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Running a Good Business

Book 1: Why Good? Why Now?

By Claude Whitmyer and Gail Terry Grimes

Published by FutureU Press, a division of The University of the Future, LLC

Smashwords Edition

Copyright © 2011 by Claude Whitmyer and Gail Terry Grimes. All rights reserved.

License Notes: This ebook is licensed for your personal use only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you're reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of the author.

This ebook is not meant to be a substitute for legal or professional advice. It is the reader's responsibility to verify that the facts and general advice in this ebook apply.

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Table of Contents

Chapter 1: Do What You Love and Still Pay the Bills

- Do Well By Doing Good and Manage As If People Mattered

- Entrepreneurship Can Bring Both Security and Freedom

- Why "Good?"

- Why Now?

- Too "Good" to be True?

Chapter 2: Small is Beautiful

- Characteristics of Small Business

- Small Business By the Numbers

- What's the "Unemployment Rate" for Small Businesses?

- What Does the Immediate Future Hold?

Resources

About the Authors

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Chapter 1: Do What You Love and Still Pay the Bills

It takes a certain turn of mind, some unique skills, and a big dollop of realism to successfully run a business on your own. For many, a business of their own is not primarily a stepping-stone to a bigger enterprise, though you could use it for that. People run small, micro and one-person businesses because they prefer that form of business. They like the opportunities and freedoms it gives them -- to enjoy more agile and expansive personal lives, to express their political and ethical values, to play a larger role in their communities and, in some cases, to pioneer new fields or overcome personal challenges and adversities. But what do we really mean when we say "good" or "small?" In chapter 1 of this volume we'll go into detail about what makes up a good business as compared to an ordinary, run-of-the-mill enterprise and in chapter 2 we'll look in detail at various ways of measuring the numbers and characteristics of small businesses in the U.S.

As we continue through this volume and all the other books in the Running a Good Business series, you will learn step-by-step how to start or transform a business into one that is good in every sense of the word. You will learn how to . . .

. . . Select the best clients for you . . .

. . . Build a network of referrals for new business . . .

. . . Maximize and stabilize your income . . .

. . . Keep your books and manage your time . . .

. . . Find technical and emotional support when the going gets tough . . .

. . . Set up your workspace and choose technology . . .

. . . Handle your phone and mail efficiently . . .

. . . Price your products and services . . .

. . . Create a marketing plan that works . . .

. . . Serve your community . . .

. . . Take care of your employees . . .

. . . do all this, remain true to your values, and still find time for your personal life too.

Do Well By Doing Good and Manage As If People Mattered

You can

. . . follow your heart . . .

. . . do good . . .

. . . serve your community . . .

. . . and take care of your customers and workers. . .

. . . all without sacrificing your business bottom line.

You will learn how . . .

. . . to clarify your personal values . . .

. . . make your management style true to those values . . .

. . . and work with others in a mutually cooperative and supportive way.

You will also develop an awareness of . . .

. . . the "downstream" impact of your business activity . . .

. . .the freedom needed to take action at your own discretion to control that impact . . .

. . .and the necessity to work at a human pace rather than the pace dictated by machines.

The importance of life-long learning and the role of mindfulness in finding and maintaining meaningful work will also be covered.

Entrepreneurship Can Bring Both Security and Freedom

In our experience with nearly a thousand small business owners, having control over their work coupled with the joy and security that comes from expressing their internal vision are the two most frequently mentioned reasons why they chose to start their own business. Increasingly people are feeling the need to make a difference, to find meaningful work, to take charge of their lives. Here's what a few good businesses have to say about self-employment:

"A lot of my friends who are employed are scared to death their going to lose their jobs. I have a friend who has been unemployed for two years and can't find a job. She was laid off after 14 years. I feel there's a lot more security in being self employed. My business can go up and down but no one's going to fire me. I'll always have a job.

"I have control of my life and my time, the rhythm that seems right to me on a daily basis and I don't have to answer to someone else. Being self employed means I can say yes or no to projects I want to work on. As an employee no matter how many of your own projects your impassioned about there will always be the boss saying you gotta do this I'm assigning it to you.

"I think part of why other people think of running a business as such a risk is that it's not part of their life. To me it's a natural extension of what I do anyway. t doesn't feel like I'm working when I'm working. It's an incredibly good feeling to know that what I'm doing has an impact, that I am helping people achieve peace and health and harmony in their lives. I no longer feel the separation that I had when I worked for someone else and had a work life and a personal life and there was a line down the middle. Now that line is totally blurred. Its really nice. I feel like my life and my work are of a piece."

Patti Breitman, Book Agent

~*~

"Being self employed . . . once your successful . . . the real benefits are almost boundless. Even though there are none of the traditional benefits. There is no time and a half . . . no vacation pay . . . .there's none of that. I have to salt money away for that. But I personally wouldn't trade working on my property out here in the country . . . looking at the redwoods . . . watching the birds in the feeder in my wife's garden with my children running around, for anything. I don't know how I could have a better life really. I'm crazy about what I'm doing. I have my moments of frustration and then I think . . . would I rather be working for another lab and boy I get my priorities straight. I all of a sudden realize how great it is in spite of the few frustrations here and there. It could be a lot worse and it couldn't be a lot better."

Don Anderson, Anderson Dental Studio

~*~

"I think having a small and micro business is about control . . . control of your life and your time . . . not having to answer to someone else. While I was getting my masters degree I worked at a bookstore and for those three years I had the experience of being an employee. Although I liked being part of a group and the sense of having colleagues and going someplace and seeing people everyday . . . I hated the fact that when I was tired and ready to stop I couldn't. At 4:00 in the afternoon, when I was ready to exercise and go have dinner, I had to keep working. I was not efficient during that time and it didn't make sense. I couldn't pay attention to my own body rhythms . . . I couldn't work when I was best able to and most productive . . . I had to work according to their time clock and not mine.

