusively on common problems such as fire, theft, or power outages.  Business specific issues aren’t covered.  The lists are a good starting point, however, and should help you to focus your thinking and expand your plans to cover the things that your business needs to worry about.”

Your business continuity plan can be as simple or complex as you so choose.  Start by identifying what the biggest impacts may be to your employees and business as a whole.  Next figure out what you can do to minimize these impacts.

If you have investors or are looking for them, they will want to know that you have such a plan in place.  Investors want to make sure that you have alternative strategies that will help protect their investment.  By having such a plan, your investors will know that you’ve thought about the bigger picture and your business as a whole and where it is going over the long run.  It will assure them that you will do what it takes to protect your business and their investment.

"A well thought out business continuity plan can mean the difference between being funded and not.  It can also mean the difference between your business’s survival and failure in the event of a crisis."

Here are some articles on business continuity plans that you might want to check out:

“How do I plan for the unexpected”: http://www.financialpost.com/small-business/business-solutions/story.html?id=618879

“Business continuity and disaster recovery: The Basics”: http://www.csoonline.com/article/204450/business-continuity-and-disaster-recovery-planning-the-basics

“How to create a business continuity plan”: http://www.wikihow.com/Create-a-Business-Continuity-Plan

“Business Continuity Plan”: http://www.ready.gov/business/implementation/continuity

Until next time…

Using Pinterest for business

Today I thought I’d talk a little about Pinterest, one of the fastest growing social networking sites out there, and how it can help grow your business through advertising, marketing and branding.

Pinterest launched in 2010.  By December 2011, the site became one of the top 10 largest social networking sites with 11 million total visits per week.  In January 2012, the site had 11.7 million unique users, making it the fastest site in history to break through the 10 million unique visitor mark.

If you’re unaware of the platform, Pinterest is a pinboard-style social photo sharing website that allows users to create and manage theme-based image collections such as events, interests, hobbies, etc.  Users can re-pin images to their own boards or “like” other peoples’ pins.  The mission of the company is to “connect everyone in the world through the things they find interesting.”  Pinterest also allows its users to share pins on both Twitter and Facebook, enabling its users to reach a broader community.  

To gain access to Pinterest, potential users can either receive an invitation from a friend already registered, or request an invitation directly from the Pinterest website. An account can also be created and accessed by linking Pinterest to a Facebook or Twitter profile.  When a user re-posts or “re-pins” an image to their own board, they have the option of notifying their Facebook and Twitter followers.

So how to use Pinterest for business?  Any business that relies on driving a high-volume of traffic to their website to increase sales should consider joining Pinterest.  In fact, early research indicates Pinterest is more effective at driving traffic compared to other social media sites, even Facebook.  "While there's no mechanism for potential customers to buy your products directly from the site, consider the marketing potential: Popular images (with links back to the original source) can get repinned on hundreds of other users' boards."

First off, spend time getting to know the site.  One key is to build relationships with those who are known for quality “pins” at the site.  Once people (or potential customers) get to know more about your business, they will be more likely to post about your products.  Focus on users that get the most likes and repins.

Keep it simple.  One of the main draws of Pinterest is that it is incredibly easy to use.  Hanna Abaza, the co-founder and CEO of Wedding Republic says: “It’s best to mimic Pinterest’s uncluttered aesthetic so your boards are clean and elegant looking.”

Make sure you’re business is a good match.  A lot of users are looking for “do-it yourself” ideas so make sure your content is original and enticing.

You should consider launching a daily pin “theme” to promote your brand.  This keeps visitors interested as you are changing your content daily.

Promote more than just your products.  Think of Pinterest as a visual blog.  When you are blogging about your company, you want to give your audience information about more than just what you’re selling.  You are cultivating a relationship and dialogue flow.  By giving users information on things that are of interest to them, you will get their attention and most importantly, hold their attention.

A good tip in helping raise awareness about your company is to follow the big names on Pinterest.  This method has proven to work on Twitter.  When you follow popular people and they follow you back, other users start to as well – kind of like a follow the leader type model.

Think visually.  Pinterest is a visual social network so highlight some of your best visual content.  "Remember, visuals elicit emotion in users which drives their desire to purchase a product that can take them where they want to go."  Think about using images that cultivate your company’s culture so you can give your customer a better idea about what your products and goals are all about.  Encourage your customers to share photos of them using your product so that others might repin such an image enabling you to grow your customer base.  You can also pin videos so consider that option as well.

