March 20, 2023

Thinking Entrepreneur: Can I Afford to Be Optimistic?

Thinking Entrepreneur

An owner’s dispatches from the front lines.

It is time to complete the budget for 2013. I now have the final numbers from 2012 to help in the planning/forecasting/guessing game that I have been playing for 35 years. My comptroller reminds me that every year, for as long as she can remember, she has had to reduce my projections by midyear. Great. Is it a shortcoming to be optimistic if you own a company? The answer is yes, and no. At the moment, more yes.

This year did not turn out as I had planned, or perhaps as I had hoped. There was no big recovery in either the economy or in my industry (home furnishings). We did make some progress, but I had budgeted and spent money as if we were going to be in a recovery or growth mode: more people, more inventory, more advertising.

I have lived and navigated through many recessions, and I can tell you that this has not been a normal one. In the good, old recessions, you would have a down year and then recuperate slowly over the next one or two. We are now in year five, and while things have clearly gotten better, we are hardly back to where we were in 2008. The unemployment rate is still high, and most small-business owners I know are still struggling.

And it’s not just the economy. The whole business environment is constantly changing, and it can be especially difficult for a small business to keep up. It is harder to borrow money, Web sites demand attention and dollars to keep them up, inexpensive imports continue to change the dynamics of the marketplace, and the government sideshow of perpetual crises – election, fiscal cliff, debt ceiling — continues to make people nervous. And none of it helps the unemployment rate, which should be of concern to everyone.

Still, it is hard to get anywhere as an entrepreneur without being optimistic. If you’re like me, you eventually begin to develop something of a split personality. When I am playing sales manager, I have to encourage my employees to shoot for ambitious but realistic numbers. I told one of my managers that I feel good about our prospects for next year, and she reminded me that I say that every year. Oops. Another colleague has seen through my rosy glasses. But what am I supposed to do? Ask people to strive mightily for mediocre results? On the other hand, it is also my responsibility to sign off on budgets and then make sure that the numbers are reached. That job is not nearly as much fun, and that’s where the split personality comes in.

So here is my conclusion. We need to make two budgets: one that is reasonably optimistic and another that is reasonably pessimistic. The optimistic one is for sales meetings. But, human nature being what it is, it is important not to surround yourself with yes-men who will sign off on whatever you say when you are feeling good. Send in the accountants! The second budget is the one to use for financial planning and spending.

This year, in my reality-based budget, I’m not factoring in any big turnaround in the economy, and I have reduced expenses in an attempt to ensure an acceptable profit. To me, this represents one of the most important things I have learned from the many ups and downs of building small businesses: the difference between setting goals and making a plan. Goals mean nothing without a plan.

I have also learned that whining and pity parties have no place in entrepreneurship. Misery might like company, but it does nothing to help build a company. Yes, the business environment has gotten more difficult for many small businesses, but that just means that we all need to pay more attention. In sports, when you finish a disappointing season and go home, you have six months or so to ruminate about what went wrong.

When you run a small business, you don’t get time off to think, but you also don’t go home a loser. Instead, you get to hit a reset button on Jan. 1. You get to start the new year with new wisdom, a clean slate, a new plan, perhaps even a new sense of optimism (but mostly a new plan!).

So, my fellow entrepreneurs, I encourage you to do a 360-degree analysis of what you could and should be doing better — and then make a plan to do it. No goals. A plan.

Jay Goltz owns five small businesses in Chicago.

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You’re the Boss Blog: Social Media Marketing From A to Z

On Social Media

Generating revenue along with the buzz.

As 2013 approaches, you may be developing your year-end to-do list. If you are like a lot of small-business owners, one of the items near the top of that list is something about finally taking the time to figure out social media marketing.

Maybe you set up a blog, but you haven’t been up updating it. Maybe you set up a Twitter account, but you have yet to post that first tweet. Maybe you can’t remember the last time you updated your Facebook page. Well, now’s the time.

Social media can be a great equalizer for small businesses. It used to be that guy who had the most advertising dollars was usually going to win. These days, people are much less interested in being sold; they are looking for useful information, and if you have some to offer, you have the opportunity to build a relationship.

Inspired in part by my 6-year-old son, who has been working on letter recognition, here is an A to Z checklist to help you get as much as possible out of your investment in social media marketing.

Action. Create an action plan to get started. It is important to decide what you want to do before you try to do it.

Budget. Set aside money to invest in a copy editor and/or a social media virtual assistant to teach you the ropes and review your content. This person can also manage the back end of your blog.

Consistency is crucial. If blogging is going to be central to your social media strategy, you have to decide how many times a week and which days you are going publish. And then you have to stick to it.

Differentiate. Create content that is thoughtful and cuts against the grain. There is a lot of noise in the marketplace. Don’t be just another food blogger. Carve out a lane for yourself.

Execution. Develop a daily execution plan. How much time will you invest each day?