"I see myself doing this forever. I love it. Its ideal. I just think I'm the luckiest person in the world when I wake up in the morning to have the flexibility . . . the control of my time . . . the time to write . . . the time to exercise in the afternoon .walk and do yoga. I never commute . . . I stay home if its gray and rainy and I don't want to go out . . . if I don't want to go to the office I don't. Its wonderful . . . who can complain?"

Dorothy Wall, Writing Coach

~*~

There are times almost everyday that I get this little chill that runs through my body and I go . . . wow! . . . I'm really enjoying this day . . . I'm having a good time . . . I make some money . . . I'm in control of my life doing what I want to do, not what someone else wants me to do. What more could you ask for? I feel like I've gotten to a place I've always wanted to be. Its great. Sure I could make more money if I went to work for Hewlett-Packard or someone like that, but why? The money is not what its all about. For me at least. Its about having that feeling every day. Where your driving down the road and your sitting there thinking 'I'm as happy as I can be and I'm working. I'm being a productive member of society and enjoying it and getting paid for it.'"

John Parry, Solar Works

~*~

"I have two kids and there's no question that my priority is to be a good mother. Everything about my work would probably be more if I didn't have children but it's very important to me to do a good job raising them. And I think compared to friends of mine who have other kinds of jobs and have the same juggling act to do I feel really lucky because I'm flexible in my hours. I can take the boys to a soccer game and get up a little earlier so I have my time in the studio or pick them up from the soccer game and then go out to my studio. I have that kind of flexibility which a lot of people who are more connected to an institution or some kind of job can't have."

Pam Glasscock, Fine Artist

~*~

"My work is very preventative and helps me be in tune with something bigger than myself. I guess it is the spiritual aspect of preventative medicine -- something more than you -- not just your little self. It does use the biological as a way to the spiritual but there is nothing churchlike about it.

"The fact that it is in service of something cogent that rebounds back to me and is also serving something bigger than myself is very satisfying. That satisfaction and the freedom of choice can also be hugely distressing. I'm learning how to enlarge my capacity for not knowing and being in chaos and turmoil. By my actions I learn what comes back very quickly and it's usually in a way that is salutary. It gives me a great sense of well being."

Robert Rovin, Rosen Bodyworker

~*~

Why "Good?"

"Good" is a perfect word to indicate the layers of meaning that exist with the idea of a "Good Business." A Good Business does good for the people who work there, the community where its located, the physical environment and the society it is a part of. But when a business succeeds economically we also call that a "good business" to be in. A third level includes the classical meaning of the phrase "good works" which refers to a social benefit. So a good business is also a source of such "good works" as philanthropy, community sponsorships, keeping economic transactions local so the money stays within the community, taking care of employees in a better way than businesses who claim "it's not personal, it's just business." Finally, a good business is a business you create because you are seeking personal fulfillment by following your heart.

To follow your heart requires that you consciously clarify your own personal values -- as does "doing well by doing good." This renewed awareness of what you value most will also help you to assess the impact your business is having on your family, your community, the environment and society in general. Understanding your impacts on your community will help you identify additional ways to serve it through your business. And clarifying your values requires that you also question your assumptions about management style and then learn how to make your management style true to those freshly clarified values.

This is a different than normal way of running an economic enterprise and is based on three key practices:

- Skillful Means
- Tradeskill
- Market Focus

Skillful Means

"Skillful Means is the art of working well. In business Skillful Means results in efficiency, productivity and profit. For the individual who applies Skillful Means while working, joy, satisfaction and a sense of meaning will emerge."

Arnaud Maitland
Dharma Publishing and Center for Skillful Means.

~*~

Skillful means in its most contemporary sense is a set of practices introduced by author, teacher, and entrepreneur Tarthang Tulku in his book: Skillful Means: Patterns for Success. We'll briefly list the elements of skillful means and return to them throughout the series, integrated into our discussion of running a good business. If you want to go deeper on your own, check out Tarthang Tulku's book.

In some respects, "skillful means" is a synonym for "everyday mindfulness." For most people, however, mindfulness is either:

- unheard of
- a very nebulous, difficult to grasp concept
- some kind of meditation practice

Skillful means, on the other hand, are a couple of dozen practices or skills that can be lumped into three main groupings:

- Awareness
- Change
- Sharing

Skillful means start with increasing awareness as a conscious practice in everyday life. This awareness then serves as the foundation upon which all the rest of practices of skillful means are assembled, learned, and executed on a regular basis.

Skillful means brings mindfulness practice into every aspect of your business/work life. It results in an increased capacity for getting to the root of the kinds of challenges and crises that infect everyday business interactions and it opens up new ways to build in steady, lasting improvements -- both in the way you do business and how treat those close to you.

In strengthening your skillful means you will learn better ways to manage time, money and information; improve your economic results, and increase your enjoyment of life.

Skillful means will empower you as an individual and thereby help you empower your work teams and organizations to achieve their highest potential -- continually improving collaboration, quality and results.

Awareness

Within the suptopic of awareness there are several specific practices including:

- Inner Freedom.
- Caring about work.
- Learning how not to waste energy.
- Mastering the art of relaxation.
- Cultivating purposeful appreciation for life's gifts.
- Enhancing your ability to concentrate.
- Developing a mindful relationship to time.
- Mastering the art of "working from the gut."

