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Posts from April 2012

Regulating and Redefining Small Business

Posted on  25 April 12  by 

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Late last year, ECSB identified a rising concern with government regulations among small business owners. Since then, additional regulations have only added fuel to the fire. The recently passed JOBS Act, in addition to the imminent Supreme Court decision on the Patient Protection and Affordable Care Act, is creating a great deal of uncertainty for business owners.

Source: ECSB Research, July 2011, N=1099 N.A.; July 2009, N=1228 N.A.

A recent Wall Street Journal article detailed the National Federation of Independent Business (NFIB) Supreme Court case against the mandate that all Americans carry health insurance. Provisions for tax credits for small businesses that provide insurance for their employees may help offset the burden for some owners, however others predict that the added cost of employee health coverage will force them to close their doors.

Whether good or bad, the added uncertainty surrounding the new law and political fear mongering generated in the press as a result is creating anxiety for owners.  Last year ECSB determined that most businesses owners are not clear what impact the insurance mandate and accompanying tax credits will have on their businesses. In fact, less than a third of owners surveyed could correctly determine their eligibility for health care tax credits. Pending the Supreme Court decision, ECSB recommends that health insurance providers be prepared to help owners navigate the regulations.

Additional legislation in the form of the JOBS Act, which stands for Jumpstart Our Business Startups, is changing the very definition of small business in the United States. The JOBS act will allow for increased funding flexibility by increasing the cap on private investors from 500 to 2000, in hopes of allowing businesses to expand more rapidly before having to register with the Securities and Exchange Commission.  While this opens the door to new sources of funding like crowdfunding, it also leads to more choices and tougher decisions for those owners looking to raise capital.  Selecting the right financial services products or funding vehicle has never been more complicated.

At the same time, the Small Business Administration is redefining small business by revising outdated revenue thresholds. In expanding what is considered “small,” the SBA has increased competition for lucrative contracts designated for smaller firms, as detailed in a recent WSJ article.

It’s no wonder that business owners are confused and overwhelmed. While the true impact of these regulations on small business remains to be seen, the one certainty here is that owners need help to better understand and navigate the new laws. Companies that can translate policy and create clarity for owners will be poised for success as these regulations take effect.

Which Companies Do the Best Job of Targeting Startups?

CEB’s Small Business Choice Award nominees stand out among owners as showing the most commitment to and support for startup businesses.

Last week, we wrote about why targeting startups is a critical component of a small business marketing strategy.  Since startups are such an important segment, we also wanted to find out which enterprise companies do the best job at targeting and supporting new businesses.

In an open-ended survey, the Enterprise Council on Small Business (ECSB) asked 1,300 small business owners from across North America which companies are doing the most to support startup businesses.  Ten companies rose to the top as the leaders.  Companies were recognized by owners for their flexibility and range of products, personalized service, helpfulness, willingness to understand and service new companies’ needs, and their ability to enable success for the small businesses they serve.  For this, and an overall commitment to the small business sector, we would like to congratulate our 2012 CEB Small Business Choice Award nominees (in alphabetical order):  American Express, AT&T, Chase, FedEx, Intuit, RBC, Staples, TD Bank, UPS, and Verizon.

With this top ten list in-hand, ECSB is surveying more than 1,000 North American small business owners to find out who’s the best of the best when it comes to serving startups.  The top three finalists will be invited to discuss their startup strategies at our annual ECSB Summit in Miami on June 4th, where we will also announce the winner of the 2012 CEB Small Business Choice Award.  Once again, congratulations to our nominees!

Join ECSB at our annual Summit meeting June 4th-5th to learn about targeting startups and other important windows of opportunity in the small business lifecycle.  To view the conference agenda and register, please visit our event website.

Why Startups Are a Critical Component to Your Small Business Strategy

Preliminary research from ECSB’s study of Lifecycle Marketing suggests that startups are an important segment for small business sales and marketing executives to target.  Specifically, when we look at first-time purchases across all supplier product categories, over 60% of first-time purchasers are buying within the first six months of starting their businesses.

What’s more, switching activity away from the initial supplier is quite low over time, suggesting that there is something special about that supplier who was there from the beginning.  We see that owners’ attitudes and behaviors towards suppliers are developed early on and become increasingly difficult to change.

As enterprise executives assess the startup opportunity, there are additional preliminary data points that suggest startups make for good targets:

  • Startups are a good long-term investment – Even accounting for attrition and businesses that fail, approximately one-in-five new startups acquired early will still be loyal customers after 10 years.
  • Startups are looking for supplier information – Startups are always looking for information, as opposed to tenured businesses that search for supplier information when something breaks and needs to be replaced.
  • Startups are not as industry oriented – Startups have common pain points and are less interested in industry-specific information, suggesting that targeting startups is not as nuanced an endeavor as targeting established businesses.
  • Startups are less brand aware – When startups go shopping, they have fewer brands in mind and rely more on research to expand their consideration set.
  • Startups are more receptive to marketing messages – Looking across all marketing channels, startups are about 40% more likely to follow-up with a supplier after seeing an advertisement or promotion.

Does your company have a startup strategy?  What’s hard about it?  Are you more focused on capturing market share from competitors?  Help inform ECSB research by taking this short 5- minute survey and let us know.  Select poll results will be presented at the 2012 Summit in Miami.

For more on startups and other important milestones in the small business lifecycle, join us at the ECSB Annual Summit in Miami Florida, June 4-5, 2012.  This year’s topic is Small Business Motivations and Milestones: Tapping Key Windows of Opportunity Across the Lifecycle.

Hair, Profits Growing for Salons

Posted on  4 April 12  by 

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As reported in ECSB’s Small Business Pain Points series, salons have proven to be resilient in recessions. While consumers may spend less money or extend the time between visits, there remains a need to maintain a polished appearance in a tough job market. According to Sageworks, salon profits grew 6.4% from 2008 to 2009. Additionally, salon services can’t be outsourced or automated, making it a secure industry for business owners. Now, in a sure sign of economic strength, salons are seeing an uptick in sales growth. 

A recent USA Today article stated that beauty salon sales grew 5.4% in the last two years, versus a 2.3% sales increase in 2009. As consumer financial constraints have eased, frequency of visits and dollars spent are returning to pre-recession levels. Additionally, the Bureau of Labor Statistics projects that employment for hairdressers will grow by 15.7% by 2020, leading the U.S. News and World Report to list hairdresser as one of the best jobs of 2012. 

Source: U.S. Census Bureau

Based on this data, it is unsurprising that the personal services segment is the fastest growing group of small businesses in the U.S. Census Bureau’s “Other Services” segment.  If the personal care segment is any indication, consumer spending—and small business—is bouncing back.