Posted by: John Tozzi on August 3, 2011
This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.
Small business owners are suffering from an economy hurt by reduced consumer
spending and stagnant growth, according to a new survey by the National Small
Business Association, a Washington, D.C., trade group.
The NSBA's Mid-Year Economic Report, which surveyed 400 of the group's members online between June 24 and July 11, offered little to be optimistic about:
- More than one-third say they aren't confident about the future of their business from a financial perspective
- Eighty-eight percent anticipate a recession or flat economy in the next year, an increase from 78 percent six months ago
- Forty-five percent expect no growth opportunities in the coming year, up from 40 percent in December.
"Given the ongoing economic difficulties the U.S. has faced the past three years, small business owners overwhelmingly cited economic uncertainty as the most significant challenge to the future growth and survival of their business," the report says.
Nearly one in three business owners cited the U.S. national debt as the most significant challenge to survival and growth, listing it as the top issue for Capitol Hill to address, followed by reducing the tax burden and mitigating the costs of health care reform. On Aug. 2, President Barack Obama signed a debt-limit compromise that prevented a U.S. default. The deal threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years.
The NSBA survey did indicate owners are having an easier time getting financed. The number that reported access to capital as their most significant challenge fell to 22 percent from 29 percent a year ago. Furthermore, the number of owners who reported being able to obtain adequate financing is up to 64 percent from 59 percent in July 2010, the lowest figure since NSBA began asking the question in 1993.
"The prospect of getting financed for a small business--even in a growing economy--is very difficult simply due to the fact that many small businesses lack the assets necessary for a traditional bank loan, making them a riskier lending option for banks," the report says.
More owners indicated they planned to increase jobs than cut them: 29 percent of business owners expected to hire in the next year, up from 25 percent in December. Sixty percent said employment wouldn't change, and 12 percent of owners said they would actually decrease the number of employees. About 43 percent of owners also reported increasing employee compensation, while 17 percent reported decreasing it.
Small businesses added 58,000 jobs in July, according to the latest ADP Small Business Report, which measure nonfarm private employment from payroll data.
Posted by: John Tozzi on August 2, 2011
Want a look behind behind the curtain at how startups are built at one of the most selective tech accelerators? Our colleagues at Bloomberg TV follow the teams at TechStars NYC this year. The first episode debuts Sept. 13 at 9 p.m. on Bloomberg TV, and will be online as well. Find a taste here.
For more, see TechCrunch's post today.
Posted by: John Tozzi on July 29, 2011
This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.
The National Science Foundation wants to take researchers' big ideas from the laboratory to marketplace through a new program called Innovation Corps, announced July 28.
The public-private partnership between NSF, the Kauffman Foundation, and the Deshpande Foundation will provide $50,000 grants to help scientists turn research into viable products, says NSF program manager Errol Arkilic. The grants are limited to researchers who have already been funded by NSF. They're intended to support the projects for up to six months while the teams research how their technology could benefit society.
"We're trying to support the entrepreneurial education of our researchers," says Arkilic. "We've recognized for a long time that entrepreneurship and engineering and science are very closely related. Some of our most significant technology platforms and companies are based upon really deep science and engineering."
The NSF will fund 25 teams about every three months at a total cost of $5 million per year. The Kauffman and Deshpande foundations will provide additional money for travel and other expenses.
The program will use the curriculum of Stanford University's Lean Launchpad, a class developed by serial tech entrepreneur Steve Blank to teach entrepreneurship to engineers, scientists, and other professionals. Blank will also be an I-Corps instructor. He says the main goal of his course is to get students out of their labs to see if what they have to offer is what a customer really needs.
"There's now a way to teach scientists and engineers how to use the scientific method -- which they know how to do because they're scientists -- to figure out if there is potential to commercialize their product," Blank says.
Classes will begin for the first 25 teams on Oct. 10 with a three-day introduction at Stanford. After the workshop, the teams will participate in five web-based lectures. Each team will bring together a scientist with an entrepreneur and a mentor. During the course, teams will answer key questions to test their business ideas, such as evaluating competitors and determining what resources they will need. Teams are expected to allot at least 15 hours per week for customer discovery outside of other research and lectures.
