Monthly Archive for November, 2015

Four factors that stopped the American startup

As the financial crisis was being resolved in December 2008 I heard someone say, “Wait ’til the startups get going – they’ll end this recession and crank up the economy again.” Of course, this maxim had caught on previously because when you start a business, you create at least one job.

But as I thought about how that entrepreneurial expectation had been true in past recoveries, I considered the environment we were entering and concluded that this recovery was going to be different. Indeed, in my 2009 predictions I reckoned that there were going to be fewer startups in this recovery cycle than ever before based on two conditions I saw coming. Unfortunately, things got even worse due to two factors I didn’t forecast.

Typically, the founding of most Main Street startups are funded initially with access to the personal credit and home equity of the founders. I saw problems coming for both of these sources because:

1.   One morning in February 2008 – months before the financial crisis but with storm clouds on the horizon – millions of credit card holders woke up to discover their card issuers had withdrawn any available credit they had the day before.

2.   Then, over the next year, the bursting of the real estate/mortgage bubble – the prime cause of the 2008 financial crisis – resulted in wiping out or significantly reducing the home equity of millions of U.S. households.

The two factors I did not forecast are:

3.  The youngest – and largest – of marketplace participant groups, Gen Y and Gen X, age 20-44, apparently are not as entrepreneurial as their Baby Boomer parents were at that age. According to the Kauffman Foundation, since 2009 startup activity for those two demographics has been declining.

4.  In my half-century career, and my study of the history of the American marketplace, prospective founders of new businesses have never been subjected to the level of anti-business rhetoric and policies from the federal government as they have in the past seven years.

One of the seminal findings of the Global Entrepreneurship Monitor (GEM) is a direct connection between a country’s entrepreneurial vitality and its economic growth. The Great Recession ended in June 2009. But the subsequent U.S. recovery, now well into its sixth year of moribund performance (2% annual average GDP growth), has been stuck in a kind of circular reference: expansion-creating startups aren’t happening because of the four entrepreneurship-repressing factors.

Write this on a rock …Real economic expansion – more than 3% growth – will require a return to favorable entrepreneurial conditions lost since 2008.

Next week my column will reveal counter-intuitive ways the lack of startups since 2008 have been positive.

POLL RESULTS:I’ve been in business more than 26 years, but this week we’re celebrating the 18th anniversary of my radio program. How long have you been in business?

The Question:

business_handshake_men.jpgI’ve been in business more than 26 years, but this week we’re celebrating the 18th anniversary of my radio program. How long have you been in business?

0% - We’ve been in business less than two years.
8% - We’ve been in business 2 to 5 years.
5% - We’ve been in business 5 to 10 years.
87% - We’ve been in business more than 10 years.

Jim’s Comments:
Early in 2009, as the 2008 financial crisis was being resolved and the Great Recession was coming to an end, I heard someone say, “Just wait until the startups get going after the recession - they’ll get the economy going again.”
That statement caused me to think about the dynamic they had described and to conclude, which I included in my long-term predictions, that there were going to be fewer startups in this recovery cycle than before. My reason for this prediction was because of the lack of two of the primary sources of startup funds: personal credit and home equity.  Both of these were virtually wiped out for millions of Americans starting in 2008 and did not recover for some time.
So when we asked our online audience how long they had been in business, I wasn’t too surprised to see how the responses rolled in, with so many in business more than 10 years, and none of our respondents as startups. There is good and bad news in this response, which I intend to write about in an upcoming Featured Article. Stay tuned.
Thanks for playing along. Please participate in this week’s poll below.

Be thankful

Americans punctuate each year with the Thanksgiving holiday as a way of perpetuating a 390-year-old tradition begun by a rag-tag group of our forebears. That first time, in 1621, thanksgiving day wasn’t the proper noun it became. It was just a day set aside by a few dozen humans who risked everything, actually lost most of it, were hard-by to any number of dangers that could cost them the rest, but still felt compelled to be thankful for what they had.

Regardless of where you live on planet Earth, let me leave you with a list of things to think about. This is not my list. When we’ve published it before in this space with attribution to Anonymous, some of my readers have attributed it to Mother (Saint) Theresa, which suits me just fine. I’m thankful I found it and have the ability to pass it along.

Be thankful for the clothes that fit a little too snug, because it means you have enough to eat.

Be thankful for the mess you clean up after a party, because it means you have been surrounded by friends.

Be thankful for the taxes you pay, because it means you’re employed.

Be thankful that your lawn needs mowing and your windows need fixing, because it means you have a home.

Be thankful for your heating bill, because it means you are warm.

Be thankful for the laundry, because it means you have clothes to wear.

Be thankful for the space you find at the far end of the parking lot, because it means you can walk.

Be thankful for the lady who sings off key behind you in church, because it means you can hear.

Be thankful for the alarm that goes off in the early morning, because it means you are alive.

And finally, here is mine: I’m thankful for small business owners - the most courageous and most important modern-day pilgrims I know. 

Cause and effect meets humanity & the world changed

This is Jim’s traditional Thanksgiving column.

As the 17th century dawned, cause-and-effect was merging parallel universes.

In the Old World, a decision by a group of Leiden Separatists put them on a circuitous journey. Meanwhile, in the New World, a manchild named Tisquantum was born to the Wampanoag Indians.