Format. Pick the format or formats you will use to develop your content. Will you write, record podcasts, post pictures or create how-to videos? Or will you do all of the above?

Goals. Create 30-, 60-, and 90-day goals for developing content and seeing results. For example, how many shares, page views, or inbound links do you expect to attract each week?

Help others. Providing useful content for free to your target audience is the most valuable thing you can do to build your brand. Avoid sales pitches. No one wants to be sold to.

Images are everything. Create an archive of pictures that you will use with your blog posts. Be sure to add meta data to those pictures to you improve your search-engine optimization.

Journalism. Think of yourself as a journalist. Be factual and informative with the information you share. Try to approach common topics from fresh angles. Most readers tuned to the same frequency: WII-FM (as in What’s In It For Me). Let them know you are invested in their success.

Kick start your blog by developing content two to three months before you introduce it. Create an archive that you can pull from when you are busy running your business.

Listen first. Conduct a listening strategy to find out where your target audience hangs out online, so you can focus on one particular social media site first.

Mobile. It’s time to invest in a mobile Web site. So many people are using smartphones, and for many it’s the only way they check the Internet, which is why local retailers especially need to make sure they can be found on mobile devices. Google has created a free Web site to help small business get started with a basic mobile site.

Niche. Find one. The more specialized your content the faster you will rise to prominence as an expert in your field. People want content from people who specialize in solving their problems.

Optimize. Search engine optimization is essential. Use your keywords to develop your blog titles and article content. If you do not understand S.E.O., do not panic. You don’t have to hire a firm or a guru. Here are three WordPress plugins that will help: WordPress SEO by Yoast, Online Backup For WordPress, and W3 Total Cache (to help your site load faster).

Pinterest is likely to be the hottest social media platform for small businesses in 2013. If you sell anything that is visual, start using Pinterest — especially if you are aiming at women.

Quality. If you are going to publish a blog, make sure your posts are top quality. Readers have other ways to spend their time.

Recycle. People learn different ways. Some like to read, others like to listen, some like to watch. If you write an article, turn that same content into a two-minute video. If you conduct an interview, transcribe that podcast into a blog post. If it’s helpful, people will want more of it.

Share. Share other people’s content. Spend time “friendraising” before you start developing original content. Take the time to earn the respect of other industry experts in social media by sharing other people’s content. Use a 4:1 ratio of sharing other content over your own. Be sure to comment on other people’s blogs too.

Time. You must put the time in to your social media platform. It probably will take 12 to 18 months of consistent activity before you start to build traction.

Use technology tools. There are many plug-ins and apps that will help you share your content more efficiently. Here are three I suggest: Hootsuite to schedule content sharing, Backupify to back up all of your contact lists and gadgets, such as your smartphone and iPad, and Tweet Old Postto make sure your content is circulated through Twitter 30 days after it was posted.

Video. The Internet is the new television. YouTube is the second-most-searched site on the Internet. If you want to stay relevant online, video should be part of your strategy.

Write. The more you write, the better you will write. If you can, set aside a day to develop content each week.

X-Ray. Think x-ray when you search for data within your social media networks. Use Google Analytics to evaluate the effectiveness of your blog. Pay attention to what content is shared most often and give your audience more of it. Scout LinkedIn to find groups that your target customers join. You can filter search results on Facebook by people, groups, pages, events and even posts. Go to to get started.

You. Your personal story is the most valuable element of any content you develop. The more authentic and transparent you can be, the more your content will be shared. The truth is always better than anything you make up.

Zingy. Every year, give your blog and your social media profiles a zingy new look. Update your bio and head shot, too. You want to show growth and that you are constantly investing in your brand.

Melinda Emerson is founder and chief executive of Quintessence Multimedia, a social media strategy and content development firm. You can follow her on Twitter.

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Bits Blog: SAP’s Marketplace Dream

Last spring SAP, the big German business software company, agreed to pay $4.3 billion for a company called Ariba, which runs an online marketplace for businesses selling to other businesses. The deal was for a 20 percent premium to Ariba’s stock price, and more than six times the usual multiple of earnings for an enterprise software acquisition. For a deal like that to make sense, SAP must have been thinking about ways Ariba could create new strategic businesses for the company.

The deal became final in early October, and the heads of the two companies are starting to state their aim. Ariba, it is hoped, will turn a business marketplaces into a kind of corporate social network. The equivalent of status updates on Facebook will be awareness of goods that are available, the status of payments or of products in transit.

There are, of course, no guarantees this will come true, but it is an interesting idea.

William McDermott, SAP’s American co-chief executive. William McDermott, SAP’s American co-chief executive.

There will be a lot of headline statistics on the way there. “We are committed to being a triple-digit growth business in the cloud,” said William McDermott, SAP’s American co-chief executive. “We’re up to the challenge.”

