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Sarbanes-Oxley: A Chilling Effect on Venture Capital?
Tweet Share on Facebook July 17, 2008 Comment (1)Here's something that I didn't go into in my article on venture capital: the role that financial regulation is playing. Sure, it makes sense that given all the financial problems going on in today's economy, venture capital activity would be down. But according to some, this is coming at the worst possible time.
In the wake of Sarbanes-Oxley legislation passed in reaction to the Enron scandals of 2001, "the psychology of the entrepreneur has changed dramatically," say Mark Heesen, president of the National Venture Capital Association. The basic reason is that in a world with Sarbanes-Oxley, everyone who wants to take their company public has to deal with extra paperwork and hoops to jump through. Those costs can add up and sometimes make going public simply not worth it. "Today you have a lot of entrepreneurs who say if acquisition is coming along, I'm taking it," Heesen says. "They say, 'I don't want to deal with all of these accounting rules. It's not fun going public anymore.' They'd rather sell out and go create another company or go play golf."
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Local Coffee Stores Thrive With a Personal Touch
Tweet Share on Facebook July 15, 2008 CommentThe Washington Post reports that while Starbucks is closing stores left and right, smaller local coffee shops are thriving. The report includes interviews with coffee-shop owners around the D.C. area about how they've done it.
Behind the counter, the Java Shack's baristas make the espresso themselves, no matter how many salesmen come through trying to sell Roberts an automatic machine that would steam the milk all on its own. He has said no every time. The person making the drink talks to the customer who ordered it. The scene is what Schultz originally intended with Starbucks, but even he now admits that atmosphere has drifted away as the company has grown.
This touches on some of the same themes that I wrote about a few months back when I profiled Phoenix Coffee, a local chain in Cleveland, as a business that is able to survive in a recession. The key to success for both Java Shack and Phoenix is a focus on skilled employees, as well as customer interaction.
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Green Entrepreneurship Start-Up Ideas Abound
Tweet Share on Facebook July 15, 2008 Comment (4)Yesterday I wrote (outside of the blog) that the development of green and clean technology is an area that is still booming for entrepreneurs and will continue to boom. This is a space for entrepreneurs of all kinds, from Silicon Valley venture capitalists to people who might have a day job but want to make some money on the side.
How to do the latter? Here's an interesting story about a French entrepreneur who has created a website revolving around the feverish interest in hybrid and other environmentally friendly cars. She says she spends only three hours a day on the site.
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Small Biz Owners Say 'Thanks, but No Thanks' to Economic Stimulus
Tweet Share on Facebook July 14, 2008 Comment (4)Some polls on President Bush's stimulus plan have shown that most people don't plan to do much with their stimulus checks. Can we finally write the epitaph for the plan? American Management Services, small-business expert George Cloutier's organization, released a survey today that finds that 78 percent of small-business owners think their stimulus checks are "useless."
Another interesting finding—49 percent said they do not know which of the two major presidential candidates have the best policy proposals for small business. Sens. Barack Obama and John McCain take note: The small-business vote is still very much in play.
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Best of the Blogs for Small-Business People, Week of July 11, 2008
Tweet Share on Facebook July 11, 2008 Comment (2)Business Pundit interviews Boston Consulting Group's Hal Shirkin about how global competition is only going to get fiercer.
Yaro Storak of Entrepreneurs Journey explains how to blog to "prelaunch" a new product and bring attention to it.
Want more evidence that consumers are paring back their spending? Even rock show tickets are dipping from their usually astronomical prices.
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Trouble for Small-Business Owners in Minnesota
Tweet Share on Facebook July 10, 2008 Comment (1)A survey conducted this June by U.S. Bank finds that 46 percent of small-business owners in Minnesota report lower revenues this year compared with 2007. In addition, 74 percent say they think the economy is in a recession.
For readers who are more familiar with the North Star State than I: Any reason that Minnesota's economy might not be representative? I do not believe it's been hit especially hard by the housing bubble burst. Housing price appreciation was moderate, relatively speaking, in Minnesota leading up to the crash.
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Is Peer-to-Peer Lending a Solution for Start-ups?: Q&A with Paul Dholakia of Rice University
Tweet Share on Facebook July 8, 2008 Comment (8)With the increasing scarcity of bank loans because of the economy's credit crunch, entrepreneurs are thirsty for new sources of capital. One such alternative is peer-to-peer lending, in which people lend other people money directly, without the involvement of a financial institution. Transactions take place online, incorporating elements of social-networking sites. Websites such as Prosper.com and Kiva.com connect borrowers and lenders, and the prize on the table is investments.
Peer-to-peer lending sites tap into the popularity of social networking on the Web, hoping to imitate the success of MySpace and Facebook. But there is concern that these sites could fizzle out in popularity, as many Web start-ups do.
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Will Entrepreneurs Save the World?
Tweet Share on Facebook July 8, 2008 Comment (1)There's a big discussion going on about the role of government and capitalism in addressing social ills like poverty and disease, and it's a discussion where I think entrepreneurs, even small-time ones, can play a critical role. Creative Capitalism is a blog where some brilliant minds are talking about Bill Gates's argument, made at the World Economic Forum in Davos, Switzerland, that philanthropy alone can't solve the world's problems. Free-market capitalism is also required. Many of the responses are hopeful and optimistic about capitalists' role in promoting social good, but we also hear skepticism from former Secretary of Labor Robert Reich, who writes of a "false hope in the private sector."
This reminds me of an interview I did with John Kao last year about his book Innovation Nation. He made a number of interesting points about how America is losing its status as leader in producing innovative technologies. But what surprised me was how much he measured America's commitment to innovate based on how much the federal government is doing, ignoring the private sector.
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Finding the Opportunity in a Troubled Industry
Tweet Share on Facebook July 7, 2008 Comment (2)I interviewed Jim Blasingame about the "emotional recession" that can be more dangerous for small-business owners than an actual recession in the economy. I think this article in the Frederick News Post, a local paper in Maryland, illustrates what Blasingame was talking about:
Greenwood owns the Isuzu division of Grimes Truck Center in Frederick. The business sells Isuzus and services all makes of commercial trucks. The company boasts a half-million parts inventory.
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Wal-Mart Reconsidered
Tweet Share on Facebook July 3, 2008 Comment (8)When I blogged about Wal-Mart last week, I got some nice skepticism in the comments section regarding the suggestion that Wal-Mart is not a ravager of local businesses but could in some instances be a boon to them. For example, "Dan from CA" said, "I have experienced first hand when ever large corporations like Wal-Mart, Costco and Home Depot come into a neighborhood. It always has hurts the small business."
He's definitely expressing the conventional wisdom. And the idea that Wal-Mart, with its severely discounted prices, is a force that few small businesses can compete with makes intuitive sense. But it's often the case that our intuitions don't hold up against evidence.
