Finding opportunity in the “The Long Tail”

In 2004 Wired Magazine writer Chris Anderson wrote an article describing the niche business strategies of companies such as Amazon.com and Netflix. Both companies sell a large number of unique items in historically small quantities. The article begat a book entitled The Long Tail: Why the Future of Business Is Selling Less of More, and is one of most impactful marketing book published in the past decade. The book could be classed together in the recent genre of social phenomenon and behavior books that trend in unexpected ways (think of The Tipping Point, Blink, Sway, and Outliers), but The Long Tail’s concept accurately describes the opportunities that now exist for entrepreneurs.

True to its title The Long Tail describes how we have moved from an information age to an age of choice. These choices create a market place with many more products making up the majority of customer demand. The music industry is a great example. In the 1950’s and 60’s most of the music sold in the U.S. came from a small number of popular albums and top 40 singles. Today that same large percentage of sales comes instead from tens of thousands of artists that develop small communities of consumers. Grown from consumer frustration with the old model, consumers today seek more individual choices and look for products and services that reflect their own individuality.

Coincidentally, the Information Age created the mechanism for The Long Tail. Consumers spread the word of new and unique products through blog postings, social networking, and email. Not convinced? Consider this scenario: A small web site selling American made wooden toys is suddenly flooded with orders when groups of parents realize that many of their kids’ existing foreign-made toys are coated with lead based paint. Or the small indie band turns down a national recording deal realizing that they can market more effectively and reap larger profits operating on their own.

 The Long Tail presents a compelling look at this new economy and small business owners can glean a tremendous set of potential opportunities for themselves. Next week we’ll take a look Anderson’s latest offering Free! that explores what happens then advances in technology allow many things to be produced for close to no cost.

Listen for more on the “The Long Tail” on the Vic McCarty Radio Show, 10:30-11:30 AM on Wednesday October 28, 2009.

Workshop: Creative Employer Staffing During Tough Times

Presenters: Larry LaSusa, Attorney;
Michael McPherson, UI Expert

Tuesday, October 27, 2009
8:00 am – 12 noon
Traverse City Michigan WORKS! Service Center
1209 S. Garfield Avenue

This workshop will benefit:

• Small Business Owners, CEOs, CFOs
• HR Managers / Office Managers
• Accountants / Accounting Firms

Goals of the Program:

• Find creative staffing solutions
• Understand ways to reduce cost
• Adjust policies & procedures to better manage costs
• Technical solutions to create efficient cost control
• Achieve savings in taxes and with efficiencies
• See which UI costs are entirely controllable
• Better understand the UI system and your tax rates
• Answers to your legal questions

Lawrence R. LaSusa is a principal attorney of LaSusa Law Offices, PLC. Mr. LaSusa has extensive business and litigation experience. From 1987-1990, he served as an Assistant Attorney General of Illinois, concentrating in securities fraud, investment fraud, financial institution regulatory enforcement and employment matters. From 1991-2000, he served as the chief in-house litigation counsel for two different multi-billion dollar companies: Homart Development Co., a commercial real estate development subsidiary of Sears Roebuck & Co., and Blue Cross Blue Shield of Wisconsin. He is a graduate of the University of Illinois (B.S. 1983), and the DePaul University College of Law (J.D. 1986). He has authored numerous articles for national and regional business and legal publications, dealing with intellectual property, trademarks, trade secrets and employment matters.

 Michael McPherson, is a trainer specializing in educating employers in the area of Unemployment Insurance (UI) Cost Management. His experiences working in the unemployment industry from within the Michigan UI Agency, as a private industry UI Administrator and Trainer, and as owner of a software company devoted to UI claims and cost management have allowed Michael to truly view this industry from all perspectives.

Click here for a registration form.
Submit up to three legal questions prior to the event (via email).
Get Map to the Traverse City Michigan Works! Service Center.

Successful Michigan Businesswomen to Share Strategies

Manistee, Michigan—Set aside October 16, 2009 on your calendar and attend the ninth annual National WEDO Tour; your only opportunity to connect with hundreds of women entrepreneurs and executives nationwide via live streaming video.  Women throughout Michigan are preparing for the only event-of-its’-kind in the State.  This is the 4th annual WEDO event sponsored by Manistee-Based Women’s Economic Resource Center, a non-profit organization.
 
Develop your Skills and learn to:

• Define and build an established, sustainable business model that produces consistent results.
• Discover how to spend wisely within a marketing strategy and employ tactics to measure the returns on your marketing investment.
• Determine how to obtain, utilize and maximize working capital to support the continued growth of your business.

