Survey Shows Small Business Optimism for 2018

Small business entrepreneur

There are any number of things that can derail a small business owner’s dream, particularly external issues that are out of an owner’s control such as an economic downturn, shifting consumer habits, or technology changes rendering products or services outdated.

But small business owners are optimistic, according to a late 2017 survey conducted by Staples. The survey showed 86% of respondents were optimistic and four in five reported that their businesses were thriving or surviving in 2018.

There are business matters that small business owners point to as cause for concern, as outlined in the survey. Those issues include disorganization, tax preparation challenges and a lack of marketing knowledge.

A Staples press release announcing the survey results offer a closer look at the challenges:

Disorganization Kills Productivity

  • 53 percent of thriving/surviving small business owners describe their workplace as very organized, while only 23 percent of struggling/failing small business owners say the same
  • 1 in 3 business owners believe that workplace disorganization leads to less productivity
  • 3 in 4 owners with struggling or failing businesses believe disorganization has affected their company’s productivity

Tax Preparation Challenges

  • More than half of small business owners view tax preparation as complicated
  • Nearly 50 percent of small business owners handle their business’s taxes themselves
  • 2 in 5 believe that leaving tax preparation to the last-minute causes complications
  • Nearly 40 percent are not good with numbers or do not have accounting expertise

Professional Marketing Advice Makes All the Difference

  • More than one third of thriving business owners face challenges designing effective marketing materials for their business
  • Fifty percent do not know how to reach new prospective customers on their own
  • Thriving small businesses are more likely than others to use all forms of marketing; 63 percent of thriving small businesses use social media advertising, 59% use online advertising, and 46 percent use print advertising

Tech Talk: Life After Unicorns

Editor’s note: Author Christian Beck is principal design partner at Innovatemap. This is excerpted from a more extensive post on “5 Trends Transforming the World of Venture Capital.” 

As a designer with no formal business training, I could be the last person qualified to write about the world of venture capital (VC). However, over the last several years of working with dozens of start-ups seeking seed funding and scale-ups pitching for Series A, I’ve taken it upon myself to learn the language.

To learn more about investing, I highly recommend Neil Murray’s newsletter, Series F. But for those start-ups trying to get a handle on macro-level trends in the world of VC, I am going to share how I see it from an outsider’s perspective.

One helpful piece of context is that my VC education is driven largely by witnessing first-hand how these firms work in the Midwest, contrasting with what I read from the SF-area firms. As with most things tech, Silicon Valley is the most mature market and often provides a glimpse of the future for other emerging markets. It’s also true that emerging markets can learn from the missteps of those pioneers and chart different paths.

I’ve been following a few trends in venture capital that I think are exciting and possibly transformative. One of those is zebras.

“Zebra” is a term created to contrast the unicorn, which has typically referred to companies valued at $1 billion or more. Zebras represent companies that are profitable, sustainable, and beneficial to society. As I’ve been digging into this trend, I can see the need to insert a new metaphor in the start-up world.

zebra

Unicorns are being chased at all costs, and it’s had a negative effect on entrepreneurs. What may start as an idealistic passion to change the world can easily get bastardized into chasing user acquisition, monthly recurring revenue (MRR) and hockey stick growth … at any cost.

At the heart of this is the notion that VC firms are chasing 10x returns. I’m no financial analyst, but that seems a bit like overkill. You might want to be Lebron, but if you could settle with playing in the NBA, you’d probably be just as happy.

And that’s what is really behind the Zebra trend: a reality check that every start-up doesn’t need to be a unicorn. Indie.vc proves this with a long list of companies they fund and other companies that have scaled based on revenue rather than funding (also note how simple their own web site is: the zebra mentality is carried through top to bottom).

It’s not that becoming a unicorn is inherently bad, but the mentality to get there can create a series of bad decisions that lead to failed products like the Juicero – a SaaS-based juice start-up – when simply making a better juicer would’ve been sufficient.

What it means for the Midwest

The Zebra trend is particularly relatable to Midwest tech hubs that are trying to evolve older industries like agriculture and manufacturing. Creating unicorns is less attractive than creating strong companies with the goal of establishing a healthy local economy. Pumping start-ups with cash in hopes of a 10x return may be fun in the short-term, but it doesn’t provide long-term stability and healthy growth.

