Wednesday, February 26, 2014

Facebook Ads May Encourage Fake Likes, Report Says

Facebook Ads May Encourage Fake Likes, Report Says

Link to Small Business Trends

Facebook Ads May Encourage Fake Likes, Report Says

Posted: 25 Feb 2014 02:30 PM PST

fake likes on facebook

Science website Veritasium has put together a compelling report suggesting that Facebook turns a blind eye to fake Likes. But more importantly, in an indirect way, it suggests Facebook  advertising products may encourage them.

In other words, if you buy official Facebook advertising, you could well end up with a large number of disengaged “fans.” Many of these  may come from countries not within your target market. Others may actually be fake Facebook accounts altogether. These “fans” come from websites such as We Sell Likes, and from countries such as Indonesia, Bangladesh, the Philippines and Egypt.

What is a Disengaged Fan?

Basically, it’s someone who does not interact with the status update you are trying to promote. They lurk in the background, reading and watching, but not saying anything themselves. That’s assuming, of course, that the fan is a real person at all.

And why is having disengaged fans a huge problem to your bottom line?

Derek Muller from Veritasium explains it this way.

“When you make a post, Facebook distributes it to a small fraction of the people who like your page just to gauge their reaction. If they engage with it by liking, commenting and sharing, then Facebook distributes the post to more of your likes and even their friends. If you somehow accumulate fake likes, Facebook’s initial distribution goes out to fewer real fans, and therefore it receives less engagement, and so consequently you reach a smaller number of people.”

There’s a robust market for fake Likes. Italian researchers estimate that fake Facebook activities add up to about $200 million a year in revenue. These accounts will click on any visible company Pages and Profiles they can easily find. The attempt is to make it harder to track the Likes they are actually being paid to deliver. And they quickly focus on Pages from legitimate Facebook ads that show up on the right side of many Facebook pages.

Some of these Likes come from users who have also been deceived. A classic example is the “Pink Floyd scam” where people are asked to Like the cover image of a Pink Floyd album with the promise that something magical will happen. Obviously, nothing does. But now you have done the scammer’s bidding by putting the image on the Walls of all your Facebook friends.

The report does not suggest that Facebook itself is delivering fake Likes when businesses advertise. It only suggests that people in offshore click farms use the ads as an easy source of Pages to find and click on. Muller said:

“In August 2012, Facebook reported it had identified and deleted 83 million fake accounts. . .that was 9% of the total at the time. This resulted in noticeable drops for popular singers and celebrities. So did they (Facebook) delete all of the fake likes? Nope, not even close.”

Like Photo via Shutterstock

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Supporters Urge Renewal of State Trade and Export Promotion Program

Posted: 25 Feb 2014 12:30 PM PST

cantwell

The STEP (State Trade and Export Promotion Program) offered by the Small Business Administration aims to offer small businesses in the U.S. a way to reach a global market. And right now, supporters of the program are in position in Washington, D.C., to get the program renewed.

STEP grabbed some attention last week during the confirmation hearing (pictured above) for new SBA Administrator Maria Contreras-Sweet. At the hearing, U.S. Sen. Maria Cantwell, (D-Wash.), who has since taken over as chair of the Senate Committee on Small Business and Entrepreneurship, asked Contreras-Sweet if she would support reinstating the STEP Program at the SBA.

STEP was created as a 3-year pilot program through the Small Business Jobs Act of 2010. The program was designed to award federal grant money that was matched by a small business’s home state. According to the SBA website, the goal of STEP was to give small businesses tools to reach a global market so they can begin exporting their products. It was also intended to raise the value of exports for companies that already sold globally.

Some of the services offered through STEP include website translation, support for small business participation in foreign trade missions and foreign market sales trips, and design for international marketing media.

There program made $30 million available to small businesses each year through STEP Program grants during its pilot program.

Cantwell pushed the issue of renewing the program during Contreras-Sweet’s nomination hearing. She said in her home state of Washington, STEP has helped secure at least $136 million in foreign sales for small businesses. Those businesses have largely used STEP assistance in reaching Asian markets. During the nomination hearing, Cantwell said:

“We have huge opportunities to the Asian market in the Pacific Northwest and we certainly want to see us use these promotions to help meet the agenda that the administration has on doubling the number of exports out of the United States – certainly small businesses can play a very big role in that.”

The SBA Administrator nominee said she liked the STEP Program and would support its renewal. During her confirmation hearing, Contreras-Sweet said:

“I appreciate that it provides for introductions, in many instances internationally. And so there's so many good components around STEP and in a globalized economy, we have to find ways to make sure that small businesses, too, can compete in that. There is currently in my view, with technology and all the other tools that are available to us, the lowest barrier to entry for a small business opportunity.”

