3 Things Small Businesses Can Learn From Google Product Failures

3 Things Small Businesses Can Learn From Google Product Failures
TechNet Subscribers, the End is Near
The Ugly Truth About Small Business
New York State: Still the Worst For Small Business
69 Percent of U.S. Entrepreneurs Start Their Businesses at Home

Posted: 02 Jul 2013 04:00 PM PDT

People tend to give Google a hard time for trying out so many different products – many of which eventually go to the chopping block. Google Reader is the latest product to be discontinued, leaving many marketers scrambling to find an alternative RSS reader.

We complain when a product we've grown attached to gets retired, and we've even laughed at some of Google's previous attempts at social media. (Remember Google Buzz? There's not much to remember.) But the truth is, failure is crucial to the success of all companies, big and small. Former Google CEO Eric Schmidt is famous for saying "We celebrate our failures." Below are three reasons why your small business should celebrate them too.

What You Can Learn From Google Product Failures

1. Companies Should Focus on What They Do Best

You can't please all of the people all of the time, and in business, you simply can't try to do everything. Having too many products in your pipeline is a distraction from your core purpose.

If you can't explain what your company does in one sentence, you may be trying to do too much. Customers tend to love companies that do one thing – extremely well. Once you've figured out what that one thing is, you should put all your focus on that single vision. Because it will probably take everything you've got to make it succeed.

When I founded WordStream, the company vision wasn't clear. People weren't sure exactly what my product did. That was a failure on my part; I wasn't communicating the value. So we did an exercise to refine and define our core purpose and values as a company. This helped clarify what really makes us stand out in the market, which in turn helps the leadership team focus on what really matters.

2. Shutting Down Less Successful Efforts Frees Up Resources

A side effect of focusing your product stack or reining in your service offerings is that you free up resources to put back into your core product.

For a tech company, this means that development and engineering resources can focus their valuable time where it really counts. This is also true for any kind of small business you might run. You have limited staff and a finite number of hours in the day. So it's imperative that everyone you hire is able to put their time and effort into projects that will contribute to your bottom line.

I used to actively market and sell a Keyword Research Suite – a set of keyword tools at a much lower price point than our main PPC management platform. Remember when I said you can't please everybody? That's exactly what I was trying to do. I wanted to have a product offering for businesses that either weren't doing PPC or that couldn't afford PPC software. But in the end, it was a distraction from our core purpose and it was eating up our valuable development resources. So today, it's no longer our focus and it's one of the best decisions we've ever made.

3. Failure Is a Learning Opportunity

It's easy to lose perspective when you're running a small business. Believe me, I know. Some days I feel like a million dollars and other days I feel I owe millions of dollars. But I think the beautiful thing about small, periodic failures is that they provide valuable learning opportunities which in turn is one of the most exciting aspect of running your own business and motivates me to do better next time.

Google tries and fails at many things and it's helped them get where they are today. If they were afraid to try and fail, we wouldn't have Gmail or Google Maps. But, of course, not every Google venture worked out that well. Below, I celebrate some of the many Google products and services that eventually had to die to make way for other technologies.

[Click for full size version]

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TechNet Subscribers, the End is Near

Posted: 02 Jul 2013 01:30 PM PDT

For years, Microsoft has offered a huge sampling of software for review at a very reasonable cost. Called the TechNet Subscription program, it’s been in place since 1998.

For just a few hundred dollars a year, the subscription program offered users the opportunity to, as the service’s motto explains “confidently evaluate Microsoft software and plan deployments.” But yesterday, in a message to TechNet users, Microsoft explained it would be discontinuing the program.

Microsoft enthusiasts could use the subscription as a way to get cheap Windows client and server upgrades and licenses, reported Ed Bott at ZDNet. For businesses, the subscription was a good opportunity to cost effectively evaluate software before buying.

The subscription did, unfortunately, invite some piracy on the part of subscribers who would get a hold of the review software and then resell “keys” used to access it at a huge profit. It’s unclear whether piracy concerns played a role in Microsoft’s decision or whether moves toward cloud-based software solutions might have more to do with it.