Ultimately, tech products should solve problems, but businesses should help local economies. Nowhere is this more pronounced than the Rust Belt. Here, it’s less important to roll the dice on unicorns and more important to establish strong companies that strengthen local economies. As the Rust Belt continues to emerge as a key player in the tech industry, this trend will become the norm.

Takeaways for start-ups

Focus on jobs over profits: Maybe it’s just the Heartland in me, but I tend to believe that while tech companies can service customers around the world, they can still have a local impact. The Fortune 500 is full of companies that grew slowly, created long-term value for investors and provided amazing places to work. Tech doesn’t need to be different. SaaS products can still grow by focusing on employees as much as they do their profits.

Set realistic revenue targets: The path to healthy growth starts with realistic targets. Given enough time and creativity, every start-up can plot a path to unicorn-land and often VC’s may feel the same way. But setting realistic expectations early on will lead to better product decisions down the road. Ultimately, you may find that early on you might have more revenue-based growth opportunity than you realize and wait to take on more investment (if at all).

Fewer Are Taking the Start-Up Route

Lower unemployment is just one of the factors a declining number of Americans are looking at starting their own businesses.

In the first half of 2015, an average of 5.1% of job seekers decided to begin a new business, according to global outplacement and coaching consultancy Challenger, Gray & Christmas.

CEO John A. Challenger notes, “While many Americans love the idea of being their own boss, we consistently find that 95% of those who are in-between jobs do not take that route. Most don’t even consider it to be a viable option and those who do contemplate entrepreneurship often conclude that the risks are too numerous and significant to pursue.”

The latest data from the U.S. Bureau of Labor Statistics shows that nearly 5.2 million Americans were hired in June 2015. Furthermore, there were still more than 5.2 million unfilled job openings at the end of the month.

But it takes more than just industry knowledge to pursue entrepreneurship. Challenger offers some of the other necessities required for those considering a start-up venture.

A Plan
Having a plan can help the would-be entrepreneur map out his or her vision. It does not have to be the 50- to 70-page formal plan taught in MBA programs. It can just be a few pages. Though something more detailed and formal might be required when it comes time to seek funding from banks or investors. The key benefit of the plan is that helps to focus one’s efforts.

A survey of more than 800 people in the process of starting businesses by the University of Michigan found those who wrote a plan were two and a half times more likely to actually go into business.

Savings
It takes money to make money, as they say. Not only is there the initial investment associated with starting a business, whether it is buying computers or business cards, but the fact is that it could take several months before the new business makes any money.
Unless one is trying to get a business up and running while holding down another full-time or part-time job, which is an entirely different challenge altogether, substantial savings are absolutely necessary to make up for the loss of income that occurs during the initial phases of the start-up.

Time
The reason it would be challenging to start a business while holding down a traditional job is that most new businesses require a substantial amount of time to get up and running. Entrepreneurs can expect to log 60 to 80 hours a week in the first two years.

Self-Discipline
The biggest challenge for entrepreneurs coming from a traditional workplace may be the lack of a manager giving you tasks and deadlines. Especially for those working from home, there are a lot of distractions that can pull your attention away from the task at hand. Some would say that telecommuters face the same challenge. However, they are still accountable to a supervisor, so there is more motivation to stay focused on work.
Until a new entrepreneur has that first customer, who then provides the motivation to set and meet deadlines, the only person an entrepreneur must answer to is himself. So, are you going to do the work necessary to find that first customer or fix that leaky faucet? If the faucet takes precedence, you may need to rethink entrepreneurship.

Strong Sales Skills
Regardless of the primary skills you are ultimately plan to provide through your new venture, whether it’s financial planning consulting or cupcakes, the first order of business is to get customers. In order to do that, you need to be a salesperson. As an entrepreneur, you should expect to spend 75% or more of your time on sales as the business is getting off the ground.

If you do not feel comfortable selling, your business is probably doomed before it even begins. No business can succeed without sales. A strong sales commitment is necessary, especially in the first 12 to 24 months.

VIDEO: A Look at the Latest Indiana Vision 2025 Report Card

Indiana Chamber President Kevin Brinegar discusses the latest Indiana Vision 2025 Report Card, which was just released this month.