Image: Cantwell.Senate.gov

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Language of Leadership: Constructive Versus Destructive

Posted: 25 Feb 2014 10:00 AM PST

constructive versus destructive criticism

On February 3rd Jeremy Kinsley was a guest on Entrepreneur’s Insight radio show. He talked about how inspired leaders produce results. I had the pleasure of being the follow up guest.

The host, Kip Marlow and I spent some time exploring how leaders communicate. While many people are given the title of leader, a lot of them don’t elicit results because they don’t communicate in a way that inspires action and results.

Having studied leaders for several years there are three distinct behaviors that I see real, impactful leaders engage in.

Language of Leadership

1. Constructive Versus Destructive Communication

Constructive Communication:

Good leaders communicate in a way that elevates people instead of tearing others down. These leaders seek to solve problems and create long term solutions. When their focus is on improvement they speak openly, honestly, and consistently. They always have their eye on progress and success.

Constructive communication drives performance. It's foundation is that the employee is capable and driven but has run into a snag. Working with them on that snag with a goal of removing it leads to greater results.

When someone is guided to identifying why something has happened and how they can change, they are likely to embrace the lessons and grow as an impactful member of the team.

Destructive Communication:

People who communicate destructively have changed the goal. Whether they realize it or not, their focus is on making someone else feel small.

When people feel small – they don't perform to the height of their ability. They are not motivated to succeed.

2. Seek Input

True leaders seek the input of others. They understand that they don't have all of the answers; that leadership isn't about having all of the answers, it's about finding the answers. Leaders also understand that one of the ways they grow their staff is to ask for their input.

When you include others in the conversation you are telling them you trust them and believe in them. Leaders understand that not all input will be actionable. That's not the point. The point is to get everyone thinking about growth, solutions, and success.

Better to solicit their input – than to always be telling them. People respond to being communicated with more than being talked to. They are also more likely to follow through with a plan they have had a role in creating.

3. Engage in Difficult Conversations

There are times when a staff member is unable to meet the requirements and goals of the organization no matter how hard they try. And, truly, there are times when an employee isn't a fit or is behaving in a way that is contrary to the goals of the company.

A true leader addresses this situation directly with the employee. A true leader doesn’t emotionally react to the issue by sending a blast email to all of the team members. A true leader also doesn’t avoid dealing with it.

A true leader engages in difficult conversations right away and directly with the person involved. Leaders realize that difficult conversations aren't mean or unpleasant conversations. There are unemotional, fact-based ways to communicate seemingly difficult topics. Leaders also understand that their responsibility is to deal with issues as soon as they present themselves.

This is how they tell the rest of the staff that the goals of the company are paramount.

Example of a Non-Leader: Destructive | No Input | Emotion Filled

A sales manager calls a member of the sales team into their office and begins to berate him for a lack of sales. Everyone in the department can hear the sales manager even though the door is closed. Besides the fact that the sales manager is emotional and yelling at the salesman, he/she is also criticizing him and using negative pejorative labels like “lazy,” “inept” and “stupid.” He/she ends the diatribe with a threat to the salesman's employment status.

The result: The salesman is not only unmotivated to proceed but doesn't know what to do to improve. The salesman hasn't learned anything and he wasn't brought into the conversation. Actually, there was no conversation – it was a one sided push. The salesman is no further along the problem solving road than he was when he entered the office.

Moreover, the rest of the sales staff has been negatively impacted by the event. So, the sales manager has created more problems while not solving the lack of sales issue.

Example of a Leader: Constructive | Seeks Input | Unemotional

A sales manager calls a member of the sales team into their office to discuss the salesman's lack of sales. The first thing the sales manager does is ask the sales person to share his experience. How is he approaching the process? Where is he running into a disconnect? How is he communicating with prospects and clients?

The sales manager then starts a collaborative conversation around alternative processes. The goal is to help the salesman create a different process that should bring greater results.

The result: Together they create a process the salesman can implement. The entire conversation is focused on problem solving. The salesman leaves the conversation with a plan and a belief that he can succeed at the plan.

The rest of the sales staff understands that the goal is for everyone to be successful; that when the salespeople are successful the company will be.

The difference matters because of the outcomes. When someone behaves like example 2, they are leading the organization and realize positive results. When they behave like example 1, the organization struggles to grow.

Anyone in a leadership role is better off communicating in a constructive, unemotional way that elicits involvement and buy-in. Then they will be a leader who others want to follow.

