Women- and Minority-Owned Businesses as Engines for Growth
The Puget Sound Business Journal published an article today co-written by me and Farayi Chiro, Chairman of the Small Business Partnership for Prosperity, making the case that women- and minority-owned business enterprises may lead the economic recovery in the Greater Seattle region. The article references the recent conference sponsored by the SBPP and the concept of a women and minority owned business cooperative referenced in an earlier post.
Here is the link to the full Puget Sound Business Journal article.
Client Profile: Lift9
Free Vector Advisors represented Lift9 in connection with its business combination with Intrepid Consulting, Inc., creating a global research firm with offices in Seattle, London, and Ho Chi Minh City. The combined company tightly integrates social media analytics with traditional market and ethnographic research to major brands around the globe.
Services provided by Free Vector Advisors included:
- M&A advisory services
- preparation of strategic plan and consolidated financial model
- preparation of a private placement memorandum
Read blog post from Intrepid CEO John Song announcing the merger.
2009 Kauffman Index on Entrepreneurial Activity – Look! Green Shoots!
It appears that Spring is in the air for our moribund economy. According to the latest Kauffman Index on Entrepreneurial Activity, business startups in 2009 reached their highest level in 14 years – even exceeding the number of startups during the peak 1999-2000 technology boom.
While much of the increase is certainly due to “entrepreneurship by necessity“ as laid off workers facing a bleak job market started new businesses, the signs are none-the-less encouraging. By ethnicity, new business starts were highest among African-Americans, which is consistent with findings from our post on business cooperatives. By age, business starts were highest among people ages 35-44, followed closely by those 55-64. A good sign is the significant increase in new business starts in the Midwestern and Southern states.
The most surprising finding? The State of Washington had one of the lowest entrepreneurial rates . . . and the City of Seattle had the lowest rate of the U.S.’s largest 15 metropolitan areas:
Embracing Diversity: the Emergence of Women and Minority Owned Business Cooperatives
The Small Business Partnership for Prosperity (SBPP) recently sponsored its annual Small and Minority Business Conference to address issues facing Washington’s women and minority owned business enterprises (WMBE’s). Thriving small and minority businesses are seen as essential in the new regional economy. A recent study (the Washington Minority Small Business Survey, April 2010 by the University of Washington Business and Economic Development Center) provides hope that new jobs will be created by small businesses, with minority-owned businesses anticipating significantly more robust hiring than their Caucasian-owned counterparts over the next three months (36%, as compared to 20% of Caucasian-owned businesses).
I had the honor of presenting the SBPP conference’s closing remarks, where I introduced the concept of women- and minority-owned business enterprises forming business cooperatives as a viable alternative to compete against bigger, more established companies bidding on large enterprise and government contracts.
The number one challenge for minority-owned businesses continues to be a lack of customer demand for services. At the same time, major companies in the private sector as well as state and local government entities with supplier diversity and outreach programs continue to have trouble identifying and hiring qualified WMBE’s to meet their diversity objectives. According to the Washington State Office of Minority and Women Business Enterprise Performance Report for the Department of Social and Health Services, W/MBE participation accounts for only 3.23% ($3,135,655) of total expenditures of $104,521,848 during the second half of 2009. How can WMBE’s have trouble finding customers when at the same time major corporations and state and local government entities are having trouble finding WMBE’s to hire, despite having aggressive supplier diversity and outreach programs to increase WMBE participation?
Many WMBEs lack the size and sophistication to compete with larger non-minority-owned businesses for major client projects. Responding to RFP’s is a significant investment of time and money for the typical WMBE, and most RFP’s are not written in a way that encourages WMBE participation. From the point of view of the company or state and local government entity issuing an RFP, valid concerns over viability and capacity are difficult obstacles to overcome when evaluating even the most qualified WMBE against larger non-minority owned competitors, assuming that a viable WMBE even participates in the RFP process to begin with.
I’ve attached the presentation I delivered at the SBPP conference. It outlines my thoughts on how a collaborative platform that provides a shared infrastructure, partnering and marketing and business development opportunities could enable WMBE’s to competitively bid upon, and win, large-scale client engagements in the public and private sector.
Our regional economy depends on the success of small businesses, and women and minority owned businesses in particular, to continue to be the engine for job growth.
The Painful Lessons GM Learned the Hard Way, Part II
(And how small and middle-market companies can avoid this painful experience)
Back in June 2009, we wrote about General Motors on the day Fritz Henderson announced the company’s bankruptcy filing. At that time, we highlighted the simple business principles that would have been brought to bear, should this company survive its unfathomable decline.
At that time, we asked rhetorically, “So, how do you get there?
- Close inefficient, duplicitous locations and operations;
- Aggressively reduce excessive expense, converting as much to variable cost as possible. This is an ongoing process versus a one-time exercise;
- Generate cash to invest in and grow your business.
Since then, we watched the company shed a substantial portion of its dealership structure, obtain a taxpayer loan, fire Henderson, and hire former ATT head Ed Whitacre as the new chairman. Brands have been reduced, employee levels shrunk, and its future remains in doubt. It turns out most of our comments and observations made at the time of the bankruptcy announcement have turned out to be true.
Peter Kauffman of The Wall Street Journal wrote an interesting article (GM’s Plodding Culture Vexes Its Impatient CEO, April 7, 2010, page B1) on the trials and tribulations of GM under its new leadership. While the company has lost significant market share to its rival, Ford, it has cleaned up its balance sheet, but continues to bleed cash on its high debt load.