Blogs and support forums will remain giving help to users, Microsoft announced. But no subscriptions will be available after August 31, 2013. The subscriptions generally run for a year.

So if the TechNet Subscription program is something you’ve used regularly to evaluate software for your business, better take note.

Will you be affected at all by the discontinuation of this Microsoft service?

Image: Microsoft Technet

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The Ugly Truth About Small Business

Posted: 02 Jul 2013 11:00 AM PDT

business entrepreneurship

People who know me know that I love being an entrepreneur. There is absolutely nothing like the thrill of taking something that you created out to market. It's a ton of fun, it's challenging and it's so rewarding to know that your future is entirely in your own hands. I really don't know that anything helps you develop your own sense of self in quite the same way as creating your vision and then working hard to ensure its success.

That said, if my nearly-grown son were to come to me and say he wanted to start his own business, I'd have to balance my passion for entrepreneurship with some harsh realities that I think every small business owner needs to know before getting started. I think that the challenges of starting and successfully growing a small business fall into three categories.

The Truth About Small Business Entrepreneurship

Two Years and No Pay

We all know that starting a business is often about bootstrapping cash. What most people won't tell you is that for a long time you will make more money an hour flipping burgers than you will selling your product or service. You are in for a rude awakening if you are expecting to make any money in the early days – meaning the first two to three years. This is the time frame when you live off of your savings, so to get started, you have to:

Have a savings to live off of.
Be very comfortable tapping into it for general living expenses.

Why so lean? Because you can't get to selling or marketing your product until you wade through a huge number of administrative tasks that must be completed. Plan to spend a lot of time on things like creating your website, finding office space, balancing your lean budget and doing strategy planning.

To drive home this message, I'll share a personal story. When I started my business my family went from living comfortably to barely scraping by on $2,000 a month. We had four kids, our credit cards were maxed and we literally had nothing in the fridge. My mother saw how bare the cupboards were and made an emergency Costco run to ensure we'd eat. I had the delusional belief that our company would be a success, but hadn't planned for just how lean it would be in those early days.

The point: Know you'll be strapped – for a while – and plan for it.

Relationships on the Back Burner

It probably won't surprise anyone, but having no food in the house or disposable income can put a strain on your most cherished relationships.

What might surprise you is how consuming starting a new business is – it occupies everything you have, which means there's not much left over for the people you care for and love. So, not only is your spouse dealing with the fact that you don't have enough money to pay the bills, they have to also cope with the fact that you are spending all your time developing the business. And you have to spend this time…the business cannot survive without you pouring all of yourself into it. Don't underestimate how much of a strain that can take on your loved ones and friends.

You have to understand, I have a great, super supportive wife. But I remember very clearly the day when she reached her limit and asked me to use my MBA and law degree to get a 'real job' and take care of my family. I didn't want to, but I saw the strain my passion for entrepreneurship was putting on my family and I agreed to quit. In truth, I went to work that day intending to spend my time searching for a new job but was sucked into work and forgot to look at job sites.

Luckily, my wife had a change of heart and I didn't quit – but it was rough.

Drained Emotional Reserves

Like I said, entrepreneurship is thrilling, especially when you see yourself create something from nothing. There is, however, a dark side to being so engaged in your work – you can become totally consumed by it. I mean, I was so caught up in it that I forgot to look for a new job when my wife asked me to.

The “all-in” nature of starting up your own business has you thinking about it all the time. It isn't just the time and energy spent thinking about your business. It's the mental and emotional strain you endure. You have to know going into it that every insecurity you have will eventually surface. Whether you bring them there, or someone you care about who has reached their max does, you are going to have to face some ugly thoughts about yourself. When you take the fear, uncertainty and doubt and combine those with a negative customer experience or a spouse who is questioning your delusional perseverance, you'll get a recipe for wanting to quit.

