Revenue Producers: Where They Are, What They Do

Sure, all businesses (or at least a very high percentage) are important contributors to society in some form or fashion. But for the sake of a research paper, the Kauffman Foundation identified Companies That Matter as the following: scalable, quickly reaching $100 million or more in revenues; generating jobs quickly and broadly; and disproportionate creators of wealth, directly through profits and salaries and indirectly through equity.

More from Kauffman on the research and what it found:

In the paper, "The Constant: Companies that Matter," Kauffman Foundation Senior Fellow Paul Kedrosky explores the rate and founding locations of companies in the United States that "matter" from 1980 to present.

"Companies unable to reach $100 million in revenues are still relevant to the economy," Kedrosky says. "But the $100-million firms meet an entirely different threshold that gives cities, states and countries an even greater economic advantage."

Anywhere from 125 to 250 companies per year (out of roughly 552,000 new employer firms) are founded in the United States that reach $100 million in revenues. The largest contributors, in percentage terms, are from the consumer discretionary and industrial sectors. Taking into account sectoral contribution to U.S. GDP, the information technology sector produces more $100-million companies than might be expected.

Geographically, the most productive region in terms of $100-million company production is the U.S. southeast (Georgia, Florida, Kentucky, Louisiana) with the Pacific region (California, Oregon, Washington, Hawaii) coming in second. Following closely behind are the Mid-Atlantic and Central regions. Most regions are balanced with regard to sector, except for the Pacific region, which produces only slightly fewer $100-million information technology companies than the rest of the country combined, most of which are in California.

The United States averages 20 technology companies founded per year that reach $100 million in revenues, 17 of which are in 7 states: California, Florida, Illinois, Massachusetts, New York, North Carolina and Texas. Of these 17, 4 are usually in California. However, in the 1990s, California's share of $100-million technology companies was around 35 percent. That share has declined to around 20 percent in recent years.

"Looking forward, we will most likely see even more changes regarding the locations and sectors of these companies that matter," said Kedrosky. "With the prevalence of lean startups, accelerators and fractional entrepreneurship, and the declining cost of company creation, entrepreneurship is less expensive and more widely available to prospective entrepreneurs."

Gigerich: Indiana Business Climate is Good News, Bad News Scenario

Larry Gigerich of site selector Ginovus penned an informative column for Inside INdiana Business about Indiana's business climate. While we have come a long way and are currently envied by many states, there is still work to be done. He writes:

A few weeks ago, the Kauffman Foundation and Thumbtack.com released an annual ranking of states for their friendliness to small businesses. Indiana ranked 15th for 2013. The study analyzed several factors including items related to tax climate, work force development and regulatory issues. Eight-thousand small businesses were contacted for feedback regarding the study's criteria. Here is how Indiana ranked in each category.

1. Overall Friendliness: B+
2. Ease of Starting a Business: B+
3. Ease of Hiring: F
4. Regulations: C
5. Health and Safety: D
6. Employment, Labor and Hiring: C-
7. Tax Code: D
8. Licensing: A-
9. Environmental: D
10. Zoning: B-
11. Training and Networking Programs: C-

The grades given to Indiana are not surprising. Work force development and job training have been a focus of Governor Mike Pence and the legislature since the beginning of the year. Indiana's educational achievement, continuing learning for adults in the work force and availability of certification/credential programs have not been where they need to be. While progress has been made, there is still much to be done by government, educational providers, not-for-profits and the private sectors.

Indiana has been recognized as a relatively easy place to start and grow a business. This report points to that in terms of licensing, zoning and other factors affecting the launch of a new business.

The tax code ranking is a bit surprising, but the survey asked small businesses if they were paying too much in taxes for their locations. The elimination of the state inheritance tax, which impacts small and family-owned businesses, could help improve this ranking.

Indiana continues to struggle with rankings where health and environmental issues are considered. In particular, the state's obesity and smoking rates are unacceptably high. These items impact healthcare costs, number of missed days of work and quality of life. In terms of the environment, Indiana's long-term large manufacturing presence has impacted water, air and soil quality. While important steps have been taken in the areas, there is much left to be done.

The top five states for small businesses are (in order): Utah, Alabama, New Hampshire, Idaho and Texas. The bottom five are (in order): Illinois, California, Hawaii, Maine and Rhode Island.

