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.
Starting a New Business?
Learn more about FV LaunchPad
Introducing FV LaunchPad
Ideal for new businesses and LILO (little in, lots out) start-ups, our Free Vector LaunchPad™ services are designed to get you from idea to execution quickly. We take you through the entire process — from business formation and planning, website and infrastructure development, to business launch and the tools to manage and grow your ongoing operations.
You’ve got a great new business concept — one that you believe addresses a need in the marketplace and that you are passionate about. You have a window of opportunity to address this need — how is your time best spent?
In our conversations with entrepreneurs and business owners, one of the biggest stated challenges is time management. Is your time better spent evangelizing your product or service, developing a prototype, or networking with potential clients or partners? Laying the foundational groundwork — such as business formation, website and infractructure development, development of the business plan, financial model, and go-to-market strategies – are labor- and time-intensive activities with steep learning curves. You can do it yourself — but is it the best use of your time as you look to launch your business?
At Free Vector, we have developed a fixed price offering that is designed to get you from idea to execution quickly, an offering that puts together all of the basic business components and allows you to focus on developing and monetizing your new venture with a firm foundation for growth.
We provide our entreprenurial clients with the tools and knowledge to put them in the best position to succeed in their new venture. We subscribe to the old Chinese proverb: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime”.
The Free Vector LaunchPad™ provides your business with a solid foundation and platform for success — with no ongoing obligations to use our services:
- Expert business, financial and strategic planning and business formation services.
- low-cost, scalable software-as-a-service (SaaS) technologies to manage your operations, including website management, hosted accounting, customer relationship management (CRM), email campaign management, and document management and collaboration technologies, giving you the flexibility to run your business from any computer or from a low-cost netbook.
- Website development, search engine optimization (SEO), search engine marketing (SEM), and social media integration between your website, Facebook and Twitter to build market awareness fast.
- “Dashboard” tools and analytics to manage your ongoing business.
- Full knowledge transfer, training and 3 free months ongoing mentoring and support.
To learn more about our FV LaunchPad offering or our other business advisory services, contact us at info@freevectoradvisors.com.
Entrepreneurism: What Seattle can offer Detroit (and vice versa . . .)
I’m a Detroit native, but have lived in the Seattle area now for the past 18 years. I get back to Detroit fairly often to see friends and family and increasingly, for Free Vector-related opportunities.
Everyone is aware of the economic issues facing Detroit and the State of Michigan. The national news paints a very bleak picture of the area — the collapsed housing market, the GM and Chrysler bankruptcies, and the 15.2% statewide unemployment rate, almost a full 3% higher than Rhode Island, the second-worst state in the nation for unemployment (Bureau of Labor Statistics, June 2009 report).
But don’t count Michigan out just yet. Read more…
Birth of an E-Commerce Startup
While I have been, and been around, entrepreneurs and startups most of my professional career, I’ve had an unique opportunity recently to advise on a startup that hits me where I live, so to speak — my wife’s recent launch of her K-8 math curriculum offering, www.mangomathgroup.com.
Mango Math is the first of two initial beta clients for a small business offering Free Vector has developed. Read more…
What Entrepreneurs Can Learn from the GM Bankruptcy
Being a lifelong resident of the Midwest, it was particularly painful for me to watch General Motors CEO, Fritz Henderson, go through the machinations of the agonizing press conference that took place on June 1, where he formally announced the bankruptcy of GM. The wealth collectively generated by GM, Ford, Chrysler, as well as the other OEM automakers (both transplant and foreign), including their supply chain, had been enormous and unprecedented in our country. Then, in a relatively fast process (a decade), the common shareholder equity of GM was suddenly worthless, triggering the shutdown of countless supply companies, and the loss of thousands of jobs for people relying on the automotive sector for their businesses.
While a variety of factors contributed to the billions of dollars of cumulative losses over the past decade at GM (some out of the control of the company) most were certainly within the control of management. After a decade of layoffs, plant closings, poor labor agreements, some painful labor concessions, the cannibalization of its supply chain, and the unforeseen credit and housing bubbles coupled with a crude oil price spike, the accelerated demise of General Motors was almost a certainty. Clearly, the automotive-based regional economy of the Midwest was being changed permanently.