Don't quit. I believe the psychological battle we face as entrepreneurs is one of the saddest and most inspiring things to study. Sad when the entrepreneur succumbs to the psychological warfare; inspiring when the entrepreneur triumphs over it.

My dad taught me something as a teenager that I didn't pay attention to until I was buffeted by the challenges of starting a business:

Thoughts become words.
Words become beliefs.
Beliefs become actions.
Actions become habits.
Habits determine our outcomes.

I've found this lesson to be true. As entrepreneurs, we have to master our thoughts. When we do, we create amazing outcomes. It's not the formula for solving every emotional challenge you have, but it goes a long way toward getting you on the right path.

Keep Focused, Plan and Improve Your Odds

Most small businesses don't make it. I'm lucky that ours did. Even though it took a toll on my relationships, almost wiped me out financially and practically crushed me mentally and emotionally, I wouldn't trade it for the world.

Don't be afraid of the challenges as you start and grow your small business. Instead, plan, anticipate and prepare. Make sure to remember that every day you make it increases the likelihood that you'll survive.

Thoughts Become Beliefs Photo via Shutterstock

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New York State: Still the Worst For Small Business

Posted: 02 Jul 2013 08:00 AM PDT

new york state small business

Politicians like to profess their support for business, especially small business. But their claims don’t always stand up to careful scrutiny.

Take Gov. Andrew Cuomo’s recent claim that his administration is doing everything it can to reverse the “perception and reality” of New York as an anti-business state.

In an op-ed at Syracuse.com earlier this month, Cuomo wrote:

We’ve begun to reverse that trend with a fiscally responsible financial plan, which includes the Property Tax Cap, the largest middle-class tax cut in 60 years, and limiting state spending to 2 percent.

Among other accomplishments, Cuomo mentioned:

New York Open for Business, a $140 million ad campaign that tries to portray the state as a great place to do business.
10 Regional Economic Development Councils created by Cuomo to plan for economic development and spending so far more than $1.5 billion for job creation and community development, and
The NYSUNY 2020 initiatives, including an $80 million capital investment plan for the state’s universities.

More Spending Instead of Tax Cuts

This year, Cuomo also says the state will create a $50 million venture capital fund to invest in commercialization of technologies developed in the state’s research institutions. The governor also recently signed into law a new Tax Free NY initiative.

No, this doesn’t mean there aren’t any more taxes in New York state. The new law creates special zones around state university campuses where businesses will pay no taxes for the next 10 years.

The problem, observed the New York Post recently, is that the governor and the state legislature still haven’t cut the state’s bloated $143 billion budget. And they say they can’t lower personal income tax by even 1 percent. In fact, as the Post reports, Cuomo actually raised the top income tax rate almost two percent.

Where Things Stand

In 2011, the Tax Foundation, a non-partisan Washington D.C.-based research group, found New York state to have the worst tax climate for small business in the U.S. And the foundation’s latest index in 2013 shows nothing has changed.

Politicians seem to think that added state funding grows businesses. But small business owners know only cutting taxes and spending can do that. Below is an ad from the state’s New York Open for Business campaign. Knowing what you know about New York state’s tax laws, would you open a business there?

Gov. Andrew Cuomo Photo via Shutterstock

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69 Percent of U.S. Entrepreneurs Start Their Businesses at Home

Posted: 02 Jul 2013 05:00 AM PDT

Home based businesses

If you operate your business from home, you’re not alone. A recent survey of U.S. businesses indicates the majority of entrepreneurs do the same.

And that’s not just in the startup phase either. According to the 2012 Global Entrepreneurship Monitor report (PDF), more than half of U.S. entrepreneurs continue to operate their businesses from home long after those businesses are up and running. The study examined Total Entrepreneurial Activity (TEA) across industry sectors in the U.S.

It’s also a mistake to think of the majority of these owners as so-called solopreneurs who never grow their businesses beyond a staff of one. Study authors observed:

Home-based businesses may evoke an image of the sole entrepreneur working out of a spare bedroom or garage, perhaps with one or several cofounders. Somewhat surprisingly, though, only one-fourth of the entrepreneurs surveyed stated they had no employees working for their businesses. Given the high prevalence of entrepreneurs operating at home (two-thirds of TEA), this finding suggests that many actually had employees in their home-based businesses.

