Merry Christmas & Happy Holidays

We’d like to wish everyone a Merry Christmas and happy holidays!  We are on a blogging break for this week and will be back at it again on January 5th, 2009.  Until then, all the best!

The Coming Commercial Real Estate Implosion

As the new year approaches, uncertainty looms over the economy. Where 2008 has been the year of home owner foreclosures, recent data suggests that 2009 may be full of commercial real estate concerns. An Associate Press report from a few weeks back suggested that commercial offices and shopping malls would be among the biggest players to feel the pinch:

The 2009 outlook for the commercial real estate sector has turned suddenly bleak. Rents and vacancies at shopping centers and office buildings will suffer the most, but industrial buildings and apartments won’t be immune to the downdraft….Worse still, about $36 billion of commercial real estate debt will expire next year, and about $55 billion of debt on average will roll over annually by 2012.

A recent report covered by the New York Times now suggests that this number will be even higher:

Now a New York research company, Real Capital Analytics, has compiled data showing that at least $107 billion worth of income-producing property — including hotels, offices, apartment complexes and warehouses — is already in distress or is headed in that direction.

Dealing with Declining Income and Rising Business Debt

For many small businesses, bankruptcy looms. The recent retraction in consumer spending has resulted in a declination of small business income the board. Many companies are already feeling the pinch: declining income makes covering costs and paying off debt increasingly difficult. To boot, because banks remain hesitant to lend, it’s particularly hard for small businesses to obtain new lines of credit to weather this economic storm.

Here at the BizJournal, we don’t like to be in the fear mongering business. However, we do believe it’s important to encourage the consideration of one’s position and options during this uncertain time. We are also optimistic that with careful consideration and planning, small businesses positions can significantly improve. Thus, to help your small businesses deal with declining income and rising business debt, we suggest taking the following action:

Industry Selection, Competitive Advantage, and Business Success

Note: One of our goals with the smbZen BizJournal is to make it an educational resource & reference guide for entrepreneurs and small business owners.  In the coming weeks, we will have more posts like the one below, posts that aim to provide guidance and discourse on business methodologies and trends.  We hope you find these posts insightful and useful. To that end, any feedback would be greatly appreciated.  Simple leave a comment here or send an email to support @ smbzen.com.   Thanks!

Industry Selection

Industry selection is the single most important determinant to business success. If the characteristics of an industry are unsound (i.e it is shrinking, there are many entrenched competitors, etc), the probability of failure is extremely high.  Conversely, if the industry is growing, i.e. the general trends are in your favor, the probability of success substantially lower.  March Andreessen, founder of Netscape, OpsWare, and Ning writes:

In honor of Andy Rachleff, formerly of Benchmark Capital, who crystallized this formulation for me, let me present Rachleff’s Law of Startup Success:

The #1 company-killer is lack of market.

Andy puts it this way:

• When a great team meets a lousy market, market wins.
• When a lousy team meets a great market, market wins.
• When a great team meets a great market, something special happens.

You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most.

The Future of Small Business Marketing and Operations

This past February, the Intuit Institute for the Future issued a 32 page report discussing the three trends that will affect small businesses over the next decade.  Given our focus on entrepreneurship and small business here on the smbZen BizJournal, we found the report to be both interesting and incredibly insightful.  The trends are:

1. “The Connected World: Small Business Management On My Time, On My Terms”
2. “Beyond Web 2.0: Technology Fuels Small Business Formation, Operations, and Innovation”
3. “Small Business Marketing: The Mindset from Push to Pull”

In the following sections, we discuss trend two and trend three.

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