While it was agonizing to watch, we all wanted to know how the board and management of GM seemingly allowed their company to collapse. More important, what could they, or should they, have done to prevent this bankruptcy? And, what questions should the CEO’s of other small, middle-market and large companies be thinking about, right now, in the wake of this bankruptcy, so as to avoid GM’s fate?
What can be done in the C-suite when a sluggish and shrinking economy, decreased liquidity limits, as well as access to cash and credit, applies enormous pressure on your company? If your product line is going down the wrong path, is it too late to adapt to consumer demand? Is your cost structure competitive and sustainable, as was not the case at GM?
During that press conference, we heard Henderson allude to several factors that would be addressed in conjunction with the creation of the “new GM”, but if one listened closely, he seemed to be addressing elements that are simple, basic “Business 101” concepts, all applicable to any company in any sector. These business elements are, however, essential to the success of any company operating in today’s environment, and include the following key themes:
• A company must be cost competitive relative to its competition;
• It must possess the best brands in its space;
• It must also offer the finest products or services available in the marketplace (value creation);
• The company must have a low debt load;
• The company must have the ability to generate sustained, bottom-line performance (GM hasn’t been able to do this for many years);
• The company must build a healthy balance sheet in order to fully support its brands and products; and
• A successful company must continually increase its investment in new technology, which will drive earnings power and help any company get through difficult times.
In other words, the task at hand in today’s business climate is get to the point where your company is consistently being analyzed, evaluated, and restructured, and get there fast. We saw for well over a decade the inability of GM to get its labor cost structure in line with its competition. This cost differential was crippling to the company, but they never were able to fix this flaw in their operating structure. The notion of being able to “grow out of a problem”, which worked well in the 1950’s and 60’s, no longer applies today.
So, how do you get there?
• Close inefficient, duplicitous locations and operations;
• Aggressively reduce excessive expense, converting as much to variable costs as possible. This is an ongoing process versus a one-time exercise;
• Generate cash, invest in your business, and grow your business.
Most of us saw this GM situation developing for many years, and most executives likely had opinions as to what they should have been doing to repair their once-great company. Yet, most also believed GM wasn’t quite in touch with their customer’s needs and desires, and, as result, they literally wasted billions of dollars designing, engineering, building, marketing and selling products without a solid market. That loss of capital, whether in the form of cash, lost earnings, human, shareholder value, etc., is all gone. What is the lesson for other companies? No company wants to end up to the position of GM today, as it is a near certainty the federal government will not be there to bail it out.
Successful companies in today’s business environment must be able to generate cash, and then invest that cash in their business. GM also learned the likely fatal lesson of never taking your customer for granted. If you lose your customer, how do you get them back? It is better to stay focused on not losing them in the first place. At the end of the day, businesses succeed or fail by not being able to identify the potential cost savings in everything they buy and everything they do. The difference between success and failure can be minute, and can often quantified at the margin in one small piece of the cost structure.
Glenn Watson, Principal
Free Vector Advisors
Update: Kauffman Index of Entreprenurial Activity
Here’s a direct link to the actual report Kauffman Index of Entrepreneurial Activity. Chock full of interesting data and trends by demographic group, industry, state and major metropolitan area.
Kauffman Foundation Report on New Business Startups
The Kauffman Foundation just released its report on new business startups. Their findings lend some support to the theory that there are “green shoots” beginning to sprout in the economy. New business starts overall was up across ethnic groups (except for African-Americans) and most geographic regions (other than the Midwest). However, the report also indicates that most new business starts comes from the creation of low-income potential and middle-income potential businesses, suggesting that most new business starts are more out of necessity than opportunity.
The findings show an increase in new business starts in 2008 over 2007:
On average, 320 out of every 100,000 Americans created a new business each month. As a whole this mean that 530,000 new businesses were created each month during 2008. These numbers were an increase over 2007 when 300 out of every 100,000 Americans started a new enterprise.
“The overall pace of entrepreneurial activity did not suffer during the recession in 2008, which is great news. This is consistent with historical patterns, to the extent we understand them, which indicate that entrepreneurial activity is largely insensitive to the economic cycle,” said Robert Litan, vice president, Research and Policy at the Kauffman Foundation. “So far, at least through 2008, this pattern is holding up.”