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Small Business Digest


Five Lessons Learned In 2007, Being Applied in 2008

Over the past year, this newsletter’s parent has been talking to thousands of small business leaders in a variety of venues and reports.

From these encounters, Information Strategies, Inc.’s (ISI) editors have gleaned the following lessons as reported by these business leaders pertaining to 2007 and looking ahead to 2008.

1. Healthcare costs continue to rise but solutions are being adapted.
2. Energy costs are no longer dependent on supply/demand but market manipulation.
3. Employee loyalty is waning as employer commitments weaken.
4. The generational shift in ownership has begun and will accelerate in 2008.
5. Outsourcing and web-based solutions can work for business units but have drawbacks.

According to JoAnn M. Laing, ISI's President & CEO, business leaders are looking at their efforts in 2007 and making changes to their 2008 plans.

  1. Healtlhcare benefits costs still concern small business leaders.  They are being more proactive in reducing these costs either through pushing more of them onto employees; reducing benefits or, more appealing to their employees, better tailoring them to their particular workforce.  For instance, segregating out maternity benefits as the workforce gets older; splitting the workforce into older and younger groupings with differing offerings for each; and finally, stressing wellness programs as a way of reducing utilization while improving employee morale.
    Smaller employers are also offering cash incentives for employees who participate in wellness programs and/or opt for Health Savings Accounts to reduce costs (insurance premiums and taxes) as well as supplement retirement income.
    Recognition that offering healthcare is a competitive advantage for hiring and retaining better employees; as a result, cutting expenses elsewhere to continue to offer healthcare, despite the cost rising at a multiple of inflation.
    Over the past three years, financial incentives for employees to be healthier and to save for retirement are also appearing more and more frequently in ISI’s surveys and focus groups.
  2. The rise in energy costs is having a significant effect on enterprises of all sizes.  With these increases has come strong feeling that costs are being manipulated by financial groups for profit.  Finding ways of reducing energy dependence has risen high on many business leaders’ agendas.
  3. Loyalty within smaller enterprises is waning but from employees or employers.  In study after study, ISI has found a growing divide between employee and employer, something not shown in surveys taken just two years ago.
    Part of this trend can be traced to the disappearance of the craftsperson as a leading entrepreneur with more distributive types of businesses, where entrepreneurs act as middle-persons in the process (think e-Bay).
    Another factor is that outsourcing various aspect of the business, often only performing the core/critical functions in-house.  This approach does not lend itself to building core loyalties within the company, particularly when they are forced to deal with foreign or outside providers. 
    Given that the Internet is also allowing smaller firms to sell and source overseas, the personal relationships that make up business growth and continuity is fraying.
  4. The generational shift is happening to a greater extent than previously thought according to ISI’s research   This shift is changing the way smaller firms are doing business, planning for the future and taking on risk.  Smaller firms are running much leaner and depending more and more on IT driven solutions.  Growth and expansion are predicated on footprints much wider than the previous generation, helped in part by the Internet.  Finally, the newer entrepreneurs are taking more risks with their products, services and capital.
  5. The new generation of entrepreneurs is utilizing the Internet more both as a marketing venue expanding the footprint of their marketing efforts while at the same time using it to provide more of the infrastructure necessary to run a growing business.  Internet based applications are more and more the source of infrastructure within these new firms.

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