An outstanding panel of national speakers:

• Cindy Bates, Vice President of Microsoft North America
• Geneveve Bos, Founding Publisher/Owner, Pink Magazine
• Marilyn Landis, President & CEO, Basic Business Concepts, Inc.
• Mercedes LaPorta, President, Mercedes Electric Supply Inc.
• Susan Wilson Solovic, CEO, SBTV

WEDO is sponsored by Women’s Economic Resource Center, National City, now a part of PNC; Little River Casino Resort; West Shore Bank; Alliance for Economic Success; Manistee Area Chamber of Commerce; Northwestern Bank;  Kendra C. Thompson Architects, PC; and Daniel D. Laskey & Company, PC; Michelle Frey, Farmers Insurance; Memorial  Medical Center & USDA Rural Development.  A networking breakfast and luncheon directly following the national program.
 
The local program will help businesswomen understand how to use Social Media Marketing, like Facebook, Twitter, Linked-In for business promotion.   http://www.atiattractionmarketing.com/ati-attraction-marketing-video/

Also, learn about the free, local resources that are available for sustainable business planning in Northwest Michigan and throughout the State with MI-SBTDC.

The event will take place at 2700 Orchard Hwy Manistee, MI 49660 and will begin at 9:00 a.m. and adjourn at 1:15 p.m. on Friday, October 16th at $35 per person.

For more program information or sponsorship questions, contact; Joni Purgiel (231) 723-0505 or joan.purgiel@nationalcity.com. 
 Register now online at www.we-do.net. 

 

Business IT Gets Footing in Northern Michigan

By Kevin Bozung, Safety Net Inc.

For major technology companies, Northern Michigan seems to be a forgotten marketplace.  In the last six years, I recall only one occasion where a major technology company came to the area hosting an event to share information about current technology trends and products. So, in 2009 Safety Net began leveraging relationships with our partners such as Microsoft, Dell, Cisco, Symantec and Barracuda. Safety Net has been sponsoring lunch-and-learn style events where local IT professionals can listen to presentations from our partners and get one-on-one time with them to get information they need.

Our first event in April was a big success. We brought in Microsoft and Dell EqualLogic to discuss trends and products related to burgeoning Server Virtualization and Storage Area Network technologies. We had over two dozen attendees from all over northern Michigan. We followed that with a Systems Monitoring and then a Network Security event, both also well received by the IT community.

On November 9th, we have Microsoft and Dell EqualLogic coming back for a repeat of our first event. This will be a very informative event for those who missed the first one. We will have presentations from our guest speakers as well as live product demonstrations. New information will be available on technology advancements such as Windows Server 2008 R2, which will be helpful even for those who came in April.

For information about our events, please visit www.safetynet-inc.com/events.

Listen to Kevin on the Vic McCarty Show for Small Business Focus this Wednesday at 10:30 AM. Safety Net is a business technology consulting firm and Microsoft Gold Certified Partner providing outsourced IT services, advanced computer networking and proven software solutions to small and midsize organizations. The company is based in Traverse City. To learn more, visit safetynet-inc.com.

Enchantment of 4-hour work week leaves time for more

by Chris Wendel

Self-help books have always been a quandary for me. I seldom buy wholeheartedly into anything that someone is pushing. I’ll keep my distance and glean what I can, but other than college football and an occasional Bon Jovi concert, I’m not into the herd mentality. That cautious curiosity has served me well along the way, and I’m proud to say that well into my 40’s, I’m still alive and I’ve yet to get wrapped up in any income devouring pyramid schemes.

With that as a backdrop, I offer up the book “The 4-Hour Workweek” with the tag line: “Escape the 9-5, live anywhere, and join the new rich”. Written by Timothy Ferriss, a 30 year old entrepreneur who among other things has been a world-record holder in tango (how this is achieved is yet to be revealed), a national champion in Chinese kickboxing, and an actor on a hit TV series in Hong Kong.

Credentials aside, Ferriss’ book offers a laundry list of ways to streamline one’s life and outsource the ancillary parts that inhibit productivity. Some of the techniques border on outlandish, while others were compelling to try out on my own.

For example, Ferriss advocates limiting email reading to two times a day, cutting out time wasting web surfing, listening to nothing but music, reading fiction (or Ferriss’ book), mixed in with a maximum of one hour of daily television. It’s my understanding that the idea here is to cut out the useless bombardment of messages and information that deter us from the true creative abilities that we possess.

About a week ago I decided to put some of the book’s parables into action. I had some crucial work deadlines and my attention span was waning. I stopped cold turkey with the web surfing (unless it was essential for work), and watched only one hour a day of daily TV (no news or sports). I have listened mostly to classical music in the car, and limited my reading to a daily hour or so to fiction.