Change

Within change lies the practices of:

- Coping.
- Avoiding unnecessary efforts to escape.
- Overcoming resistance and resentment.
- Learning to let go when appropriate.
- Recognizing superficiality and purging it from our own characters.
- Withstanding manipulation -- both of us by others and by us of others.
- Coming to a deeper appreciation of competition and its true role in nature and commerce.

Sharing

Within sharing are additional valuable practices including:

- Cultivating deeper self-knowledge.
- Learning better ways to communicate.
- Encouraging cooperation.
- Taking responsibility and asking others to take theirs.
- Developing more humility while giving others more than their fair share of credit.

There is some overlap between skillful means and tradeskill . . . and no wonder. Becoming more aware, learning to deal with change, and developing the ability to give and receive support are all essential for good business success. You'll see as you learn more about tradeskill that the overlaps with skillful means lie primarily in three focused areas: energy, time, and cooperation.

Tradeskill

"While we recognize 'natural' musical and athletic abilities, business ability, on the whole is still considered something that you can acquire as an adult. But I believe tradeskill, like many skills, is easy to acquire when young, harder to get the knack of when you're older. Tradeskill is what you learn as a kid while running the paper route, working in your uncle's store, or starting an over-the-counter market in baseball cards. The smaller the business, the more important tradeskill becomes."

Paul Hawken, Growing a Business

~*~

Popular business magazines often carry glitzy profiles of real-life businesses that read like fairy tails -- success stories that shrink years of work into "started making cookies in her trailer and ended up with a multimillion dollar business." The emphasis is on making a pile of money, being in the right place at the right time, and "If you work hard and have a great idea, you, too, could be one of the people in these articles." The skill it takes to run a business is glossed over and remains a mystery.

Creating a good business and keeping it going involves what has come to be called "tradeskill." This is a term originally coined by Salli Rasberry and Michael Phillips in Honest Business to describe a whole cluster of behavioral attributes that are vital to running a business. For many tradeskills, if you have them, you learned them when you were young.

You can go to the most prestigious business school in the country and you won't find anyone talking about tradeskill. Chanting mantras, practicing visualization, or taking a workshop won't help you get tradeskill and it won't rub off on you by reading the Running a Good Business ebooks or any other book.

You picked up tradeskill from your parents or from someone you spent a lot of time with who was in business. Tradeskill is like riding a bike, ice skating, and being lovable: much easier to learn when you're young. You usually know whether you have tradeskill or not, just as you know if you have a "green thumb" or are good with children.

Tradeskill is quite different from being skilled in a trade. Being a talented dress designer doesn't mean you will succeed at running a dress designing business. Being a good cook does not ensure success in the restaurant business. Being a skilled carpenter does not automatically make you a competent contractor. Being a talented artist does not ensure you will succeed as a gallery owner.

Success in business is not an inalienable right bestowed at birth to every United States citizen. It's actually more like raising a child and getting married. While everyone feels they can do it, few actually know what "it" is. It is beyond the theme of these books to deal with marriage and child-rearing. But the fact is that not everyone can start a small or micro business and expect to succeed.

Running a successful small, micro or one-person business requires tradeskill. Tradeskill means that not only do you have to be competent in your field, you also have to be good at business. Of course if you don't have the knack of running a business it's alright to use trial and error as a way to learn, as long as you have not used your home as collateral or borrowed heavily from your in-laws.

Although most people learn what tradeskills they have when they are young, that's doesn't mean you can't make up for what you might lack. Elsewhere we share a self-assessment instrument that will help you figure out the tradeskills you have and those that are weak or non-existent. This self-assessment will also give you a chance to create a plan for gaining those you lack and strengthening the weak ones. (See the Supplement to Book 4: Self-Assessment for Tradeskill).

Market Focus

Market focus means finding and focusing on your appropriate market niche. Fortunately, the number of market niches for a "good" business is large. Over the last several decades, consumers have become increasingly sophisticated. Greater consumer awareness is leading to an increase in businesses that match goods and services to consumers who need them.

When it comes to market focus, the examples are many. Consider the oil traders who buy and sell drilling rights worldwide and deal in millions of dollars from their office at home. Or the arbitragers and bond dealers working on investment portfolios of their own, with just a telephone and a rented desk in the back of some brokerage office. These businesses are often major forces in the financial market. A handful of financial wizards, all one-person businesses, made a bundle by betting against the economy during the Wall Street disaster of the early 21st century.

In the political realm, a lobbyist in Washington, D.C., and a private consultant specializing in policy analysis are among the best paid and most influential people in our nation's capital. Both run quiet, behind-the-scenes businesses.

There are also the professionals such as realtors, consultants, accountants, speakers, trainers, free-lance editors, psychotherapists and tax preparers.

Some good businesses are retailers, for example, the flower shops, juice bars and shoe repair stores that flourish in many cities. There was a fellow in Seattle, Washington, who motored his little boat around Lake Union selling espresso and croissants to houseboats, ships at anchor, and shoreline offices. Gone on vacation lately. If so, you've likely encountered more than one resort-town hot-dog stand or gift shop catering to the many tourists who visit each year.

Traditionally, many service trades have been run as small, micro or one-person businesses including, housekeeping, beauty salons, shoe shine stands, tailoring, plumbing, carpentry, fortune telling, child-care providers and mechanics. The last 40 years have seen a proliferation of service providers as more and more women join the work-force and households with two earners have become the norm.

As Americans work longer hours and are under more stress many new market niches have been created in the personal service and alternative healing fields which include: herbalists, personal trainers, acupuncturists, aura and angel readers, channelers, and practitioners of bio-feedback -- not to mention certified massage therapists, yoga instructors and tai chi teachers.

