A study by Warwick Business School has identified a ‘blueprint’ for above-average growth and profitability in small businesses.

According to the research, which compared growth rates among 500 small and medium-sized businesses and their competitors, the 43% of companies which have adopted this formula benefited from an average sales growth of 17% between 2006 and 2009.

The study, commissioned by Royal Mail, identified six key factors that set the most successful businesses apart, covering areas such as HR, planning, research and development and growth ambitions.

“We found that implementing three of the six key factors was really enough to contribute to above average growth,” said Stephen Roper, professor of enterprise at Warwick Business School.

“Firms employing the blueprint grew on average 3% faster over a three-year period than those firms not doing it.”

The following six factors were identified:

•    A flexible and responsive management approach: Flexibility and effective delegation of decisions enables firms to surpass customer expectations and achieve above average growth

•    Business process efficiency: Making active attempts to evaluate and optimise internal processes allows businesses to reduce costs and improve efficiency

•    Marketing: Using a variety of marketing methods, such as mailshots and the internet, enables firms to make potential customers aware of products and services more effectively

•    Human resources planning: Having a plan for staff development and future employment increases a business’ flexibility and responsiveness and aids its growth aspirations

•    Growth ambition: Having a growth objective or ambition shapes a business’ strategy and its willingness to invest in development

•    Research and development: A thorough understanding of the markets in which it works, and the best ways of delivering services, enables a business to compete more effectively

Increased uptake of the blueprint among small businesses could generate a further £15bn for the UK economy, the study claimed.

© Crimson Business Ltd. 2010

Stand Out in a Crowded Marketplace – Internet Strategy Tips – Entrepreneur.com

Posted using ShareThis

Profits aren’t as low as you might think. Here’s how companies in 12 industries are faring, plus tips for defending your own bottom line – Inc.com

Given the barrage of bad economic news over the past 18 months, you would think that the profit margins of U.S. companies would have withered away to nearly nothing. But though it’s true that bottom lines have been hammered over the course of the recession, something promising has begun to happen: Profit margins are ticking back up.

The net margins of privately held U.S. companies grew more than a full percentage point in the second quarter of 2009. In some industries, the growth appears especially robust. Information and professional services firms saw net profit margins increase more than 3 percentage points; the finance and insurance sector saw a gain of 6 percentage points.

That’s the result of an analysis of private company profits by Inc. and Sageworks, a maker of financial software and a leading provider of data about closely held businesses. In an effort to determine just how the tough economic climate has affected entrepreneurs, we looked at three key indicators — gross profit margins, net profit margins, and change in revenue — for companies in 12 economic sectors over the past eight quarters. In all but three of those sectors — health care, wholesale trade, and real estate — net margins strengthened in the second quarter of 2009 (the most recent period for which data are available). The data can be found on the pages that follow. We also asked top executives in each sector to describe how their industries are faring and to share some insights into how they strive to maintain their profits.

It’s tempting to view the good news about margins as evidence that a recovery has begun. But it’s not that simple. Stronger margins are undeniably a good thing. But they do not exist in a vacuum. Indeed, the generally encouraging news about the bottom line is offset by the fact that the top line — that is, sales — continues to be anemic in almost every industry sector. Retailers saw revenue fall 3.5 percent in the second quarter. Sales in the information industry dropped some 1.5 percent. “Since sales remain down and consumer spending fell in the second quarter, these increases in profits result mostly from cost cutting,” says William Dunkelberg, chief economist of the National Federation of Independent Business. Unfortunately, at this point in the downturn, there’s not much left to trim. Dunkelberg also cautions that many may have cut too deeply. “The reduction in costs, especially in labor, has been dramatic — and perhaps overdone,” he says.

It’s also instructive to look at the difference between gross and net profit. Gross profit reveals how much a company earns after accounting for the cost of producing the product or service it sells; when gross profit margins fall, it generally means that a company has little to invest in non-income-generating activities, like marketing or tapping new markets. Net profit, or the bottom line, shows how much a company actually keeps after subtracting all expenses, such as taxes, interest paid on debt, and other nonproduction costs.

The problem is that although net profit margins are strengthening, gross margins are falling or flat in six of the 12 industries we examined. That means that even though businesses have been able to cut costs, they don’t have much pricing power. “Wherever you see reductions in gross profit margin, that suggests firms are still reducing prices,” says Doug Tatum, co-founder of Tatum, an Atlanta-based consulting and executive search firm.

