Small Business Week in Review: 03/16/09

Economic News Roundup

AIG made considerable noise this past week.  The first point of content came from the company’s disclouse that it made mult-million dollar bonus payments to executives in the company’s financial products unit, the very until that caused the firm’s insolvency.  Angered and dissapointed by the news, The Huffington Post writes:

Recall that these bonuses are going to executives at AIG’s financial products division — the very unit that wrote trillions of dollars of “credit-default-swaps” that insured investors against defaults on bonds backed by sub-prime mortgages. The problem was that AIG used a loophole in the law to argue that the “credit-default-swaps” were not really insurance, so they weren’t required to abide by insurance laws which would have assured that they had the capital on hand to pay claims when defaults actually occurred. That caused AIG to collapse and helped precipitate the global financial crisis. Seven of these executives get from $3 to $6.5 million. So much for responsibility.

Charles Schwab: Success is Contingent upon Hard Work

Many entrepreneurs-to-be hesitate at starting a company because they doubt their abilities.  A myth has shackled the dreams of many entrepreneurs: that one must be a natural genius to start a company and succeed.  Unfortunately, among those that believe this myth, only the most confident or arrogant dare to pursue their dreams.

Certainly, being a genius can’t hurt. But many great business minds would echo what Charles M. Schwab once wrote:

Most talk about “super-geniuses” is nonsense.  I have found that when “stars” drop out, their departments seldom suffer.  And their successors are merely men who have learned by application and self-discipline to get full production from an average, normal brain.

In his essay “Succeeding with What You Have,” Charles M. Schwab extends this statement to dispel the myth of genius being the key to success.  Rather, Schwab argues, the key to success is hard work.

The Process of Identifying and Launching New Products & Companies

The process of launching  a new product or company  is a discipline that anyone can learn and through repetition excel at.  There is a method to the madness.  As entrepreneurs and business owners, developing a competency in the process is one of our primary job functions.   If we want our respective companies to grow and withstand the tests of time, we must systematically build this discipline into our organizations.

There are two approaches to launching new products and companies. The first approach identifies an idea, validates the idea through market research, and then creates a business plan to make the idea a reality.  The entire process is “idea centric.”  The second approach (the one smbZen favors), begins with self-awareness.  It asks: (a) what are our, or our company’s traits and abilities, (b) our combined expertise and training, (c) who do we collectively know, and (d)  as a consequence of these three questions, what can we do?  This approach is entirely “people-centric.”

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.

Next Page

smbZen is a service by SMBZEN, LLC
Copyright © SMBZEN, LLC All Rights Reserved | info (at) smbzen (dot) com