Then there is the Internet. Not only helping small, micro and one-person businesses compete against larger companies, but providing new niches that didn't even exist during most of the last century. These new niches are often information related, with individuals and small companies learning how to sell what they know online, without ever leaving home. Additionally, there are thousands of small virtual teams of software programmers continually churning out new online apps hoping to be the next Google, Facebook, Twitter or Wikipedia.

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Why Now?

While the globalization of big business is leading to mass-produced items and generalized services, there is a simultaneous increase in the demand for products and services that are more suited to individual wants and needs.

On top of that, more and more people are voting for their personal values with their purchasing behavior. When -- in addition to best quality, best value for the price, and best customer service -- you offer goods and services within a context of shared values, many customers will choose loyalty to you, even over a lower priced competitor.

Consumers increasingly favor small and local as well. The "Good" Business tends to be both local and small. In today's parlance, we're talking about businesses with under 200 employees.

Some government agencies define a “small” business as any company with fewer than 500 employees. Other agencies allow big business to masquerade as “small” by providing technical loopholes in qualifying for government contracts. So it is critical, when you hear someone going on about small business, to find out just what they mean by small.

For the purposes of the Running a Good Business series, when we say “small” we mean under 200 employees. We use this limit primarily because our own personal experience has been that the issues that come up and the culture that develops in companies with more than 200 employees are of a qualitatively different kind and nature and benefit from significantly different strategies. In addition, manifesting all that we mean by “good” is more easily done when there are fewer than 200 employees involved. The boundary is not hard a fast, but at some point not far above 200 you will begin to notice the differences. (Footnote 1)

Small, micro and one-person businesses can be found nearly everywhere, and they earn a wide range of incomes as we described above under "Market Focus." A great many "Good" Businesses target local markets as well.

Add the evolution of the Internet in the last decade, providing both better tools for consumers to find what they want and better tools for businesses to let consumers know what they offer and you have a perfect storm for market focus as a major driving force in the success of any business. With Internet-based business transaction tools and a pack of global logistics companies like FedEx, UPS and DHL, a small business serving a local market can expand into additional local markets that have similar needs no matter where they are in the world.

What does it take to start and run a small, micro, or one-person business with a niche market focus serving local or global markets or both while remaining true to your values?

That is what the Running a Good Business ebook series at Smashwords.com is all about.

We'll go into greater detail about choosing your market niche in Book 12: Marketing, PR and Self Promotion.

Obviously, you have a lot of options. What the Running a Good Business series offers you that you won't find anywhere else is the additional focus on "good" as a superior business strategy. Throughout the series we will talk about the ways in which applying skillful means and tradeskill within the concept of market focus generate better results than the "business as usual" approach.

Too "Good" to be True?

Don't worry. You can be sure that there will be those who question your sanity if you decide to follow the "good business" path.

"Business doesn't work that way?" they'll tell you.

"You have to be hard nosed?"

"Are you an idiot?!? You can't cooperate with your competitors?"

"Take care of your workers? You've got to be kidding! They'll steal you blind!"

"You're a dreamer if you think that will work!"

And so on and so on and scooby dooby do!

Don't you believe a word of it! Those are the unreasonable voices of the disease of Resistance.

How do we know that we're right and all these voices are wrong?

First, our own experience tells us this. After 30 years as entrepreneurs and after working with hundreds, if not thousands, of small businesses, we've had a good taste of what works and what doesn't.

Second, people we respect tell us this -- people who have succeeded in their own lives and have given back to the rest of us by describing what's really possible and what steps to take to manifest your dreams. Let's listen to a few of these positive voices. Perhaps they will strike a chord with you as they have with us.

~*~

Author Steven Pressfield, best known for his book The Legend of Bagger Vance (which was made into a major motion picture starring Will Smith) has contributed a whole book on the subject of Resistance -- those nay saying voices we are all plagued by at one time or another. we highly recommend picking up his The War of Art: Break Through the Blocks and Win Your Inner Creative Battles." It's required reading for anyone wanting to run a good business. Here's Steven:

"Most of us have two lives. The life we live, and the unlived life within us. Between the two stands Resistance . . . Late at night have you experienced a vision of the person you might become, the work you could accomplish, the realized being you were meant to be? Are you a writer who doesn't write, a painter who doesn't paint, an entrepreneur who never starts a venture? Then you know what Resistance is.

"Resistance is the most toxic force on the planet. It is the root of more unhappiness than poverty, disease, and erectile dysfunction. To yield to Resistance deforms our spirit. It stunts us and makes us less than we are and were born to be."

Steven Pressfield
The War of Art

~*~

Jason Fried and David Hansson are co-founders of the highly praised 37Signals, a trailblazing software company producing products used by millions of people globally. When they started, those in the know told them they couldn't succeed without a lot of capital, a lot of people, and certainly not with a product that can only be accessed when you are connected to the Internet. Today, still working with only a couple hands full of fellow creative zealots their project and customer management software products are best sellers. Fail to add their book ReWork to your Running a Good Business book shelf at your own peril. Here's some of what they have to say:

"'That would never work in the real world.' You hear it all the time when you tell people about a fresh idea.

"This real world sounds like an awfully depressing place to live. It's a place where new ideas, unfamiliar approaches, and foreign concepts always lose. The only things that win are what people already know and do, even if those things are flawed and inefficient.

"Scratch the surface and you'll find these 'real world' inhabitants are filled with pessimism and despair. They expect fresh concepts to fail. They assume society isn't ready for or capable of change.

"Even worse, they want to drag others down into their tomb. If you're hopeful and ambitious, they'll try to convince you your ideas are impossible. They'll say you're wasting your time.

"Don't believe them (emphasis is mine). That world may be real for them, but it doesn't mean you have to live in it."