In the third quarter of this year SAP’s revenue from cloud computing subscriptions did grow 1,475 percent from a year earlier, to 63 million euros, about $81 million. That was, however, less than 2 percent of SAP’s overall revenue, which still relies mostly on old-fashioned software.

Adding Ariba, which had $474 million in revenue in 2011, will certainly bolt a big number on to SAP’s cloud revenues, which at least for awhile will look like strong growth. In the long run, however the acquisition has to come up with something substantial to meet Mr. McDermott’s commitment.

There is, of course, the benefit to Ariba of being part of a much bigger organization. Purchasing of supplies and services from third parties by the world’s 2,000 largest companies, Mr. McDermott said, amounts to about $12 trillion annually. “That isn’t limited to SAP” with Ariba, he said (it’s not even close), “but we will continue to pursue it.”

In addition, by hooking the knowledge of what supplies are being purchased to mobile devices and real-time analysis software, two other new businesses for SAP, the opportunity exists to create new products.

Robert Calderoni, the former chief of Ariba and now a member of SAP’s managing board who will oversee the business, said the real profit would come from becoming less of a place of mere transactions, and more a global network of vendors and corporate buyers. Both sides will have a high level of awareness about things like product availability and payment status. Ultimately, he said, SAP wants it to be “a community we create,” in which it collects high fees by enabling transactions.

“Our first customer liked our software. Our second customer liked our software, and that it had someone on it,” Mr. Calderoni said. As this builds, he said, Ariba can move from collecting a very modest commission (about 0.06 percent of the transaction) to “hundreds of basis points,” or several percent, by managing awareness and fulfillment, the way Amazon does between consumers and third-party sellers.

The connection to SAP should also help Ariba get to bigger numbers of both buyers and sellers. At present there are about 733,000 vendors on Ariba, and growing by 1,000 companies a week, according to Mr. Calderoni.

If SAP does acquire a truly large volume of cloud transactions, it could even end up in a kind of content business, offering industries, financial traders and government economic insight into buying and logistics. “It becomes a predictive tool,” Mr. McDermott said.

For now, the acquisition may seem like more consolidation in the cloud, which has been lead over the past year by SAP, Oracle, and That may be interesting from a financial or evolutionary perspective. The real value is in making something altogether new. That is probably several triple-digit years away.

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Bucks Blog: Employers That Forbid You From Telling Others What You Make

I was surprised earlier this month when I tuned in to a Marketplace report that noted that there are employers that contractually forbid employees from telling anyone how much money they make.

It’s a free country, and private employers can do what they wish in this respect, though plenty of companies (and many public employers) make a point of sharing salary data so there is no question about who is making the most (and, hopefully, why).

I doubt that a clause in an employment agreement mandating salary silence would be a deal killer for anyone in this economic environment. But doesn’t this sort of mandated vow of silence raise suspicions in the eyes of people who work for these employers? What are they hoping to hide from their employees, and why?

If you work (or have worked) for such an employer, please name it below and tell us a bit about why you think the rule came to be and whether it was a good or bad thing.

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Economix: Why Hasn’t Employment of the Elderly Fallen?


Casey B. Mulligan is an economics professor at the University of Chicago.

While employment rates have fallen sharply among the general population, they have not done so among the elderly. This result is difficult to reconcile with Keynesian characterizations of the labor market.

Today’s Economist

Perspectives from expert contributors.

The red line in the chart below displays an index of the per capita employment for the general population. For example, a value of 93 for 2010 means that the fraction of people employed in 2010 was 7 percent less than it was in 2007, before the recession began. The red line shows what we all know by now: many fewer people have jobs now than did a few years ago.

The other two series in the chart are for specific age groups: ages 65-69 and ages 70-74. Both groups have a somewhat greater fraction working now than in 2007 (the increase is even more for ages 75+, but that group is small, so it is omitted from the chart).

Recent studies have looked at the labor-market experiences of the elderly during the first half of the recession. The authors emphasize that, while the recession by itself might reduce elderly employment, the elderly have become increasingly willing to work. I agree.

Many elderly people, for example, saw the market values of their homes and retirement assets plummet in 2008 and feel they can no longer afford to be retired. Naturally, many of them react by looking for work.

The blue and green lines in the chart show that the elderly have been much more successful than the general population at obtaining and retaining jobs.

These findings contradict the Keynesian narrative of the labor market, in which the marketplace fails to recognize the degree to which people would like to have a job. (The Keynesian narrative helps rationalize, among other things, the assertion that unemployment insurance did not reduce employment during the recession, because “what’s limiting employment now is lack of demand for the things workers produce. Their incentives to seek work are, for now, irrelevant.”)

Employment, even during a recession, is not solely the result of lucky few finding available positions. All else being the same, the market tends to create and allocate jobs for those people who are most interested in working.

That’s why, if government is to avoid making employment any less than it has to be, it’s so important to pay attention to the incentives created by taxes, subsidies and government regulations.

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