Friday, August 13, 2010

Insuring Small Business Risk

Entrepreneur insurance - really?

That was my reaction when I heard about a new insurance product that indemnifies small business founders and investors from personal loss when they take out commercial debt.

With the blisteringly high failure rates for small business, it has always taken a strong constitution and high levels of risk tolerance to open a business. But in the past, one could get a bank loan and limit personal risk if a business was established and had a good chance for growth.

Not so anymore. Personal guarantees, once reserved for startups and those with shaky financial backgrounds, are now de rigueur for any business owner seeking a loan - no matter how stable and successful their businesses are.

Enter Asterisk Financial, the subject of my Q&A this week. Its founders have developed a new-fangled product that pays half of the personal loss for policyholders who have signed personal guarantees and then defaulted on their business loans.

An innovative idea, and one that would probably not be possible (or necessary) outside of the current credit crisis.

Wednesday, August 11, 2010

The Birds and the Bees

I've developed a serious (layperson's) interest in science recently, after years of bewildered suspicion on the subject.

So when I hear about ways that science intersects with my own topic, small business, I like to explore them.

This week, I write about a new book from National Geographic senior editor Peter Miller. He believes that the collective intelligence of "The Smart Swarm" can inform entrepreneurs in management decisions.

Friday, August 6, 2010

Tweet, Tweet-Tweet, Tweet-Tweet

Yes, I worked at Disneyland back in the day and listened to the Enchanted Tiki Room soundtrack one too many times. (My restaurant, Plaza Pavilion, was housed with the Tiki Room ride and the Tiki Terrace, a Polynesian-themed restaurant that was well-known among Disney "cast members" for only hiring Asian employees).

In today's terms, "tweeting" is a technological innovation that one (apparently) must participate in to be a valid member of society. Or at least a smart marketer and savvy solopreneur.

Buzz Bissinger, once a Twitter skeptic, has become an enthusiastic convert, according to The New York Times.

I feel more like the Times' Peggy Orenstein, who wrote an insightful column in last Sunday's magazine. It's worth a read, but here's a bit that particularly resonated with me:

The expansion of our digital universe — Second Life, Facebook, MySpace, Twitter — has shifted not only how we spend our time but also how we construct identity. For her coming book, “Alone Together,” Sherry Turkle, a professor at M.I.T., interviewed more than 400 children and parents about their use of social media and cellphones. Among young people especially she found that the self was increasingly becoming externally manufactured rather than internally developed: a series of profiles to be sculptured and refined in response to public opinion. “On Twitter or Facebook you’re trying to express something real about who you are,” she explained. “But because you’re also creating something for others’ consumption, you find yourself imagining and playing to your audience more and more. So those moments in which you’re supposed to be showing your true self become a performance. Your psychology becomes a performance.”


It's that blurring between the public and the private - that sense of being "on stage" at any given moment during the day - that gives me pause and makes me a reluctant technology adopter.

No doubt one day I will tweet like the birdies tweet, several times a day. But for now, I'm content to stay quiet.

Wednesday, August 4, 2010

Specialty Networking

Entrepreneurs are often told to narrow their marketing efforts and target specific customers. But how effective is the highly targeted networking that is enabled online these days?

I address that question in telling the story of a new social networking group for LGBT professionals and their allies. Check it out.

Monday, August 2, 2010

The Makings of Success

Half of all small companies go out of business after five years, according to the U.S. Small Business Administration. But why is the failure rate so high?

It's a combination of factors, obviously, with lack of proper capitalization usually topping the list of externals.

But what about the internals? I've been writing recently about what interior qualities make for a successful entrepreneur. Over at Bloomberg BusinessWeek, we recently tackled the age-old question about whether an entrepreneur is born or made, with interesting results.

In my L.A. Times column this week I hone in on six factors that make for successful entrepreneurs even during recession.

Despite the financial challenges of 2009, approximately half of the respondents who participated in a survey done by The Guardian Life Index said that they expected either a greater than 10% increase in revenues over 2008 or projected growth for their companies over the next 12 to 24 months, or both. Of the 1,100 respondents, more than 400 looked forward to expanding their businesses in the years ahead, and 200 anticipated increasing sales even in 2009.

Turns out there are six key dimensions that differentiate those success-oriented small business owners from their less-successful peers: collaboration, self-fulfillment, future focus, curiosity, tech savvy and action orientation.

Success-oriented small business owners learn how to rely on and delegate effectively to others within their business as well as build strong personal relationships with their management team, employees, consultants, vendors and customers. They are more committed to creating opportunities for others than most entrepreneurs wholly focused on their own monetary rewards.

Pretty interesting stuff, proving yet again that the iconic image of the head honcho solopreneur who makes all the decisions with an iron fist and considers his employees like so many cogs in the company wheel is not only out-dated but flat-out wrong.