Jason Fried & David Heinemeier Hansson
Re-Work

~*~

Milo and Thuy Sindell are co-entrepreneurs (married couples who work together) who have founded two software companies and written several books. The End of Work As You Know It: 8 Strategies to Redefine Work on Your Own Terms is another one to add to the required reading list for your Running a Good Business Bookshelf. Here's a sample of what they say about the pursuit of happiness and feelings of self worth, two important counter weights to the disease of Resistance.

"When you think about it, you'll realize that you probably go through your day seeking to be curious, challenged, recognized, appreciated, creative, or satisfied. The culmination of these states of being may result in sporadic shots of happiness, but happiness as a constant state of being? Is that possible or even desirable? Think for a moment beyond happy. Consider what brings you "happiness." Look closer at how the various aspects of your life generate specific emotional responses. By discovering and living these aspects, you will gain much richer and more dynamic professional experiences.

" . . . you must believe that you are worthy of achieving exactly what you want. At the very least, you must temporarily suppress any undermining thoughts . . . If you don't believe you deserve great things, you'll find it tough to make them happen."

Milo Sindell and Thuy Sindell
The End of Work As You Know It

~*~

Ok, those voices are pretty motivating to me. If you don't feel the same way, then the ebooks in the Running a Good Business series are probably not for you. But just in case all you need is a little nudge, here's some more practical advice from Tim Ferris, the author of The Four-Hour Work Week.

Tim Ferris is a serial entrepreneur. By age 30 he spoke six languages, ran a multinational firm from wireless locations worldwide, and had been a world-record holder in tango, a national champion in Chinese kickboxing, and an actor on a hit television series in Hong Kong. He was nominated as one of Fast Company's "Most Innovative Business People" for 2007.

The title of Tim's best seller, The Four-Hour Work Week: Escape the 9-5, Live Anywhere, and Join the New Rich, sounds like one of those scammy "get-rich-quick" schemes when you first encounter it. But it's not a best seller because it appeals to wishful thinking. What Ferris provides in the way of practical advice is being applied right now by thousands of people globally and radically changing the way a lot of people think about work, jobs and self-employment. Here's what he has to say on the subject of "Challenging the Status Quo versus Being Stupid."

"Most people walk down the street on their legs. Does that mean I walk down the street on my hands? Do I wear my underwear outside of my pants in the name of being different? Not usually, no. Then again, walking on my legs and keeping my thong on the inside have worked just fine thus far. I don't need to fix it if it isn't broken.

"Different is better when it is more effective or more fun.

"If everyone is defining a problem or solving it one way and the results are subpar, this is the time to ask, What if I did the opposite? Don't follow a model that doesn't work. If the recipe sucks, it doesn't matter how good a cook you are." . . .

"It's lonely at the top. Ninety-nine percent of people in the world are convinced they are incapable of achieving great things, so they aim for the mediocre. The level of competition is thus fiercest for "realistic" goals, paradoxically making them the most time and energy-consuming. It is easier to raise $1,000,000 than it is to raise $100,000. It is easier to pick up the one perfect 10 in the bar than the five 8s."

"If you're insecure, guess what? The rest of the world is too. Do not overestimate the competition and underestimate yourself. You are better than you think.

"Unreasonable and unrealistic goals are easier to achieve for yet another reason.

"Having an unusually large goal is an adrenaline infusion that provides the endurance to overcome the inevitable trials and tribulations that go along with any goal. Realistic goals, goals restricted to the average ambition level, are uninspiring and will only fuel you through the first or second problem, at which point you throw in the towel. If the potential payoff is mediocre or average, so is your effort. I'll run through walls to get a catamaran trip through the Greek islands, but I might not change my brand of cereal for a weekend trip through Columbus, Ohio. If I choose the latter because it is 'realistic,' I won't have the enthusiasm to jump even the smallest hurdle to accomplish it. With beautiful, crystal-clear Greek waters and delicious wine on the brain, I'm prepared to do battle for a dream that is worth dreaming . . .

"The fishing is the best where the fewest go, and the collective insecurity of the world makes it easy for people to hit home runs while everyone else is aiming for base hits."