In summary, Indiana's ranking relative to the rest of the country is good. Policymakers in the state should focus on ways to improve our weaknesses in order to move Indiana into the top 10. Due to the fact that Indiana has never been a location for large headquarters for companies, small businesses are and will continue to be the lifeblood of the state's economic growth.

Reviewing the New Age in Marketing

The old days of driving a purchasing decision solely through advertisements are over. Advertisers and marketers now have to combat what Google calls “The Zero Moment of Truth.” This moment transcends mere product placement and traditional marketing by representing the time between product introduction and product purchase. This time lag is now filled by readily available and increasingly popular online research and customer reviews.

Whether you are in the market for a local plumber, a new TV, a new car, a restaurant, a hotel or any other of the infinite products and services offered in the marketplace, it is no longer standard practice to act solely on the word of others. The Internet provides millions of bits of information on all types of products and services and heavily influences an increasingly higher percentage of purchases.

As business owners and marketers, we need to understand that our advertising and our name is no longer good enough to drive actual purchases. Sure, our reputation and catchy promotions attract interest and may even give us an initial jump on our competitors, but, in today’s marketplace, one lousy, negative or false review can diminish even the most polished advertising efforts and the sale is lost.

It is not practical to expect a flawless online record. If your business operates long enough, at some point someone will be unhappy with a product or service. That unhappy person may turn to the thousands of review boards that connect consumers all across the globe and publish some sort of unflattering remark directed at your business or your products. How do we monitor online review boards? How do we respond? How do we distance ourselves from bad reviews? When is it advantageous to consult an attorney or take legal action? How do we best protect our reputation online?

By now, you might be thinking, “Well, that’s what crisis communications is for.” A bad review is not a crisis and treating it as such will only amplify the reach and the effect of the review.  New age marketing has to include specific and strategic plans of action pertaining to the handling of negative reviews similar to the way traditional public relations efforts seek to put water over an impending fire. The knowledge, the plan and the execution of handling online reviews not only helps protect your brand, but it can create a competitive advantage, increase customer service efforts and silence defamers. Not all negative reviews are treated the same. Some should be directly addressed on a personal level, some should be strategically distanced from the company and some may need legal attention. Much like consumers, business owners and marketers need to do their research.

Mobile Madness!

Digiday explains why smartphones and mobile devices are no longer wants, but necessities, in today's world. Here are 15 stats that all brands should know about mobile:

  • The U.S. is at 101% penetration. (CTIA)
  • 1 billion smartphones will be shipped globally this year. (Gartner)
  • Apple beats all other phone manufacturers in customer satisfaction for smartphones. (J.D. Power and Associates)
  • 59% of mobile users are as comfortable with mobile advertising as they are with TV and online ads. (InMobi)
  • 85%  of mobile users prefer mobile apps over the mobile Web. (Compuware)
  • 75% of Americans bring their phones to the bathroom. (11 Mark)
  • 15% have answered their mobile phone while having sex. (Wilson Electronics)
  • Mobile advertising revenue is expected to reach over $11 billion worldwide this year, up from over $9 billion last year. (Gartner)
  • Mobile drives 23%  of paid-search clicks. (The Search Agency)
  • Americans spend an average of 158 minutes every day on their smartphones and tablets. (Flurry)
  • 15% of mobile users prefer to check financial accounts on smartphones and tablets. (Quicken)
  • 42% of consumers using a mobile device while in-store spend more than $1,000. (Interactive Advertising Bureau)
  • Mobile now accounts for 12% of Americans’ media consumption time, triple its share in 2009. (eMarketer)
  • 39% of mobile users access social networks from their phones. (Business Insider)
  • Mobile commerce will account for 15% of total e-commerce sales this year. (eMarketer)

Hat tip to Chamber staffer Glenn Harkness for the story.

Court Strikes Down Controversial NLRB Poster Requirement

This issue has been kicked back and forth in the court system in the last couple of years. There finally appears to be some closure, much to the relief of America's business community. The Hill reports:

Industry groups, which quickly challenged the rule after it was issued, cheered the ruling. Jay Timmons, the president and chief executive of the National Association of Manufacturers, pledged to remain vigilant against the “rogue” NLRB.