Anger Photo via Shutterstock

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Microsoft Finally Launches New OneDrive With More Features

Posted: 25 Feb 2014 07:30 AM PST

onedrive

After some delay, Microsoft finally introduced the newly renamed OneDrive this week. But the renaming of the company’s cloud storage service once called SkyDrive has proven to be more than that. Microsoft is also taking the opportunity to turn an embarrassing legal defeat into a big marketing campaign with new features.

Topping the features list is the huge amount of free space that Microsoft is literally throwing at you. First off, there’s 3GB of storage that comes with the automatic camera upload feature. Then there’s another 20GB for users who follow a special bonus link, valid within the first year. Then there’s 500MB for every person you successfully refer to OneDrive.

Those of you who had SkyDrive installed on your phones don’t need to uninstall or reinstall anything. Your phones will silently update and the app will change without any input from you.

Other features include video sharing and viewing, automatic camera roll backup for Android phone owners, and real-time collaboration with Office Web apps Word, Excel, and Powerpoint.

OneDrive is baked directly into Windows 8.1 and Office. You can even set OneDrive as the default save location for your files. In doing so, Microsoft is sending a clear signal that the days of the PC are numbered, and that cloud computing is the future.

Watch this video overview from Microsoft outlining some of the features of the new OneDrive cloud storage platform:

OneDrive is currently beating rival cloud storage services with its prices. 100GB with Skydrive comes to $50 a year, while its nearest rival, Google Drive, comes in at $60 a year for the same amount of storage. Box and Dropbox trail far behind at $120 a year for 100GB.

Image: OneDrive

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It Was Good That Shaun White Lost in Sochi; Here’s Why

Posted: 25 Feb 2014 05:00 AM PST

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failure is opportunity

Like small business, the Olympics don't always work out the way they are planned. One of the poster athlete's for the Sochi Games is Shaun White who basically put half-pipe snowboarding on the map.

He won the gold medal at the last two Olympics. He was supposed to be a repeat winner this year. After he arrived in Sochi, he pulled out of the slope style event because he thought the course was too dangerous. With all the pressure now on winning the half-pipe event, he lost and came in fourth.

While I cheer Shaun White's decade of success, it's good that he lost in front of millions of people. Here is why and what you can learn from it:

Things Don't Always Go As Planned

Even with endless hard work and preparation, sometimes you just lose.

Similar to White, the course may be rough (the market) or the other athletes (competitors) may be better that day. No athlete or company can control all the conditions.

Every small business owner needs to get used to not knowing what will happen. There are no sure things in sports or business and this pushes everyone to work harder.

Event the Favorites Lose

No matter how dominant your business may be in the market place, you won't always win. You have to earn a victory each time you compete and not mail it in.

While White's competitors were well qualified, no one would have predicted 15 year old, Ayumu Hirano from Japan would win the silver.

The favorite has to work just as hard and the rivals always have an opportunity to win.

How You Lose Counts

White did not let this one loss define him. He said:

“I don’t think it makes or breaks my career, one night.”

He never blamed the course or the other competitors. After his failed run, he agreed to celebrate with Swiss Gold Medalist Iouri Podladtchikov (IPOD).

The Best Push the Rest

The top dog gets everyone to improve until they get beat. This is good for any competitive market because in the end, the customer (or viewer) gets a better product or service.

The best business always gets pushed by other companies that want to be them.

What will White do next?

Looks like he is going to dust himself off and compete in 2018.

Shaun White Photo via Shutterstock

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U.S. Senator Jim Risch Wants More Money For SCORE

Posted: 25 Feb 2014 02:30 AM PST

U.S. Sen. Jim Risch

U.S. Sen. Jim Risch (R-Idaho) has proposed boosting the coffers of the SCORE Program run by the Small Business Administration. To offset the proposed increase in revenue that would go to SCORE, Risch proposes dropping the Program for Investment in Micro-Entrepreneurs (PRIME), also run by the SBA. In a statement announcing his proposal, Risch said:

“While I have certainly found areas for reform and repeal, such as the PRIME program, I have also been impressed by SCORE and the impact they make with very little taxpayer support. I believe that with a modest increase in their funding, they can serve thousands more entrepreneurs.”

SCORE is a non-profit organization that’s designed to offer free mentoring and other advice to small business owners. SCORE has been operating for 50 years. The organization has at least 11,000 people working for it covering more than 60 industries, according to SCORE’s website.

The bill to increase SCORE’s funding was just introduced to the Senate earlier this month. Senators have yet to take action on the measure. If it’s passed, SCORE funding would be increased to $10.5 million by 2015.