Tim Ferris
The Four-Hour Work Week

~*~

Ok. Are we sufficiently jazzed now? If not, but if you're still hoping for the best, it might be a good idea to put down this ebook and go find a copy of one of the books I've just quoted. Spend some time with one or more of them and come back here when you feel like you're energized and ready to take on the world!

~~~***~~~

Chapter 2: Small is Beautiful

To run a successful business of any kind, what people need most of all is good information -- time-tested -- real-world validated -- information that can guide them on the adventure of doing what they love while still paying the bills. It's our hope that the information we present in the Running a Good Business series will be this kind of information.

Many people feel their eyes glaze over when a lot of numbers are discussed. If you're one of those, you can just skim this chapter looking for the main points -- they are bolded to make them stand out.

Characteristics of U.S. Businesses

A large number of U.S. businesses are home-based and self-financed. They constitute a major segment within the economy and come in a wide variety of types. Owners can be of any education level, come from any age group, and most have no employees. Owners' incomes, the actual role they play within the business and the number of hours they work vary.

Home-Based Businesses

Older data from the U.S. Department of Commerce revealed a trend of fewer home-based businesses in the decades following the 1960s. In 1990 that trend began to reverse itself, no doubt in no small part from the increasing availability of the Internet beginning in that decade. The Federal Reserve Board’s report, “National Survey of Small Business Finances (1995),” found that small businesses were home-based 53 percent of the time. By 2002 the Department of Commerce reported half (49 percent) of all U.S. businesses were home based.

A U.S. Census Bureau report from 1997 revealed that self-employed individuals who had no paid employees operated three-fourths of all U.S. businesses. Top industries for home-based businesses were reported as:

- Professional
- Scientific and technical services
- Construction
- Retail trade
- Other services (such as personal services, and repair and maintenance).

Figure 1. Home-based businesses, 1960 through 1990.

Self-Financed Businesses

The Federal Reserve Board’s report, “National Survey of Small Business Finances (1995),” found that twenty-four percent of all new businesses in 1993 began with no outside financing. The remaining 76 percent received funding from traditional sources, such as banks, credit unions, and finance companies, or from family members or credit card advances.

The 1997 Census Bureau report mentioned above indicated top industries for self-financed businesses were:

- Accommodation and food services (79 percent)
- Manufacturing (78 percent)
- Wholesale trade (74 percent)
- Retail trade (72 percent).

Nearly 3-in-10 (28 percent) of all entrepreneurs started or acquired their business with no capital at all.

Nearly 1-in-10 U.S. businesses -- both employer firms and nonemployer firms -- were started by owners who used personal or business credit cards to finance the startup or acquisition.

By 2002, a U.S. Census Bureau report on characteristics of businesses and business owners revealed that people using their own money or family assets for business startups included 77 percent for businesses with paid employees and 59 percent for businesses with no paid employees. This amounts to a 180 degree turn around from the Federal Reserve's 1995 findings and coincides with an apparent reduction in business loans by banks. [http://www.census.gov/newsroom/releases/archives/business_ownership/cb06-148.html]

Small Businesses are Innovative

According to a 1997 report of the U.S. Census Bureau small businesses produce over half (55 percent) of all innovations.

Small business owners can have any education level, be of any age, but most have no employees

Education Level of Small Business Owners

Small business owners come from every education level.

In the 2002 report, 64 percent of business owners had at least some college education at the time they started or acquired ownership in their business, 23 percent had a bachelor’s degree and 17 percent had a graduate degree. While most of the entrepreneurs surveyed had some college, just over 1-in-4 owners had a high school education or less.

Age of Small Business Owners

Most small business owners are at least 25 years. Eight-four percent are more than 35 years of age.

In the 2002 Census Bureau report cited above, age of the respondents was almost evenly split into three groups:

- Thirty-one percent of owners were more than 55 years of age

- Twenty-nine percent were between 45 and 54

- Twenty-four percent were between 35 and 44

Only 2 percent of owners were less than 25 years of age.

These data were collected prior to the current recession and the more recent boom in Internet, software and other tech startups by a new wave of young people. It will be interesting to see the report on new data from the 2010 census.

Small Businesses Create Jobs for Women, the Young and Older People

According to the 1997 report of the U.S. Census Bureau small businesses are most likely to generate jobs for young workers, older workers and women. They provide two-thirds (67 percent) of first jobs.

Veterans as Business Owners

Fourteen percent of business owners in 2002 were veterans; 73 percent of those operated with no paid employees. Nearly 7 percent of veteran business owners were disabled as a result of injury incurred or aggravated during active military service.

Disabled as Business Owners

Thousands of people with disabilities have been successful as small business owners. The 1990 national census revealed that people with disabilities have a higher rate of self-employment and small business experience (12.2 percent) than people without disabilities (7.8 percent). The Disabled Businessman’s Association estimates that 40 percent of home-based businesses are operated by people with disabilities.

The University of Montana Research and Training Center on Rural Issues for People with Disabilities has documented that entrepreneurs with disabilities have successfully operated a wide variety of businesses: Accounting Services, Air Conditioner Repair Service, Auction Service, Auto Body Repair Shop, Bakery, Bicycle Shop, Boat Making Shop, Child Care Service, Chiropractic Practice, Contract Services, Counseling Service, Farming, Janitorial/Maintenance Service, Piano Refinishing Service, Real Estate Office, Restaurant, Free-lance Writing, Used Clothing Store, Weed Abatement Service and Welding Shop. The type of business that a person -- disabled or not -- can operate is limited only by imagination.

Owners' Income, Role and Hours Vary

When it comes to depending upon a business for income, 70 percent of business owners with employees reported that their business is their primary source of income, compared to 44 percent of nonemployer firms.

More than half of business owners reported their primary function was managing day-to-day operations and producing their business goods and services.

When it comes to putting in long hours, more than half the owners of firms with paid employees reported working overtime (more than 40 hours a week, on average). Only 26 percent of owners of nonemployer firms reported they worked overtime. In fact, 43 percent of owners of nonemployer firms reported working less than 20 hours a week on average, compared to 20 percent of owners of firms with employees.

Obviously, it may not take all kinds, but there are all kinds of small, micro and one-person businesses.

Small Business By the Numbers

Uncle Sam generally defines a small business as one with fewer than 500 employees. In reality, most business are much smaller than that, but their numbers are huge.

In 2007, the Census Bureau reported slightly more than 23 million sole proprietorships. [http://www.census.gov/compendia/statab/cats/business_enterprise/sole_proprietorships_partnerships_corporations.html]

In 2008, the Bureau of Labor Statistics counted a total of 27,281,452 firms. Of those, 5,930,132 employed 120,903,551 people. The remaining 21,351,320 firms had no employees (Table 1). [http://www.bls.gov/data/#employment]

Table 1. Number of Non-Employer Firms in the U.S. (2008).

The 2008 number was derived using different calculations than the 2007 number, but the point is that of roughly 23-27 million businesses in the U.S. in 2007-2008, roughly 1 in five had employees. The other 4 did not, making one-person businesses the single largest category of business by size. Further to the point, as Figure 1 illustrates, nearly half of all businesses had fewer than 500 employees.

Figure 2. Businesses categorized by number of employees.

SOURCE: U.S. Census Data: 2008 County Business Patterns. [http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=CB0800A1]

Table 2 below contains the data from which Figure 1 was derived and illustrates with actual numbers just how many truly small businesses were in the U.S. in 2008 -- the year prior to the moment of recession-driven peak unemployment in 2009. Updated census data will be available soon, but even if the recession impacts smaller businesses disproportionally (which is likely) the numbers and ratios are likely to be similar.

Table 2. Number of Employed by Size of Employer Firms in the U.S. (2008).