The process of switching off the nonsense was easier than I had anticipated, and also very freeing. I have more time to spend on impactful undistracted conversations, and my ability to zone in on pressing projects has increased dramatically. I’m still working on checking my email only at 12 PM and 4 PM, and when I’m not distracted by email, I realize how more useful my time can be.

Having said this, there is still plenty of territory to explore with “The 4-Hour Workweek”. I’m not saying that I’ve totally drunk the Kool-aid, but with more of Ferriss’ techniques to pursue, I’m still holding on to the hope of pairing down my work week. Four hours? I’m not sure, but tomorrow I’m checking out personal assistants in India that can attend to my more mundane chores. Hopefully then I’ll have newly acquired the hours to actually finish the book. How much I buy into it after that remains to be seen.

Building your professonal team

One of the most important steps of starting a new business is selecting a group of professional experts. Finding a good attorney, accountant, banker, and insurance broker are fundamental to establishing a solid business organization. These experts provide services that are irreplaceable and cannot be adequately done by you alone.

Unless you are truly technically trained and have more time than you know what to do with, you must have help. Here are some examples of how your professional team can be the cornerstone of your business

1. Attorney
a. Registering a business name
b. Ways to legally structure a business
c. Clarifying a business partnership relationship

2. Accountant/Bookkeeper
a. Establishing a bookkeeping system
b. Paying business taxes
c. Payroll taxes

3. Banker
a. Financing your business
b. Bank accounts
c. Merchant credit card services

4. Insurance Broker
a. Identifying the type of coverage your business requires
b. Offering policies for your identified coverage

How do you put your team together? Start with people you know. If you are on a first name basis with someone at your bank ask if you could more likely sit down and discuss your business goals with them. Talk to friends and see if they could recommend an accountant or attorney. If you are new to town look in the yellow pages or online and find an insurance agent. The key is to find people you feel comfortable about telling your story to, someone who “speaks your language”.

With your own employees, it’s always a good idea to know what your strengths are first and delegate the tasks you find more challenging or tedious to someone else within your organization. For example, if you don’t enjoy bookkeeping or find it is something you hesitate doing, hand it off to someone who is adept at crunching numbers. This passing off of certain responsibilities may also play a large role in the internal staff you build and the personnel you hire.

Putting together your professional team the right way is a critical step in a small business’ road to long term sustainability.

Going forward, area wineries show plenty of promise

The Grand Traverse Region continues to be the focus of agriculture and agri-tourism. One area that fits into this sweet spot is the popular growth of the area’s vineyards and wineries. There are many reasons why wine grapes are beginning to challenge the dominance of cherries as the region’s major commodity.

The transition into grapes includes benefits to the local economy that are advantageous compared to cherries and other tree harvested fruit. Grape production is likely part of a winery operation that stresses the additional value added components of bottled wine (retail and wholesale sales), tasting rooms, bed & breakfasts, and on site events.

Markups and profit margins on these value added elements are much higher than traditional cherry wholesale production. Labor associated with grape farming in most case pays employees a higher wage and offers more year-round employment than cherry farming.

Grand Traverse and Leelanau counties make up more than half of Michigan’s grape and wine production. With 14,600 acres of vineyards and 2,000 acres devoted to wine grapes, Michigan is ranked as the fourth largest grape growing state, and eighth in wine grape growing production. In 2008 the Michigan wine industry attracted more than 800,000 visitors.

At last count (which seems to change by the day), Grand Traverse County boasted a total of seven production wineries, and Leelanau County 14, amounting to an increase of roughly 33% in the last ten years.

Even in our recession type economy, the statistics show a macro trend towards additional wine consumption:
• Consumption of table wine increased with red wine usage outpacing that of white, due in part to high consumer awareness of its health benefits.
• Wine consumption increases with age. Less than a quarter of young adults aged 21-24 drink wine, compared to 41% of adults aged 55-64
• During 2003-08, the frequency of drinking domestic wine increased 2% while that of drinking imported wine rose 1%, which equates to 809,000 more drinks consumes in 2008, compared to 2003.
• Consumers aged 25 to 34 who drink wine report spending more per bottle of wine than any other age group, making a ripe target for wine marketers.

Additional information broad-based macro market studies show two distinct secondary markets for U.S. and Midwest U.S. wine consumption. The first is adults between the ages of 55-64, while the second includes consumers between 25 and 34.

Meanwhile, year-round population figures and projections for the Grand Traverse Region going forward show that these same age groups will grow significantly in the next few years compared with other population sectors. One needs to remember that these figures are based on the area’s year-round population and do not include the large influx of seasonal visitors and residents.