One great idea I read about a company doing was hosting a contest that asked users to create a pinboard on their own account to demonstrate what they loved about their brand, product and service.  Remember, engaging your customers and getting them involved in the process can only help you succeed and grow your brand.  Once the contest was over, they picked a winner who had the “coolest” pinboard and gave them a prize.

Most importantly, add a “pin-it” button to your own website so you can expose your brand to your audience both old and new.

I’ll leave you with one important thought: the trick to succeeding on Pinterest isn’t necessarily about showing off your products or services directly; “it’s about finding creative ways to show how these products and services fit into the lifestyles of your target audience.”  Take the best practices you’ve learned here and start pinning content that represents your company’s vision and goals so you can identify and attract visitors back to your website and allow your product to gain traction in the broader marketplace.

Here a great tutorial about using Pinterest for business that you might want to check out.  “How to use Pinterest for Business”: http://blog.hubspot.com/Portals/249/docs/ebooks/howtousepinterestforbusiness.pdf

Here’s Pinterest’s own ideas for business: http://pinterest.com/newspapergrl/pinterest-for-business/

Here are some videos of Pinterest founder, Ben Silbermann talking about the site: http://techcrunch.com/2012/04/08/pinterest-startup-mountain/

Until next time...

Growing your small business

Now that you’ve gotten your small business of the ground and running it’s time to focus on the next step: growth.  But how exactly do you grow your business in difficult financial times without going broke or straying too far from your original idea?

According to the Small Business Administration, almost 70% of businesses survive for the first two years but then only 50%of them survive the next five.  This is proof that many businesses can make it through the first phase but once the “newness” wears off, not as many businesses can stay solvent.  It stands to reason that the businesses that fail after two years didn’t continue to grow.  So how can you avoid such a fate?

A big problem that a lot of new businesses face is: how do you keep customers coming back for more?  Once they purchased what you’ve offered, they may not need you for a few years to come.  One way to avoid this is to continuously update your product so that consumers will want the newest version.  Adding products and services should be a constant theme when you are a small business owner because it will keep your customer interested.  You don’t want them to just purchase and then walk away – you want to cultivate a long-lasting relationship with them.  Of course, by keeping open lines of communication with your initial customer you have the potential to drive in new business by word of mouth, referrals and recommendations.  Additionally, you should be advertising your latest products as they become available.

Remember to identify your customer base repeatedly and keep your finger on the pulse of what they need and want so you can better service them.  Playing to your customer base is essential to getting and keeping customers.  “In many ways, who your customers are should characterize how you run your business in terms of marketing, product design, and even store policies.”

Analyze your successes and failures.  Obviously, failures should be explored as to what went wrong and why an idea didn’t work but don’t forget to look at why something did in fact work.  Remember, what did work is just as important as what didn’t.  This is helpful in putting together future business ideas and identifying things that impressed customers in the first place.  “So long as you try to ascertain the good and bad of your business, you can avoid future missteps and guarantee better success.”

Keep your current customers satisfied.  A good way to do this is by offering something in return for filling out a customer satisfaction survey.  The first step to growing your business is to always exceed the expectations of your current customers.  This reduces customer turnover which means you won’t have to waste as much time looking for new customers to replace the old.  Work with your customers to determine new product and service opportunities.  

Most importantly, know your customer.  Knowing what your customer needs and wants is the best way to keep them happy and interested in the product you are selling.  Why do they in fact need your product and services?  Is it merely a trend?  Are there other competing companies out there doing the same thing?

Lastly, actively pursue new products and market opportunities.  This is the proactive part of growth and business development.  “It includes seeking our growing and profitable markets, solving customer’s problems and finding new market niches where your company can have a sustainable competitive advantage.”

Here are some articles to check out that just might help give you the right tools to grow your brand in this competitive market.

“10 Steps to grow your business”: http://www.startupnation.com/steps/71/grow-your-business.htm

“How to grow your business without going broke”: http://www.openforum.com/articles/how-to-grow-your-business-without-going-broke

“5 ways to grow your business despite the economic crisis”: http://www.openforum.com/articles/5-ways-to-grow-your-business-despite-the-economic-crisis