Both the Separatists and Tisquantum became very important to our future, but not before their lives would change and intertwine in ways not to be imagined by either.

Seeking religious freedom, the Separatists crossed Europe and then the Atlantic. On their odyssey they would steel their convictions, which proved handy in the New World.

Incredibly, first as a hostage and later as an interpreter, Tisquantum crossed the Atlantic six times. On his odyssey, Tisquantum learned Old World languages that, combined with his New World survival skills, would contribute to his rendezvous with destiny.

During their journeys, both experienced a name change: The Separatists became Pilgrims and Tisquantum became Squanto. And as the Pilgrims prepared for their first Atlantic crossing, Squanto made his last.

Arriving at his birthplace in 1619, Squanto found that his entire village and family had been wiped out by an epidemic.

On the day after Christmas, 1620, with the Mayflower Compact in hand, the Pilgrims came ashore at what is now Massachusetts, on a place they named Plymouth, after the city where their voyage began.

The Pilgrims’ first winter in the New World was brutal; less than half of the 102 colonists survived until spring. Then on March 16, 1621, an Indian named Samoset walked up to the Pilgrims and said, “Hello, English.” Very soon he recognized that these sad-looking folks needed help from someone who spoke better English.

The two universes finally converged and cause-and-effect met humanity as Samoset brought Squanto to the Pilgrims. In one of the great moments of serendipity, it turns out Plymouth was the very spot of Squanto’s ill-fated village.

Squanto spent the rest of 1621 befriending the Pilgrims and teaching them how to survive in the New World. It’s clear that his contribution was critical to the survival of these important American forebears.

When the courage and convictions of one group of individuals converged with the humanity of two others, something special happened: Part of the foundation of the most benevolent nation in history was born.

This week we give thanks for these individuals and the blessings that have accrued to us 394 years later.

Write this on a rock … One person can make a difference. Happy Thanksgiving.

POLL RESULTS: Veteran’s Day is this week. Please let us know where you fall on this list.

The Question:

Veteran’s Day is this week. Please let us know where you fall on this list.

24% - I am a Veteran with active duty experience.
12% - I’m a Veteran with Guard/Reserve experience.
49% - I’m not a Veteran, but a close member of my family is.
15% - I’m not a Veteran and don’t have any in my close family.

Jim’s Comments:
As you can see, a little more than one-third of our respondents have military experience. This number will drop over time as the Baby Boomer generation shuffles off this mortal coil. Boomers are the last generation that came of age during the last military draft period and the Vietnam war, so their numbers are slanted toward military experience.
Around 1973 the U.S. transitioned to a volunteer military. It says a lot about the character of young Americans who have continued to enlist in service to a grateful nation, even in times of war. Clearly, when America needs defending from bad actors from within and from without, that defense is going to come from a smaller percentage of the population than ever before who are willing to stand a post as a volunteer.
Consequently, in the future, America will need to revere and support our veterans even more than in the past.
Thank you to all who have served.
Thanks for playing along. Please participate in this week’s poll below.

Celebrating milestones

If you will permit me, today I would like to talk about a couple of milestones of which we’re kind of proud.
On Monday, November 17, 1997, I began broadcasting The Small Business Advocate Show for two hours Monday through Friday, and ever since that first day the program has been nationally syndicated. This week we’ll celebrate our 18th anniversary and the beginning of our 19th year on the air.
In January 1998, we began simulcasting our show on the Internet, which makes us one of the pioneers of Internet streaming. We’ve been archiving our show since 1999, including multiple on-demand streaming options. In 20o7 we added the ability to podcast all current and archived interviews.
This Monday will be my 4,672nd live broadcast since we began — including all the holidays (next week I’ll broadcast my 19th consecutive live Thanksgiving Day show). Since that first broadcast, I’ve conducted over 18,600 live interviews with small business experts and entrepreneurs. When you hear me talking about making sure that you’re passionate about the business you start, if you didn’t already, now you know I practice what I preach.
From the beginning, my primary programming goal was to focus on the fundamentals that are important to successfully starting, operating and growing a small business, and to make all of the things we do available to you for free. On that last note–the free one–I must say thanks to our outstanding corporate partners, without whose support the free part would not be possible. I especially want to thank our Presenting Sponsor, Insperity, for their abiding support for more than eleven years. When it comes to supporting small businesses, Insperity truly does practices what it preaches.
For my work on behalf of you over the years, I’ve received a number of national awards from organizations such as the U.S. Small Business Administration, FORTUNE Small Business magazine, TALKERS magazine, the American Chamber of Commerce Executives, the Association of Small Business Development Centers, Small Business & Entrepreneurship Council, and New York Enterprise Report.
Also this week, we’re celebrating the 16th anniversary of this publication, The Small Business Advocate NEWSLETTER. This week’s edition, Volume XVII, Issue 1, represents 832 consecutive weekly issues since 1999. Thanks for being a loyal subscriber.
Finally, thank you for your support, comments, many words of encouragement and especially the honor and privilege of being your Advocate. I’m already looking forward to the rest of our journey together. More than anything else, I want you to know how proud I am of you as a small business owner and what you have accomplished.

Nothing I do as The Small Business Advocate is about me–it’s all about you, my heroes, small business owners, regardless of where you live on planet Earth.

Thanks for being part of my community. I’ll see you on the radio and the Internet.

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