What remains clear is that the Grand Traverse Region continues to produce more nationally and internationally acclaimed wine, the region is becoming known for good quality wine, and that the future looks bright for the area’s wine producers.

SBTDC Business Resource Centers

Northern Michigan is fortunate to have great resources for small business development and aspiring entrepreneurs. In the past year, the several public libraries, the Northern Lakes Economic Alliance and the Michigan Small Business and Technology Development Center (MI-SBTDC) have worked to revamp and open several Business Resource Centers (BRC’s).

Find one near you:
. Boyne District Library
. Charlevoix Public Library
. Cheboygan Area Public Library
. Jordan Valley District Library
. Petoskey – Northwest Michigan Works!
. Petoskey Public Library
. Traverse City – Northwest Michigan Works!

Available at BRC’s
. Reference Materials Covering Relevant Business Topics
. Books and Resource Guides on Marketing, Sales, Finance, Law, Human Resources and more!
. Books on How to Start a variety of businesses with Industry Specific Guidance
. Free and Confidential Business Counseling with a Certified Michigan SBTDC
. Access to Valuable Online Market Research and Database Tools for Counseling Clients

Inside The American Recovery and Reinvestment Act

What is the American Recovery and Reinvestment Act doing for small business? The SBA says it is an effort to jump-start our economy, create or save millions of jobs, and ensure our nation can meet the challenges of the 21st century. The Recovery Act assigns a key role in this effort to the U.S. Small Business Administration, providing it with program tools that offer new economic incentives to small businesses and lenders alike, all aimed at growing our economy through job creation, re-starting lending, and investing in small businesses and the entrepreneurial spirit of Americans.

• Provides entrepreneurs and lenders financial relief from the current economic crisis that will help encourage borrowing and lending to all small businesses, including start-ups
• Offers businesses access to the capital and the tools they need to drive economic recovery and to create and retain jobs
• Helps unlock credit markets for small businesses
• Temporarily eliminates some loan fees for borrowers and lenders

The bill is divided into nine key components, including:

• Temporary Elimination of Loan Fees • Temporary 90 percent Guarantees
• Secondary Market Liquidity for Section 7(a) loans, SBA’s largest loan guarantee program, which serves a wide variety of small business borrowing needs
• America’s Recovery Capital (ARC) Stabilization Loans
• Expanded Microloans
• Surety Bond Program Expansion
• Secondary Market for First Mortgages associated with Section 504 Certified Development Company loans, which support small business capital-asset and real-property investments
• Expanded Refinancing Project for Section 504 Loans
• Small Business Investment Company Program Expansion

SBA is working to implement these elements with the goal of having the broadest impact on small businesses as rapidly and effectively as possible. To learn more, follow the link.

Basics of Buying a Business

Buying an existing business can be a less risky and more quickly profitable venture than starting your own business from scratch. But it’s not entirely risk free and your success will depend heavily on how you choose and evaluate the business you buy.

Financial Statements

Look at both financial statements and tax returns form the past 3-5 years to judge both the current fiscal health and financial trends. Make sure you see figures that are accompanied by an audit letter from a reputable CPA. Don’t accept a simple financial review or a compilation because those are based on figures supplied by the company. Is this business in sound financial condition? Do the financial statements match the tax returns? Are sales and operating ratios in line with industry standards? Your accountant can help you analyze these figures to determine the net worth of your company.

Payables and Receivables

Check the dates on invoices to see if the business is keeping up with its bills. Normal payment times vary from industry to industry, generally 30 to 60 days is standard. If bills are being paid 90 or more days past the invoice date, the owner may be struggling with cash flow. Also find out if any liens have been placed against the business because of unpaid bills.

 Inspect the accounts receivable with a skeptical eye: often their stated value is somewhat inflated. Take a close look at the dates on them to determine how many are delinquent and by how long. This is important because the older the receivable, the lower its value and the greater the chance that it will never be paid. While you’re at it, make a list of the business’ top ten accounts and run a credit check on them. If the majority of customers or clients are creditworthy but are late to pay, you may be able to solve the problem with a more rigorous collections policy. If the clientele is financially unstable, start looking for another business.

 Employees

You need to determine how critical the employees are to the success of the business. You also need to look at their work habits to determine if these are people you can work with. How long have these key employees been with the company? Will these people remain with the company after a change of ownership? What incentives will you have to provide to get them to stay? Can any key employees be easily replaced? What are their relationships with customers and would customers follow any of these employees if they were to leave? Also look at the role the current owner plays in the company. Is this a role you want to play? Are there any current employees who can take over those responsibilities if necessary?