Under Whitacre’s leadership, what are the new lessons we can take away to improve our smaller businesses?
First, Whitacre is a CEO who is willing to delegate high-level decisions to his senior executives, yet hold them accountable for the results. This philosophy streamlines the implementation of new product ideas, brings them to market faster, and can save money.
Second, cash is still king, and the high debt margin is killing their cash position.
Third, the company’s plodding culture is a key target of Whitacre, as the infamous bureaucracy of the old GM is legendary. As Peter Kaufman pointed out in the article, “To succeed, their whole business has to change. They have to be leaner, meaner, and faster.”
Whitacre is also allowing key executives to pick their own people for their teams. Undoubtedly, he will hold them accountable for their selections, as there is a high sense of urgency and accountability in the senior ranks. Empower your people, but hold them accountable for their results.
Finally, he appears to be an executive who is willing to listen to his people, and caring about what they think. If you don’t know what is going on in the lower ranks, you can’t solve the problems.
Balancing a governmental budget in the “New-Normal”
Across the country, city managers, mayors, school superintendents and other state and local governmental officials are coming to grips with the severe budget deficits they will be facing as a result of the continued decline in residential property values. Most municipal units derive the bulk of their revenue from taxes collected on the value of properties in their respective communities, and typically share a portion of revenue allocated by their state government.
In all 50 states, revenue is down this fiscal year, but will likely remain down for many years for the ten states hit the hardest (Pew Research Report on California and others, November, 2009).
The severity of the problem, which is only exacerbated by the traditional high-cost benefits package featured in most municipal governments, is causing officials to re-examine how they not only deliver services to their constituents, but how to pay for them. Read more…
The Next Big Risk to Economic Recovery: State and Local Government Bankruptcies
Will governmental units be the next group to face mass-bankruptcy?
As the economy continues to show no signs of recovery by any meaningful measurement, the financial meltdown and the mortgage foreclosure crisis is now impacting our governmental units at all levels, particularly the local levels, which also includes public school districts.
To understand this situation, it is important to understand how most municipal units are funded. Read more…
The Mayan Chronicles: Future Trends in IT
The Mayans posited that cataclysmic or transformative events will occur in 2012, the end-date of a 5125-year-long cycle in the Mayan Long Count calendar. Whether the Mayans predictions come true remains to be seen, but we do see transformative events on the technology horizon that companies need to be aware of, or ignore at their peril.
What the IT World Will Look Like on the Way to 2012 Read more…
Gartner IT Trends: Social Media, Mobile and Cloud Computing
20 percent of businesses will own no IT assets by 2012, according to a recent Gartner press release on technology trends. The release cites the movement toward decreased IT hardware assets as a result of increased virtualization, cloud-enabled services, and employees running personal desktops and notebook systems on corporate networks. As a result, Gartner foresees that enterprise IT budgets will either “be shrunk or reallocated to more-strategic projects; enterprise IT staff will either be reduced or reskilled to meet new requirements, and/or hardware distribution will have to change radically to meet the requirements of the new IT hardware buying points”.
Other predictions in the report:
- Facebook will become the hub for social network integration and Web socialization.
“Other social networks (including Twitter) will continue to develop, seeking further adoption and specializations with communication or content areas, but Facebook will represent a common denominator for all of them.”
- By 2014, the global mobile penetration rate will be 90%, and context will drive mobile consumer services.
“Whereas search provides the “key” to organizing information and services for the Web, context will provide the “key” to delivering hyperpersonalized experiences across smartphones and any session or experience an end user has with information technology . . . . Context will center on observing patterns, particularly location, presence and social interactions.”
- By 2013, mobile phones will overtake PCs as the most common Web access device worldwide.
http://www.gartner.com/it/page.jsp?id=1278413
Social Media and Business Integration
A year ago, I had a LinkedIn profile and was maybe thinking about starting a Facebook page. I had never written a blog post, much less developed a website, and viewed the whole social media phenomenon with a lot of skepticism — and a bit of trepidation.
Since then, I have developed websites/blogs for four businesses (including this one), each with an associated Twitter and Facebook account (in addition to my “personal” Facebook and Twitter accounts). Overwhelming? At times, but the effort has been clearly worth it from both a business and personal perspective.
Why? First, because I like to build things. One of the my most personally satisfying moments last year was seeing the fruit of my search optimization efforts for the Mango Math website result in several page 1 returns on a Google search. Second, I enjoy writing (other than when I feel like I “have” to write something – funny how that works). But the real promise is what impact an effective social media campaign can have on a business when it is done right.
I don’t profess to have done much of anything right, yet, other than what I have learned by trial and error. But from a business perspective I’ve definitely learned some things and see enough value to keep plugging away. For example, things got a lot simpler when I learned that it is fairly straight-forward to integrate your blog with Facebook and Twitter. Write once, post, and your Twitter and Facebook pages are automatically updated. I’ve also learned, however, that doing it that way isn’t always the most effective way to promote your message. Each platform has a slightly difference audience, which often times requires some slightly different messaging.
There are a lot of these little social media lessons I learned the hard way. Fortunately, Mashable (www.mashable.com) is a great source of tips and expertise on all things social media. If you are looking at developing a social media strategy and don’t know where to start, I found this article, 10 Stages of Social Media Business Integration, to be particularly insightful.