In 2008, the U.S. Bureau of Labor estimated 330,000,000 people were citizens of the U.S. Of these, just under half are considered to be "in the workforce," or somewhere around 165,000,000. With close to 10% as the official unemployment rate, that would mean that just under 150,000,000 people were actually working in 2008, the year just prior to the peak of 9.8% unemployment experienced in 2009. Labor Bureau statistics for 2008 report 120,903,551 employees. Summed with the 5,930,132 business owners reported, the total number of workers would be 148,185,003 -- not far off from our nearly 150,000,000 estimate. (These numbers don't include any illegal immigrants, of course.)

Using the combined total of workers and employers of 148,185,003, the 27,281,452 business owners reported would represent nearly 18.4% of all American workers. In other words, nearly 1 in 5 people in the workforce were self-employed in 2008.

Of the 120,903,551 individuals employed in 2008, just about half (59,693,991) were employed within companies with fewer than 500 employees. Less than a third of the workforce actually worked for the large corporations that dominate our contemporary understanding of business and employment, with fewer than a couple thousand companies having more than 5,000 employees. Well over five million businesses have fewer than 20 employees. [http://www2.census.gov/econ/susb/data/2008/us_state_totals_2008.xls]

The reality of today's workplace is that most people work in a company with many fewer employees than we have been lead to believe is the norm. A full 10% of the employed are involved with a workplace with fewer than 10 employees and a full third of the total employed work in a company with only 20 to 500 fellow employees.

However, the odds are often and increasingly against small, micro and one-person businesses. They are marginalized by the government and crowded out by competition from the large. Big is more powerful -- more dangerously so -- than ever before. Small has to fight hard to hold on. It's seemingly miraculous, but -- against all odds -- they do it.

What's the "Unemployment Rate" for Small Businesses?

Table 3 uses data from the U.S. Department of Labor. Obviously they count differently than the Census Bureau as they show, for example, only 10.1 million "businesses" in 2008 compared to the Census Bureau's 27,281,452 business owners. Presumably, many of the Census Bureau's owners were partners or members of corporations, bringing the count of individual business entities down.

Regardless of which number you use, if you imagine that in business the equivalent to an "unemployment rate" would be the shrinkage in the number of self-employed from one year to the next, then for the entire population of "self-employed" as measured by the U.S. Department of Labor, the highest annual "unemployment" rate -- since the peak of 10.6 million self-employed in 2006 -- is the 3.06% reported for 2009 (See Table 3). This is far lower than the unemployment rates for workers during that same period (See Table 4).

Table 3. The "Unemployment Rate" for Small Business. [http://www.bls.gov/webapps/legacy/cpsatab9.htm]

So, sure. If you start a business, it might not work out. But the same is true of getting a job and even more so at the present moment.

One new (and perhaps more indicative) measure of "recovery" from the depths of the recession might be the reduction in "unemployment rate" for the self-employed.

On average, the U.S. Department of Labor reported an increase of 100,000 self-employed individuals per year from 2001 through 2006, before the recession driven decline began in 2007. At that rate, it would take a decade to return to the 2006 peak number of total businesses reported.

The Bureau of Labor Statistics also reports that from 2006 to 2007, there was a decline in total number of businesses of 200,000 (that is, 200,000 businesses were "lost") or 1.92%. From 2007 to 2008, the decline in the total number was 300,000 or 2.97%. From 2008 to 2009 it was also 300,000, but the smaller total number of businesses for that year means that the rate of decline was 3.06%, representing the peak of "unemployment" for the self-employed for the period in question (2006 through 2010). An additional 100,000 businesses were lost between 2009 and 2010 or a rate of 1.03%. Whether considering the rates or the absolute numbers, it seems that we may have experienced an early indication that the losses from the recession have slowed down. We'll know for sure when we can see the data for 2010 to 2011. The most recent reduction in the number of businesses lost may be a favorable sign that the self-employed are "unemployed" at a lesser rate than the workforce. (See Tables 3 and 4.)

A similar trend toward "recovery" can be seen in data for real unemployment. Starting at a low point of 4.7% in 2001 unemployment went up and down from 4.6% to 6.0% until the huge leap to 9.3% in 2009. In 2010 the rate declined slightly to 8.7%, another signal of a possible slowing of the recession.

Table 4. Unemployment rate, 2001 through 2010.

What Does the Immediate Future Hold?

Could these two sets of data herald an end to the recession? It seems that we may be headed for a recovery period -- housing prices not withstanding.

Obviously real, tangible assistance from State and Federal agencies could substantially increase the rate of recovery. Such assistance has always been in short supply and what little there is gets gobbled up by larger businesses masquerading as "small" by taking advantage of the vagueness in the definitions of "small business" used by most government agencies. In addition, a lot of lip service is paid to "small business as the engine of the economy" but very few tangible, helpful programs are out there.

Case in point: the so-called "bailout" or TARP money was originally earmarked for business financing. Unfortunately, the banks that were forced to take that money chose to sit on it rather than loan it out and there were no teeth in the agreements or regulations governing those capital infusions. The Feds were powerless to enforce that original intent. Two strikes against small business.

Even SBA loans are a problem. They aren't really loans from the SBA. Rather, they are loans from a bank that are guaranteed by the SBA. So first you have to find a bank who will make the bulk of the loan. Even then, the application process can take 6 months to a year, far longer than most small businesses can survive when they actually need that kind of loan.

Major banks are more conservative than ever regarding business loans. They are even systematically reducing personal lines of credit and credit card balances which have been the main sources of working capital for small businesses for the last couple of decades.

Despite these challenges, the time may be right, once again, to build a business of your own, but don't expect too much help from the State or Federal government.

The good news, however, is that small, micro and solo entrepreneurs are a resilient bunch and now many of them have technology on their side. (The Internet is the great business equalizer -- possibly greater than any technological advancement in history.) The small a business the more quickly it can move to respond to changing markets. Small, micro and one-person businesses seem to have an innate ability to adapt -- when they have the resources to do so.

In our current dark days of recession, true economic recovery rests with each of us -- the founders and owners of the truly small business. As you will learn, if you don't already know, everyone has a vested interest in the success of the smallest enterprises among us, whether as customers, citizens, or budding entrepreneurs ourselves. In reality, small businesses do produce most of the jobs in this country as well as the lion's share of the gross domestic product.

According to the 1997 report of the U.S. Census Bureau, the nation’s 17 million small businesses that year constituted 99.7 per cent of all employers, employed 52 percent of private workforce and accounted for 51 percent of the nation’s sales. Industries in which small-businesses play a dominant role provided 11 million plus new jobs between 1994 and 1998 -- virtually all of the new jobs created during that time period.

Although people often repeat the folk wisdom that that 80 percent of all small businesses fail within five years, statistics from the U.S. Census Bureau reveal a different story. The Census Bureau reports that 76 percent of all small businesses operating in 1992 were still in business in 1996. In fact, only 17 percent of all small businesses that closed in 1997 were reported as bankruptcies or other failures. The other terminations occurred because the business was sold or incorporated or when the owner retired.

~*~

Sidebar: We are aware that in our use of several different sources, we report numbers that seem to lack consistency across time, such as the Census Bureau claiming 17 million businesses in 1997 and the Labor Department reporting 106 million in 2006 as the "peak" of the number of small businesses. Someday we'll take the time to go figure out where these inconsistencies come from and what that means for real numbers. In the meantime, suffice it to say that whichever set of numbers you pick, small businesses still account for an important proportion of the economy and produce the majority of jobs.