The state’s highlights include improved reading and math test scores for fourth and eighth graders, progress toward a long-term water resources plan and promising research and development rankings. Struggles continue with postsecondary credentials and a dearth of entrepreneurial activity.

See the full report card.

Ivy Tech ‘Switchboard’ to Help Grow Businesses in Monroe County

The Switchboard is an online portal designed to connect entrepreneurs and business owners to the local resources they need to start or grow a business in Monroe County.

It was created through a partnership with The Gayle and Bill Cook Center for Entrepreneurship at Ivy Tech, Bloomington Economic Development Corporation, the City of Bloomington and through grants provided by the Community Foundation of Bloomington and Monroe County and Duke Energy.

Anyone interested in being a part of or contributing to Bloomington’s entrepreneurial ecosystem is encouraged to list yourself or your organization as a resource on The Switchboard to allow entrepreneurs to access your business or service (or just connect with you over coffee). To create a profile, just visit the site and click the “list a resource” button on the home page.

Furthermore, see the video below to learn more about The Gayle and Bill Cook Center for Entrepreneurship at Ivy Tech’s Bloomington campus:

Look at Indiana Entrepreneurship Offers Mixed Signals

Cam Carter, our VP of small business and economic development, talks with Tom Schuman about the state of entrepreneurship in Indiana.

For more on recent developments on this topic, see these articles from the latest BizVoice magazine:

Lt. Governors Skillman, Ellspermann Find Great Value in Crane NSWC

Crane Naval Surface Warfare Center (in Crane, Indiana) has a reputation as "the best kept secret" in Indiana when it comes to innovation and public/private partnerships that are changing what is possible in America. For a full story on how Crane is enhancing the state's entrepreneurship culture, keep an eye out for our July/August edition of BizVoice magazine. Our creative director and I were fortunate to receive a tour of the base and the Westgate @ Crane Technology Park to learn about what's happening there — all that isn't classified, of course. But it appears we aren't the only ones who are impressed. Two of Indiana's most esteemed legislators also have some kind words about the base:

Becky Skillman did admirable work as Indiana's Lt. Gov. during Mitch Daniels' popular administration. After leaving office, she landed back in her home region of Southern Indiana, and is leading Radius Indiana. Additionally, our current Lt. Gov, Sue Ellspermann, also offered remarks on how vital Crane is for Hoosier innovation. See below.

Becky Skillman, President/CEO, Radius Indiana
Radius Indiana serves as a catalyst to help support and promote the use of civili military innovation through technology transfer and entrepreneurship. We work with our network of partners, including Westgate @ Crane, the ISBDC (Indiana Small Business Development Center), and many others to help start-up companies connect to resources they need in order to promote entrepreneurial success and economic growth within our 8-county region and beyond. With the low-cost, business-friendly environment that exists in Indiana, we are perfectly positioned and ready for growth within the defense industry.


Sue Ellspermann, Lt. Gov.
In the past I have enjoyed working with the Naval Surface Warfare Center Crane to increase the capture of intellectual property and the potential tech transfer opportunities available by identifying an external non-military application and potential market.

Our administration’s vision for Indiana includes focusing on economic development within Indiana's defense sector. One of the goals of the Indiana Office of Defense Development is to leverage the incredible assets at Crane and our federal research labs, including identifying high-potential technologies and developing strategies to successfully commercialize them. There is growing interaction and collaboration between the private sector and our major universities to bring technological innovations developed at Crane to market, to bolster the economy and create more high-tech, high-wage jobs in Indiana.

Start-up Founder Laments Simple “For-Profit” Approach

Start-up cofounder Rand Fishkin has an interesting post on his blog about how simple "for-profit" thinking may not be optimal if the view is just short-term. I'd argue some start-ups aren't profit-focused enough sometimes, but his general outlook is worth noting and he makes some valid points about the nature of doing business today.

Apple as a whole may be worth more, but Google’s trendline, particularly the past 6 months, is far more favorable. Fred’s assertion is that this stems from investors’ sophisticated understanding that Google controls so much of the data, software, and ecosystem around computing. Google’s mission isn’t to make as much money as possible, certainly not in the short term anyway. Google is aiming for total domination of their (ever-expanding) areas of focus. Revenue and profits are merely a helpful side-effect of these efforts.

