Clarifying the record on start-ups and co-opetition

In any given month, I will be interviewed by various national and international media outlets. The contacts are appreciated because it allows me to leverage my opinions and whatever I’ve learned on behalf of small business issues. And, let’s face it, any PR is good PR, so the attribution is good for my brands.

There is one problem, however, with these kinds of interviews: The interviewer is taking notes as I am speaking, and the final product may not be as spot-on with regard to what I have said. Anyone who has ever been quoted by the media knows what I’m talking about. Sometimes the quote is perfect, sometimes it’s a little off and sometimes it bears no resemblance to what was said.

Recently, as a result of two interviews, I was quoted in ways that I feel I should respond to. Neither interviewer did anything wrong, but a little clarification and expansion is warranted.

In an interview with the Los Angeles Times (click here for article), I was asked about the concept of small businesses establishing alliances with each other to maximize limited resources during a recession. I have long considered this behavior to qualify as a best-practice, so it was easy for me to comment. I said, “There is a term called ‘co-opetition,’” and went on to explain that this is where businesses that were otherwise competitors would actually partner to accomplish a specific goal, like a contract with a larger customer.

When the article came out, I was incorrectly given credit for actually coining that term. As a thought-leader and unrecovering egomaniac, I coin new terms (and laws, see below) all the time, but alas, co-opetition isn’t one of them. Don’t know the genius who did coin this extremely intuitive and handy term, but it wasn’t me.

Last thought on co-opetition: If you’re having trouble qualifying for the specifications of a request for proposal (RFP), consider partnering with someone, even a competitor.

More recently, an Asian news agency contacted me about the impact of small business on the economic recovery (click here for article). One of the points I mentioned was the access-to-capital environment for start-ups. I said start-ups weren’t going to have as much of an impact on this recovery as in previous ones because the currently diminished availability of personal credit would limit the ability to fund a new launch. I was quoted correctly, and I stand by my opinion, but there are a few things that should be added.

It must be said that, clearly, there will be many start-ups who will find a way to launch their dreams against all these odds. The good news is, because of the extreme commitment of these entrepreneurs, their enterprises will probably have a higher success rate, just by sheer dint of will. An entrepreneur who will not be denied is a force of nature.

On the other hand, easy credit often allows for the creation of start-ups that should never have happened. Blasingame’s Second Law of Small Business states: “It’s easy to start a small business, but it’s not easy to operate and grow one successfully.” The casualty rate for start-ups in an easy credit environment is nothing short of grotesque.

Sometimes start-ups don’t price their products and services properly because they don’t yet know how much gross profit they must generate to fund day-to-day operations while simultaneously capitalizing growth. Consequently, in the process of failing from a combination of too much debt service and not enough gross profit, these newbies devalue the prices for their products, while the remaining industry players must work harder to get prices back to a level that allows for sustainability.
Making a sale by offering prices that don’t allow the company to survive is a Pyrrhic victory.

Thanks for allowing me to sort of correct the record while taking the opportunity to expand my thoughts on these issues.

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