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Archive for the 'Entrepreneurship' Category

It’s Time to Tell The Truth About Minimum Wage

Before any product or service is offered to customers, the price must be determined. The foundational element of this calculus are costs, which includes labor. In a true free-market economy, all elements of cost are determined by the marketplace. But in the U.S., we don’t have a true free-market economy because of mandates and subsidies imposed by the federal government, one of which is the minimum wage.

Alas, raising the minimum wage is being proposed again.

When the government is involved, politics, not reason, is the motivation, which isn’t so bad when the issue is politics. But politics has no place in what businesses pay for their cost factors, especially labor, often the largest cost factor.

When proposed, the national minimum wage was never some great egalitarian blow for the working man. It became law in 1938 as a cynical, protectionist move by the Congressional delegations of the northern textile industry – primarily Massachusetts –against their southern counterparts, whose lower, market-based labor costs made them more competitive.

Today the minimum wage has become a political wedge issue of the cruelest type, because research shows each increase actually hurts the segment it purports to help, especially younger, entry-level workers, like teenagers and minorities. The primary reason is that for decades employers have controlled the impact of an increase by reducing entry-level positions using various organizational steps. But today, technological advances have given all employers an increased ability to forgo entry-level hires in favor of low-maintenance, non-taxed innovative devices and/or software.

The results of two recent online polls reveal how these options manifest on Main Street. When we asked about their attitude toward the minimum wage, 82% of small businesses said the government should not be setting wage rates. But when asked how a minimum wage increase would impact their business, 76% said “Not at all.” The reason for the lack of concern by the sector that doesn’t like the minimum wage is likely because: a) they’re already paying more than minimum wage; b) they have legal ways around it to the disadvantage of the unskilled, increasingly unemployed worker.

An important goal of most businesses is growth, but adding payroll expense to achieve it is no longer a given. And so far, business owners are in charge of the decision to add workers or use other means to achieve growth. Nevertheless, increasing minimum wage does cause problems: an arbitrary increase distorts all wages as it becomes the new base from which other workers measure wage progress. If a small business adjusts all wages up in response, expenses rise. But if it doesn’t, morale declines. Furthermore, unions use minimum wage as a contract lever to exact from employers automatic, across the board increases for all organized workers.

In the marketplace, any increase in price must be justified by value delivered. But this logic is lost when labor costs rise by government fiat without adding one extra unit of productivity.

Write this on a rock … Let’s call the minimum wage what it is: A political lie that actually hurts poor and unskilled workers.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

The Out Basket

Harold Alexander, British field marshal during WWII, and 1st Earl of Tunis, had a habit at the end of the day of “tipping” the remaining work left in his In basket into his Out basket.  When asked why he did this he replied, “It saves time and you’d be surprised at how much doesn’t come back.”


For small business owners, the Earl’s management style could be dangerous; many of us don’t have anyone to come by and take the stuff from our Out basket.  If we don’t do it, it doesn’t get done. But I wonder about this method for dealing with worry.

What if, at the end of each day, you “tipped” all of your left over problems into your mind’s Out basket — the problem customers, the bank payment, the new competitor — go ahead, put all of those alligators right in there. Don’t worry. Those that need to be will be there in the morning.  But you might be surprised at the ones that just “don’t come back.”  And there you were worrying about them.  Pretty silly, huh?

In his book, Blue Highways, William “Least Heat Moon” Trogdon reported that his grandfather, who was full-blooded American Indian (Osage), once told him, “Some things don’t have to be remembered.  They remember themselves.”

So, there you have it.  If it’s important it, will be there in the morning.  If not, it will go away and wasn’t worth the worry.  And worry is one of the greatest inner demons small business owners have to slay.

Give that “tipping” thing a try. It just might save you some worry. Now where did I put that Out basket?

How vacations reveal American Dream may be in jeopardy

For several years we’ve polled our small business audience weekly about issues and conditions that impact them.

Whenever a question is seasonal or a recurring issue, besides serving that poll, the responses often produce a bonus. For example, the potential to identify year-over-year trends, or illuminate a current market trend.

In last week’s poll response, we scored both of these bonuses. The subject was a seasonal one that’s almost unique to small business ownership – “Will you take a vacation?” – with three response options: 1) “I’ll take an entire week off;” 2) “Only mini-vacations, like a long weekend;” and 3) “Vacation? I can’t even take a day off.”

This year everyone moved. Historically the real vacation group fluctuated close to 50%. I was happy to see our new poll had almost six of ten (59%) respondents allowing they were taking a week off, whether to go incommunicado, or expecting to check in. The long weekend responders in the middle thinned out compared to past years, while the sarcastic, “What’s a vacation?” bunch increased.

The classic evolution of time off for a business owner looks like the inverse of our response options. In the beginning it’s, “What’s a vacation?” then you graduate to long weekends as the business matures, and finally to a full week off, or more, at maturity. Maturity means having your organizational and capitalization stuff together.

This week’s response also supports two forecasts I made in 2009.

As the Great Recession technically ended, I predicted small businesses would increasingly diverge into two categories: they would either become stronger, or inevitably erode their equity and credit and go out of business. That’s what I’m seeing in the responses to our vacation poll this week. The sector that formerly could only take off a few days is diminishing because they’ve either joined the organizationally and financially stronger ranks, or gone the other way toward extinction.