Later in the week, courtesy of Dan Ariely, I watched this video about Hancock Bank’s remarkable $1.4Billion growth following Hurricane Katrina (it’s worth watching all the way through, but if you don’t have 6 full minutes, start at the 3:44 mark).

The mission of making money isn’t just boring and stale. It’s hard to get excited about. It’s hard to get behind. It’s hard to build a fan-base around. It’s hard to hire for. It’s hard to scale. And it’s hard to stick with something through the muck of despair and failure that inevitably occur if you’re not pursuing something bigger than yourselves – bigger than money.

I don’t mean to suggest that those who relentlessly pursue wealth at the cost of all else don’t occassionally succeed. But I would argue that most businesses that have changed the world in the technology age have been pursuing a mission beyond the financial.

Top Companies Rank Top Goals

Two of the many Indiana Chamber programs/initiatives that we are proud of are the Best Places to Work in Indiana program and our Indiana Vision 2025 economic development plan.

We combined the two in a strictly unscientific survey, asking the Best Places applicants to prioritize five of the Indiana Vision 2025 goals. There are no right or wrong answers, of course, but it's interesting to see how these top organizations rank some of the strategies that will help move our state forward.

The five goals and the average rank (1 being most important, 5 least important):

  • Develop entrepreneurship and aggressively promote business start-ups through education, networking, investment and financial support: 2.3
  • Diversify Indiana's energy mix with an emphasis on clean coal, nuclear power and renewables: 4.2
  • Enact comprehensive local government refrom at the state and local levels to increase efficiency and effctiveness in delivery of services: 3.4
  • Increase to 90% the proportion of Indiana students who graduate from high school ready for college and/or career training: 2.1
  • Increase to 60% the proportion of Indiana residents with high quality postsecondary credentials: 3.0

Work is ongoing on all the Indiana Vision 2025 goals. The 2013 Best Places to Work program will culminate with the May 2 awards dinner. Rankings will be revealed at that event and BizVoice magazine will profile the 100 winners.

Hoosier Entrepreneurs Earn Invitation to White House as Startup Climate Warms

Indiana's strong business climate and favorable cost of living is making the Hoosier state a popular place for startup businesses. As this blog and BizVoice feature about DeveloperTown convey, Silicon Valley doesn't have much on the budding ideas and energy emanating from the heartland — especially in Central Indiana. Tuesday, five Indiana entrepreneurs are meeting with White House staff in Washington, D.C. about how to make Indiana's startup climate even better. Below is an excerpt from a press release, as well as background on Indiana's representatives as written by Kevin Hitchen of Localstake.

Startup leaders from across the country will convene in Washington, D.C. on February 5th to meet with administration officials to discuss the importance of fostering vibrant startup communities throughout the U.S. These Startup America Region Champions will also unveil their regions’ plans to push their startup ecosystems to the next level. Representatives from the Small Business Administration, Office of Science and Technology Policy and the Department of Commerce will take part in the meeting. 
 
Participating regions include: Startup Arizona, Startup Colorado, Startup DC, Startup Indiana, Startup Iowa, Startup Maryland, Startup North Carolina, Startup Nebraska, Startup Tennessee, Startup Texas and Startup Virginia. This meeting will be preceded by the Kauffman Foundation’s State of Entrepreneurship luncheon and followed by a reception hosted by Startup DC at the brand new D.C. startup hub 1776.

Indiana's representation includes:

  • Michael Coffey, who raised $2.5 in 60 days in 2010 and started a niche marketing company, moved from Napa Valley to Indianapolis because he is so impressed with Indiana's startup scene. In 2012, he became partner at DeveloperTown.
  • Kevin Hitchen is one of the founders of Localstake, a new investment marketplace that allows individuals to invest in local private businesses.  Localstake recently registered as a broker-dealer with the SEC and FINRA, so it can offer private business investing before the JOBS Act is implemented.
  • Matt Hunckler is the founder of Verge, a 2,000-member platform for software entrepreneurs in the Midwest. He leads startup efforts at Social Reactor, a premium social engagement platform based in Carmel.
  • Michael Langellier is the new CEO of TechPoint, Indiana’s technology growth initiative. He cofounded MyJibe, which he sold to MoneyDesktop in November 2011.
  • Dustin Sapp is president and co-founder of TinderBox, the third company he has helped start in Indianapolis. He has been recognized locally and regionally for efforts in entrepreneurship.