The sense of awe in that statement — that home based businesses “actually” have employees — is interesting. It shouldn’t be surprising that so many businesses are being run out of entrepreneurs’ homes. Today in many businesses, work is done “virtually.” Workers’ technology (computers, mobile devices and Internet connections) is much more important than their physical workspace, especially in knowledge businesses.

Stats on Home-Based Businesses and Entrepreneurship

Here are some additional factoids of interest from this fascinating study:

It costs less than you might think to get a business off the ground – According to the study, entrepreneurs required a median of $15,000 to start a business. On the one hand, that’s a lot. But on the other hand, it’s an amount that many people in the United States can save up or raise from family.

Most startups are self-funded or family/friends funded – The vast majority of startup funds (82%) came from the entrepreneur himself or herself, or family and friends.

Venture capital is rare - Only one in 1,000 entrepreneurs in the United States receive venture capital funding, according to a finding cited from an earlier study in 2009. In other words, forget about venture capital. You’re better off spending your time growing your business than searching for VCs.

Entrepreneurship is not limited to a certain age group – Roughly 15% to 20% of adults across all age groups are entrepreneurs.

Entrepreneurship does follow age patterns, however – Young entrepreneurs have the highest intentions to start a business, with 30.5% saying they intend to start one. The intention to start a business drops during mid-career, and then starts rising again at age 65 and up.

Women entrepreneurs are more likely to have home-based businesses — Among startup businesses that operate out of the owner’s home, 72% are operated by women — versus 61% of men. Among established businesses more than 3 and a half years old, 68% of women still operate the business from home, versus 53% of men.

Senior citizens who continue to work tend to be entrepreneurs – Many seniors, of course, are retired. But of those still working, more than 42% run established businesses (i.e., businesses more than 3 and a half years old). About 10% are starting or running new businesses of less than a few years old. And over 25% intend to start a business. So if you want to stay actively working in your senior years, consider your own business.

Outsourcing, family help, volunteers and part-time workers are sources of labor – Over 20% of business owners say they employed family members, had unpaid help (often family members), or part time employees. And 30% outsource some activities.

Businesses not only are started from home, but tend to be run from them – The 2012 survey says 69% of businesses now start in the home. And 59% of established businesses more than 3 and a half years old continue to operate from there.

More businesses are consumer businesses than any other type — We all know home businesses can include services like freelancing, independent contracting, consulting and virtual assistance. But the 2012 study shows only 33% of all businesses surveyed fall into this category.

Another 41% of businesses include companies in the consumer sector. This could include hotels, restaurants or real estate. But it could also include Internet businesses based from home like eCommerce.

Other businesses covered in the survey are “extraction” businesses concerned mainly with natural resources like farming, mining and forestry and “transforming” businesses like manufacturing. These are usually capital intensive and so unlikely to include many businesses started in or operated from the home.

The study did not break down how many of each industry sector specifically are home based, however.

Why This Study is Important

The U.S. study was completed by researchers at Babson College and Baruch College who interviewed about 6,000 respondents.

Work was sponsored by the Global Entrepreneurship Research Association including Babson College, London Business School and representatives of the Association of GEM national teams. The Global Entrepreneurship Research program aims to describe and analyze entrepreneurial processes within a wide range of countries including the U.S.

This study tends to look broadly on the economic contributions of entrepreneurs who otherwise get short shrift in standard government statistics. For instance, recognizing the prevalence of home-based businesses is important, and recognizing that they employ people and outsource services is also important. Recognizing that outsourcing helps grow employment in other companies is another positive point.

The way entrepreneurs run businesses in this country is very different from the government’s rigid (and limited) ways of measuring employment and economic impact. It’s good to see a stellar source like the GEM Report and Babson calling attention to some of these structural changes.

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