Historically speaking, it would be intuitive and accurate to think that the no vacation group would include startups, rather than just declining businesses. But I also predicted in 2009 that there would be fewer startups in this economic recovery cycle. As you may have seen reported by real research organizations, my startup prediction, unfortunately, has come to pass. According to the U.S. Bureau of Labor Statistics, there has been a steady, 10-year decline in businesses less than one year old, and the category total is 10% fewer today than 20 years ago.

So our vacation responses indicate a barbell effect happening on Main Street. And it’s good news that so many small businesses have survived and become stronger. But since every business, large and small, begins as a startup, the overall decline of entrepreneurship in the U.S. does not bode well for the future robustness of the U.S. economy or the business ownership component of the American dream.

Write this on a rock …
If small businesses were a plant or animal species, it would currently be classified as threatened, on a path toward endangered.

POLL RESULTS: Will you give your business a vacation from you this summer?

The Question:

Will you give your business a vacation from you this summer?

28% - I will completely disconnect for at least a week.

31% - I will take a week off, but will be checking in.

25% - I can only handle long weekends this summer.

16% - Are you kidding? I can’t even take a day off!


Jim’s Comments:

Almost every year since we’ve been doing this online poll, we’ve asked about vacation for small business owners. Looking at these historic responses we saw that taking a whole week off has generally fluctuated on either side of 50%. But this year, I was happy to see that almost six of ten of our folks were going to take a week off, either to completely disconnect or to check in. This year, those who can only handle a couple of days at a time dropped, while those who can’t take any time off increased.

I’m going to have more to say about this in next week’s Featured Article, including how what I believe is a connection between these responses and the current condition of the Main Street economy. Stay tuned and thanks for contributing. Don’t forget to take our new poll below.

The rare and wild entrepreneur

If you venture into the marketplace jungle, you may be able to observe that rare wild creature, the entrepreneur, in his or her natural environment (darting is not necessary, entrepreneurs are very gentle - just rub their stomachs). As you study them, you will find levels of vision, curiosity, courage, tenacity, and faith. Here’s what to look for in order to identify this elusive critter:


Vision: Entrepreneurs see things and consider the possibilities before they exist, even as the world is telling them, “It won’t work.” When entrepreneurs are deep into their vision they go into what their families call a “zone,” which is when it’s easiest to slip up on them.

Curiosity: Entrepreneurs ask questions other humans don’t. They can’t help it. If someone asks you a question and you have no idea what they are talking about, you are probably having a close encounter with an entrepreneur. Don’t be irreverent; you might be at ground-zero of the 21st century equivalent of Velcro or the microchip.

Courage: Entrepreneurs attempt things that other human species won’t. As you peer through the triple canopy at your subject, look for death-defying acts in the face of conventional wisdom. Entrepreneurs eat conventional wisdom for breakfast.

Tenacity: Entrepreneurs keep trying when other humans give up. They have a high pain threshold, which when combined with a visceral desire that can only be compared to the maternal instinct, delivers a primal display of tenacity which often is frightening to other humans. If the entrepreneur you are observing is crouching, lie down quickly. You probably aren’t in danger, but fainting is a possibility.

Faith: Entrepreneurs believe in themselves and their vision. The great writer and even greater curmudgeon, H.L. Mencken, once said, “Faith may be defined briefly as an illogical belief in the occurrence of the illogical.” That’s our entrepreneur! If you see someone demonstrating an inordinate commitment to an “illogical belief,” congratulations. You’ve found your entrepreneur.


Catch and release, please.

Replace worry & fear with business performance

In his book, Blue Highways, William “Least Heat Moon” Trogdon said his Osage Indian grandfather, William “Heat” Moon, taught him this about worry: “Some things don’t have to be remembered; they remember themselves.”

Owners are justified in worrying about their small businesses, but sometimes they waste emotional energy worrying about things over which they have little or no control, or aren’t likely to happen.

In the movie, Bowfinger, Eddie Murphy played Kit Ramsey, an action movie star also famous for being a pathological worrier. He leads a frightened and miserable life because he worries about strange things that would never happen.

Ramsey’s greatest worry was being captured, killed and eaten by space aliens. He also worried about being crushed by a gigantic foot, or that his body might burst into flames. Pretty silly, huh?!

Watching Murphy play this unstable character is hilarious. But it’s not funny or silly when you and I worry about things that, like Ramsey’s obsessions, probably will never happen.

·  Instead of aliens, how much do you stress out about your business being killed and eaten by the dreaded Internet competition?

Stop obsessing about online competitors. First, you should be an online competitor yourself. Second, without a fixed base, online-only competitors may have what customers need, but you have something more powerful: You know what customers want.

·  Instead of being stepped on by a giant foot, do you obsess about being squashed by one of the Big Boxes?

In The Age of the Customer, prospects often rule you in or out before they know how much you charge. You can establish a level of relevance with prospects and customers that no Big Box can, as they continue to focus first on being competitive.

·  Instead of bursting into flames, do you wake up in the night obsessing that your business might go up in smoke if customers abandon you?

In The Age of the Customer, you actually should obsess about customer expectations, otherwise they won’t really leave, you’ll just become irrelevant.

Instead of living a frightened and miserable life like Kit Ramsey, put that energy into performing so well that any competitor would be hard-pressed to take customers away. Build relationships with customers to the degree that when something they want pops into their heads, as Trogdon’s grandfather would say, your company remembers itself.

Write this on a rock -

Don’t live a frightened and miserable life. Replace worry with action and performance.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.