Still, the surprisingly robust net profit margins are cause for at least some optimism. Brian Hamilton, CEO of Sageworks, is encouraged by recent activity in the retail sector, which ramped up net profit margins in the second quarter despite an ongoing drop in revenue. “When retail trends up, that’s typically good news for everyone,” Hamilton says. “It means that people are starting to spend again.” And if companies have been cut to the bone, it also means they are lean and mean and could be ready to pounce once demand in general does pick up — something Dunkelberg expects to happen in the fall. “When sales finally do go up,” he says, “we could look forward to a rapid increase in profits.”

Read the rest of this article at: http://www.inc.com/magazine/20091001/the-profitability-report-how-to-protect-your-margins-in-a-downturn.html

Venture Capital is a term oft-bandied about, but sometimes it’s a mysterious process. Speaking at Stanford University, Beth Seidenberg of VC firm Kleiner Perkins Caufield and Byers tried to clear up a aspect: Whether a startup is worthy.

Seidenberg narrows the hunt down to five key criteria that need to be met before KPCB will consider funding a startup:

• A-plus Leadership
• Large, Fast-growing, Under-served Market
• Reasonable Financings
• Sense of Urgency
• Missionaries not Mercenaries

The key feature is strong leadership–it’s absolutely vital as far as KPCB is concerned and this makes good sense: Start-ups are often relatively small enterprises, with short management chains and they’ll face significant challenges on a day-to-day basis. Good leadership is key to surviving these.

The remaining criteria also make pretty good sense, which is satisfying: Entrepreneurs have to be sensible about the value of their operation, keen to drive the team to success on a short scale, and more concerned with achieving a successful business than driving for high profits. The particulars of the KPCB criteria probably aren’t a good match for other VC firms–for example their interest in high tech-risk companies, versus low tech-risk companies that try to achieve large markets–but the overall common sense in here is hard to argue with. That’s probably unsurprising since KPCB has Colin Powel, Al Gore and Sun Microsystems’ John Gage as partners.

It’s good food for thought, especially if your nascent company is about to chase some of that VC money presumed to have recently dried up. It may just be flowing again.

[via VentureBeat]

Keep an eye on these rising stars. They are transforming the Web, empowering other start-ups, and turning your conference room into one big whiteboard. Our look at America’s coolest young entrepreneurs.

Do you fantasize about doodling on your office walls? Looking for jewelry that combines rock ‘n’ roll style with Old Hollywood glam? Or are you craving truffle oil popcorn? The companies on this year’s 30 Under 30 list might have what you’re looking for.

Check out the 30 Under 30 at: http://www.inc.com/ss/30-under-30-americas-coolest-young-entrepreneurs

For many 2009 Inc. 500|5000 honorees, conducting business almost exclusively online is a win-win — less overhead and bigger profits, while providing a 24/7 experience for customers.

It was graduation week, and like many matriculating seniors, Genevieve Thiers wondered what she would do with her life. She worried that her classical Opera training might not provide the immediate financial relief that she would need to pay the bills. That’s when she spotted inspiration: a pregnant woman. She watched the slow, belabored steps the woman’s swollen feet took up the staircase; she watched the woman grab the railing for support as she pulled herself up the stairs like a pot-bellied mountaineer hoisting himself up a steep rock wall. The woman was trekking across the Boston College campus, posting fliers soliciting a babysitter.

Pistons began firing in Thiers’ head. She recalled thousands of nights spent babysitting as the oldest of seven children. She saw how inconvenienced the pregnant woman was by drafting, printing, and distributing flyers, not to mention actually finding a worthy candidate. And Thiers knew there was a relatively simple answer to the problem that millions of mothers around the country must have been facing too: an online community that matches care-seekers with care-givers. The whole thing reminded her of Match.com, where she met the man that would eventually become her husband. “If people could use the Internet to find true love, why not use it to find a quality sitter?” Thiers asks. After a quick call to her father and a $120 loan to buy the domain name, www.SitterCity.com, No. 358 on the Inc. 500, was born.

Online-only is becoming an increasingly popular start-up model, especially for entrepreneurs looking to launch a business with low overhead. For many of the companies on the 2009 Inc. 500|5000 list, such as Sittercity, which is based in Chicago, online-only is what makes sense — less overhead means better prices for customers and more profits for business owners.

Greg Murtagh, the CEO of Triad Digital Media, says he launched his online media management and operations company, No. 373 on the Inc. 500, because he saw a need and thought he could rectify it. “I could clearly see the value to be generated by moving printed materials to the Web and delivering customized information to people quickly and cost-effectively,” Murtagh says. “Not only could the Web cut costs, it could grow revenue.”