"We get them to motivate themselves to spend more time outside the building than you ever would have imagined," Blank says. "The facts are outside the building."
At the end of the course in December, the teams will return to Stanford to present their business pitches in front of venture capital firms.
Arkilic says there are about 18,000 recipients of NSF support each year that are eligible to apply. The foundation is limiting applications to people who have received research grants in the last five years.
"Innovation has always been something that's front and center for NSF," Arkilic says. "Increasingly there's a recognition that the economic strength of our nation is built on the advances in science and technology."
Posted by: John Tozzi on July 26, 2011
This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.
More than 160 African high school students are getting lessons in entrepreneurship this week during Babson College's first Entrepreneurial Leadership Academy, aimed at promoting leadership and business instruction in Ghana and Rwanda.
The academy brings students from high schools throughout the regions of Sekondi, Ghana, and Byimana, Rwanda, together in each country for a week of learning with two dozen faculty, undergraduates and alumni from the Wellesley, Mass. college. The sessions start at 9 a.m. and end at 5 p.m., but the Babson teams are offering smaller optional classes after hours because demand from students is so high, says Dennis Hanno, dean of the undergraduate school at Babson. Topics range from creating customer value and recognizing opportunity to modeling leadership.
"They just have this passionate thirst for learning," Hanno says. "When I asked questions about what I talked about yesterday, they can answer them faster than I can." Teachers from about 26 high schools in each country picked the students, who range in age from 16 to 20 years old. About 85 were selected in each country.
Throughout the week, students generate and refine business ideas, which their peers and the Babson team evaluate. Together they select the best business ideas, which become candidates for a share of $1,000 in seed capital administered through local churches.
The effort grew out of an 11-year relationship between Babson and the two countries, Hanno says. He goes to Ghana with a team of students and teachers each year to teach local high school students. In Rwanda, the college last year established the Babson College-Rwanda Entrepreneurship Center, a collaborative effort between Babson instructors and the Rwandan Private Sector Federation.
"One of the most difficult questions I get is, 'Can I come to Babson?' and unfortunately the cost of coming to Babson is just not in the realm of possibility for most of the students that we're working with here," Hanno says.
Hanno says he has connected with a Ghanaian university that will send teachers to the academy on Friday to talk about how the students can pursue entrepreneurship education within the country.
"When they ask me why I'm here, I tell them that my life mission is to have an impact on students no matter where they are," Hanno says.
Posted by: John Tozzi on July 22, 2011
This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.
Google is offering a select number of smaller advertisers a new way to pay for online search ads: a credit card that can only be used to pay for AdWords, the Internet search giant's keyword advertising program.
Google is teaming up with World Financial Capital Bank to offer a "beta" version of a new AdWords Business MasterCard. The card is being offered to a randomly selected group of U.S.-based advertisers.
The card will allow small and mid-sized businesses to spend on advertising when they need to, such as before a peak selling season, and pay for it when revenue comes in, a Google spokesman says. The card, which carries an 8.99 percent rate and no annual fees, must be used exclusively for Google AdWords purchases. Google says the credit limit will vary by cardholder but declined to be more specific. The company won't say how many cards it plans to issue.
The interest rate is lower than most other major business credit cards, according to rates posted on BillShrink.com, which aggregates data on credit cards. The most comparable rate is offered by the Wells Fargo Business Platinum Credit Card, which charges 9.24 percent, according to BillShrink.
"If you're doing AdWords purchases anyway, and if you're running a balance on your credit cards every month, 8.99 percent is attractive," says Bill Leake, CEO of the online marketing agency Apogee Results. "The economy's still soft, and credit is still tight, and fewer alternatives exist for small businesses to get loans."
Leake says Google already offers direct credit lines to larger clients. The AdWords credit card will allow Google to capture more small- to mid-sized businesses that might be choosing between buying office supplies or online advertising. Offering clients credit cards instead of a direct credit lines helps Google reduce its exposure to advertisers who can't pay their bills, Leake says.
"If you extend [credit] terms to a business, and the business has problems, they walk away from that and the person who extended the credit is at risk," Leake says. "Google's liability is really limited here. Google gets so much of their money from smaller businesses, and this is a great way of cushioning Google if small businesses get whacked from a double-dip recession."