“The poster rule is a prime example of a government agency that seeks to fundamentally change the way employers and employees communicate,” Timmons said in a statement. “The ultimate result of the NLRB’s intrusion would be to create hostile work environments where none exist.”

Judge A. Raymond Randolph, who wrote the decision for the U.S. Court of Appeals for the District of Columbia, suggested the rule was a clear violation of free speech rights because the government “selected the message and ordered its citizens to convey that message.”

Freedom of speech, Randolph wrote, “includes both the right to speak freely and the right to refrain from speaking at all.”

The court did not rule on whether the union poster regulations were constitutional, deciding only that the NLRB exceeded its legal mandate…

Business groups argue the NLRB has favored unions under President Obama's administration and pointed to the poster rule as one of the most egregious examples.
 
“Today’s decision is a monumental victory for small-business owners across this country who have been subject to the illegal actions of a labor board that has consistently failed to act as a neutral arbiter, as the law contemplates,” Karen Harned, executive director of National Federation of Independent Business's Small Business Legal Center, said in a statement.

The advocacy group National Right to Work called the NLRB’s poster rule an “outrageous effort to transform itself into a taxpayer-funded arm of union organizing.”

This is the second major court defeat for the NLRB in recent weeks. The same appeals court ruled in January that Obama’s recess appointments to the board were illegal and therefore invalid. The independent agency is tasked with prosecuting unfair labor practices and conducting union elections.

“Stopping the NLRB’s burdensome agenda of placing itself into manufacturers’ day-to-day business operations is essential to preventing further government-inflicted damage to employee relations in the United States,” Timmons said.

VIDEO: Pres. Brinegar Wraps up the 2013 Legislative Session

Chamber President Kevin Brinegar offers a two-minute wrap-up of the 2013 legislative session. Highlighting his review are thoughts on the new budget, tax relief and critical education and workforce development issues.

Beer Lovers: Conner Prairie’s History on Tap Back for Another Year

Conner Prairie’s Horizon Council (the interactive history park's young professionals group, of which I am a proud member) will host its second annual History on Tap craft beer event on Friday, May 31. Comments from attendees last year were extremely positive, and we're able to grow the event this year, as well. However, tickets will be capped at 500, so you'll want to buy early — and take advantage of the early bird pricing.

History on Tap 2013 will include:

  • Beer samples from 11 Hoosier breweries
  • A panel discussion: "Brewer Innovation: A Taste of the Past, Present & Future"
  • Craft brewing demonstration by Tuxedo Park Brewers, featuring a "Replicale"
  • An evening adventure through 1836 Prairietown
  • Food available at an additional cost for general admission tickets, included for VIP tickets
  • Discounted rate for the 1859 Balloon Voyage (weather permitting)

“We are proud to partner with Conner Prairie and award-winning, local breweries to present this signature event,” explains Robby Slaughter, Horizon Council president. “History on Tap is designed to provide an interactive experience that celebrates the rich heritage of craft beer making in Indiana and to engage a new demographic of visitors by giving them a taste of what Conner Prairie has to offer.”

Order your tickets now!

Pretzels: The Kindest Twist of All

Who can resist pretzel trivia? The following comes from a public relations firm promoting a new Blimpie turkey sandwich on pretzel bread. The same release also indicated that Blimpie was the first quick service restaurant to feature pretzel bread (back in 2009).

But what about the history of the pretzel? Here are some tasty treats:

  • In A.D. 610, while baking bread, an Italian monk created a treat to motivate his distracted catechism students. He rolled out ropes of dough, twisted them to resemble hands crossed on the chest in prayer, and baked them. The monk christened his snacks pretiola, Latin for "little reward." Parents who tasted their children's classroom treats referred to them as "little arms." When pretiola arrived in Germany, they were called pretzels.
  • Perhaps because of its religious roots, the pretzel has long been considered a good-luck symbol. German children wear pretzels around their necks on New Year's Day. In Austria in the 16th century, pretzels adorned Christmas trees, and they were hidden along with hard-boiled eggs on Easter morning.
  • The phrase "tying the knot" came from the Swiss, who still incorporate the lucky pretzel in wedding ceremonies. Newlyweds traditionally make a wish and break a pretzel, in the same way people in other cultures break a wishbone or a glass.
  • In Austria, signs outside many bakeries depict a lion holding a pretzel-shaped shield. According to a legend that dates to 1510, pretzel bakers working before dawn heard Ottoman Turks tunneling under Vienna's city walls and then sounded an alarm. The city was saved, and the bakers were awarded their unique coat of arms by the Viennese king.
  • Hard pretzels were "invented" in the late 1600s, when a snoozing apprentice in a Pennsylvania bakery accidentally over baked his pretzels, creating crunchy, seemingly inedible, knots. His job was spared when the master baker, attempting admonishment, took an angry bite out of one–and loved it.
  • Julius Sturgis opened the first commercial pretzel bakery in Lititz, Pennsylvania, in 1861. He received his original pretzel recipe as a thank you from a down-on-his-luck job seeker after Sturgis gave the man dinner.
  • Until the 1930s, pretzels were handmade, and the average worker could twist 40 a minute. In 1935, the Reading Pretzel Machinery Company introduced the first automated pretzel machine, which enabled large bakeries to make 245 pretzels per minute, or five tons in a day.
  • More than $550 million worth of pretzels are sold in the United States annually; 80 percent are made in Pennsylvania, where hard pretzels originated.
  • The average U.S. citizen consumes up to two pounds of pretzels per year, but Philadelphians snack on about 12 pounds of pretzels per person every year.

U.S. Chamber Honors Pro-Business Members of Congress

The U.S. Chamber of Commerce recently honored members of Congress (252 in the House; 48 Senators) for their pro-jobs, pro-growth stances with the annual Spirit of Enterprise Award.

“In the face of high-stakes politics and difficult choices, legislators from both parties provided America’s job creators with a strong voice in Congress,” said Thomas J. Donohue, president and CEO of the U.S. Chamber. “This award recognizes these men and women for consistently demonstrating their support for pro-growth policies.”

The Chamber’s prestigious Spirit of Enterprise Award, in its 25th year, is given annually to members of Congress based on key business issues outlined in the Chamber publication How They Voted. Members who support the Chamber’s position on at least 70% of those votes qualify to receive the award.

The Chamber scored Congress on 8 Senate and 12 House votes in 2012, including reauthorization of the Export-Import Bank of the United States, the establishment of Permanent Normal Trade Relations (PNTR) with Russia, and the reauthorization of surface transportation legislation. Also scored were votes to repeal onerous provisions in the Patient Protection and Affordable Care Act, improve the process by which regulations are promulgated, and better secure the United States from cyber threats.

To view a complete list of the 2012 Spirit of Enterprise recipients, please visit www.uschamber.com/soe.

Those from Indiana are:

INDIANA
Sen. Dan Coats
Sen. Richard G. Lugar
Rep. Joseph Donnelly (IN-2)
Rep. Marlin A. Stutzman (IN-3)
Rep. Todd Rokita (IN-4)
Rep. Dan Burton (IN-5)
Rep. Mike Pence (IN-6)
Rep. Larry Bucshon (IN -8)
Rep. Todd Young (IN-9)

Kroger: An Indiana Staple

Kroger's web site outlines the history of the supermarket chain, describing how Barney Kroger invested his life savings of $372 to open a grocery store in downtown Cincinnati in 1883. The son of a merchant, he ran his business with a simple motto: “Be particular. Never sell anything you would not want yourself.”

Step forward to now, and if you live in Indiana, there's a likely chance you know someone employed by a Kroger store. Here are some numbers and reasons why this supermarket is a pillar in the state's grocery economy:

  • 18,128 – Kroger associates employed in Indiana
  • $13.3 million - in food, cash, foundation grants and sales-based fundraising was distributed in 2012 from Kroger's Central Division
  • 1,940 – jobs in Indiana created over the last seven years
  • 1,630 – contractors employed statewide
  • 146 – food stores with a variety of options
  • 105 – pharmacies
  • 79 - fuel centers
  • 4 – distribution centers (Bluffton, Shelbyville, Seymour and Indianapolis)
  • 4 - manufacturing plants
  • 2 – division headquarters (Seymour and Indianapolis)