But sometimes it take a bit of trial and error to see what model will work for your business, explains Jeff Goldberg, president of Cali Bamboo, a bamboo flooring and fencing company and No. 254 on the Inc. 500. “We tried every selling method under the sun, from traditional knock-on-doors, going to other fencing companies, direct mail, and online,” Goldberg says. “We didn’t really choose to be an online-only company, online chose us.” By creating a well-organized website that effectively markets the company’s bamboo fencing, Cali Bamboo was able to hit $7.2 million in revenue in 2008 and 877.1 percent growth over the last three years.

For Faraz A. Syed, CEO of DeviceAnywhere, No. 62 on the Inc. 500, the Internet is crucial to his business. DeviceAnywhere.com is a global provider of mobile application testing and development. The company is inconceivable as a traditional business, because the Internet provides the portal that gives developers around the world access to more than 2,000 cell phones and smartphones remotely. Catering to program and application developers comes with its own set of challenges, Syed says….

Read the rest of this article at: http://www.inc.com/articles/2009/08/web-only.html

About a year ago, Dan Harden, the president and chief designer of Whipsaw the Silicon Valley industrial design and product development firm, stopped by the Fast Company offices bearing an armload of products that were as eclectic as they were fascinating. A baby bottle shaped like, well, Mom. A crank-up field radio in juicy orange. A shiny little silver box that purported to be a computer but was as sexy as a jewelbox.

Many went on to win Best of Show in various prestigious design competitions, from IDEA to Red Dot to CES to the Medical Design Excellence Awards, and they earned Whipsaw inclusion in our own round-up of the country’s top design firms in last year’s Masters of Design issue. The idea that these products all came out of the same 25-person shop boggled the mind.

This year, Harden says, the range of design challenges keeping the Whipsaw crew up at night is no less diverse. The company’s ion chromatography machine for Dionex is a cutting edge lab tool for identifying unknown materials — think: the toxic soup of particles surrounding the World Trade Center site. It’ s now the number one such machine in the world, and the scientists who use it, Harden says, are “giddy” with delight at its ease of use and intuitive design.

On the other end of the spectrum, there’s Whipsaw’s latest product, a super-cool, super-functional lunch box for a new company (of which Harden is a partner) called Kinsco. The Yubo lunchbox, which will debut at the ABC Show in Las Vegas next week, is designed to transform that nasty ritual of opening your grungy, crumb-stuck container, only to find your banana squashed against your PB&J. Yuck!

Harden’s been one of the industry’s most prolific and heralded designers in the business, with 150 patents and over 100 design awards in his trophy case. Several of his creations are in the Chicago Athenaeum Museum of Architecture and Design, the Pasadena Museum of CA Art, and the Cooper Hewitt. Prior to founding Whipsaw in 1999, Harden was president of frogdesign. Early in his career, he workd with design master George Nelson.

Check out some of Whipsaw’s Greatest Hits at: http://www.fastcompany.com/blog/linda-tischler/design-times/introducing-guest-blogger-dan-harden-baby-bottles

They’re young, talented and well-funded–but how are these former financiers faring as entrepreneurs?

Lauren Imparato, 28, has always worked long hours, a standard during her employment at Morgan Stanley, moving million-dollar deals and jetting around the world to set up business operations in cities like London and Istanbul.

Good thing, too. It’s helped ease the transition into her new career as an entrepreneur. In April, she resigned from the financial services firm to be founder and owner of I.AM.YOU. studio in New York City. The studio mixes an intense workout with a “kicking” music soundtrack, a combination Imparato never encountered in the many yoga classes she attended–and something she thinks can evolve into a global lifestyle brand over the next few years.

Continue reading at: http://entrepreneur.com/startingabusiness/successstories/article203154.html

The UK’s brightest talent is being urged to take part in a new government-backed award scheme celebrating achievement in science, innovation and technology.

The iawards, launched today by science and innovation minister Lord Drayson and TV entrepreneur James Caan, are open to all organisations that can demonstrate innovative thinking and development from a British team.

UK Trade & Investment will work with the winning companies to help them find potential business opportunities and partnerships.

Lord Drayson said: “Businesses are doing a great job in developing the innovations that will drive the country out of recession. It’s time to recognise and honour our best innovators – those who are creating the successful companies of tomorrow.”

James Caan, who will sit on the iawards judging panel, said the economic downturn had presented an opportunity to transform business by creative a positive climate for new innovation.

He added: “Some of the world’s most successful companies, including Microsoft, were conceived during a recession. The UK has some of the greatest minds in the world and thanks to the existing efforts of our entrepreneurs SMEs still make up more than 55% of UK GDP.

“They must be encouraged and recognised for their work. I firmly believe that businesses who focus their energy on nurturing the talent available to them can lead the UK out of the recession.”

For more information visit: www.iawards.org.uk