~~~***~~~

Footnotes

(Footnote 1) In the past decade there has been a growing controversy over the idea that there is a natural maximum number of individuals in social networks because the human brain can’t handle more than 200 relationships at a time. If this idea interests you, check out “Dunbar’s Number” (named after British anthropologist Robin Dunbar) in an Internet search engine such as Google. This number is supposed to have a range of 100 to 230 and an average of 150.

The scientific studies Dunbar looked at measured the group size of a variety of different primates. Dunbar then used that data to correlate those group sizes to the average brain sizes of 36 primate species to produce a mathematical formula for how the two correspond. Using the formula he derived, he predicted that 147.8 is the "mean group size" for humans, which matches census data on various village and tribe sizes in many cultures.

Prior to the popularization of Dunbar’s number by lay social commentators, anthropologists, sociologists and community organizers had noticed that there did seem to be a limit of about 200 individuals in various social groups ranging from indigenous clans to personal address books. As we said, the idea was that you couldn’t really “know” more than 200 individuals at a time.

W.L. Gore, Inc., the original inventors of GoreTex, built a very successful business model using this number. Even though the Gore company had many divisions that added up to thousands of employees, they used a few simple rules to govern when to open a new plant:

(1) No more than 10,000 square feet.
(2) No more than 200 people.
(3) No more than 40 desks.

When the needs of a particular plant exceeded these numbers, they split off like a dividing amoeba and formed a new group.

Learn more about W.L. Gore's unique approach to management at [http://www.fundinguniverse.com/company-histories/WL-Gore-amp;-Associates-Inc-Company-History.html]

~~~***~~~

Resources

These resources are also available on a hyperlinked web page that will allow you to jump right to the resource or it's Amazon.Com description (when it's a book).
[http://www.meaningfulwork.com/running-a-good-business/]

~*~

Caveat: You can visit the Resource page on our website, click on any of the links for books, and then make a purchase. We get some pocket change -- about 5% -- as a reward from Amazon for having set up the page. That will help defer production costs a little. However, if you'd prefer to purchase direct, bypassing our commission, simply visit Amazon.Com on your own and use their search engine to look up the titles. The price will be the same, but we won't get a commission. In its infinite wisdom, Amazon has canceled our commisions because of a new California law about sales tax. The links will still work, but we won't get any revenues from this point forward.

~*~

We have long been thought leaders in the movement to bring back purpose and values to the workplace as demonstrated in our writing, including our books:

Mindfulness & Meaningful Work: Explorations in Right Livelihood (Parallax Press, 1994), through which we helped introduce the idea of "right livelihood" to the English-speaking world.
[http://meaningfulwork.com/books/mindfulness_meaningful_work.html]

Running a One Person Business (With Salli Rasberry. Ten Speed Press, Second Edition, 1994). We were among the first to call for a values-based approach to entrepreneurship.
[http://meaningfulwork.com/books/running_a_one_person_business.html]

In the Company of Others: Making Community in the Modern World (Tarcher/Putnam, 1993) where we were early champions of the practices of "circles of intimacy" and grassroots marketing that have come to be known as "degrees of separation," "social networking," and "social marketing." Please visit an example of one of our social networks at, http://briarpatch.ning.com and read about its long, fascinating history at http://www.briarpatch.net.
[http://meaningfulwork.com/books/in_the_company_of_others.html]

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