In 2012, SCORE says its volunteers donated more than 1.1 million hours and advised on the start up more than 37,000 businesses. SCORE offers small business owners the ability to chat one-on-one with industry leaders working through the organization. There are also SCORE-sponsored webinars and seminars for small business owners and entrepreneurs.

SCORE CEO W. Kenneth Yancey applauded Risch’s new proposal, adding:

“It will specifically help as we expand our reach in rural communities and under-served areas. As an entrepreneur and small business advocate, Sen. Risch understands the importance of the support provided by SCORE and we are grateful for his leadership.”

The program being phased out to supply SCORE with additional funding is PRIME.

PRIME is like SCORE in that it’s a program designed to provide help to small business owners, particularly in rural areas. The program awards grants to organizations that work locally with small businesses, according to the PRIME website.

Even supporters of the program admit it was too underfunded and underutilized.

Image: Risch.Senate.gov

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Tuesday, February 25, 2014

LinkedIn Will Open Publishing Platform “Soon” to All Members

LinkedIn Will Open Publishing Platform “Soon” to All Members

Link to Small Business Trends

LinkedIn Will Open Publishing Platform “Soon” to All Members

Posted: 24 Feb 2014 02:30 PM PST

unlocking the experts linkedin

LinkedIn is opening its publishing platform to all its members. Last week, the platform was opened to about 25,000 users. More will be added gradually until every member has publishing privileges. Multiple languages will also be supported when the service is fully implemented.

Until recently, the ability to publish articles was reserved for well-known leaders like Bill Gates, Martha Stewart, and Richard Branson. With publishing privileges being opened to all members soon, LinkedIn can become a place where you build your brand and share your expertise too.

In a recent post on the official LinkedIn blog, Ryan Roslansky, director of product management, explained:

“The valuable Influencer posts and the wide range of professional content from millions of publishers that we currently aggregate on LinkedIn are powerful, but only the tip of the iceberg. Combined, our members have extremely valuable and varied experiences; however, their knowledge and expertise has not yet been captured and shared.”

Posts you publish will appear as part of your professional profile. From there they can be shared with your immediate network. Your network will be able to comment, like, and share your posts within their networks.

Photos, videos, other images, and SlideShare presentations can be shared through Influencer posts too, Roslansky noted.

Influencer posts can also reach a much broader audience through the LinkedIn network. Other members not in your immediate network can follow your Influencer posts and like them, sharing them with their networks.

LinkedIn introduced Influencers in 2012. At that time, only 150 Influencers were selected to post content. Since then, dozens more Influencers have been added.

Recent topics from Influencer posts range from hiring advice to business trends. Last July, LinkedIn added a social feature to Influencer posts that allowed you to comment on, like, and share these posts with your network, a previous post on the official LinkedIn blog explains.

Image: LinkedIn

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New Chrome Feature Prompts When Malicious Downloads Are Detected

Posted: 24 Feb 2014 12:30 PM PST

new chrome feature

The Chrome browser has been updated by Google, in an effort to thwart phishers who try to hijack the browser using malware. Even though a reset button was added to Google’s settings last year, the search giant clearly felt that it wasn’t enough. Apparently browser hijackings are on the increase, and something else was needed to reinforce Chrome’s defenses.

Now, if the browser detects that your settings have been changed without your knowledge, a box will pop up asking you if you want the browser settings to be reset (image above).

Helpful?

Well….not quite. Ironically, some users on Arstechnica have pointed out that such a box is the sort of thing they wouldn’t click on, if it suddenly came up on the screen. How do they know it really came from Google? Isn’t this the sort of thing that Google is telling everyone not to do? One commenter explained:

“If I saw that popup I’d worry that it was malware masquerading as Chrome and be very leery of clicking it.”

Another commenter on the site added:

“That looks like the kind of message I tell my mum to avoid, or to talk about with me before she does anything. Not sure if I’d bother teaching her how to identify it, as I’d assume someone will develop malware to closely resemble it. May not be as useful as intended.”

The second commenter makes a valid point. What’s to stop a malware maker from making a spoof Chrome warning box, which would install malware?

If you do decide to click that box, you will have to remember that all of your extensions, themes, and Chrome apps will be deactivated. They can be manually reactivated one by one, by going into your settings, so don’t worry – nothing will get uninstalled.

It was reported last month that malware makers were buying up well known and popular Chrome extensions, and inserting malicious advertising code into them. Not realizing that the extensions were now the property of someone else, users kept on installing them. One high profile person on the Web who was particularly stung was Amit Argawal who runs the highly popular tech blog Digital Inspiration.

Image: Arstechnica

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HP EliteBook 850 Laptop is For Business Power Users

Posted: 24 Feb 2014 10:00 AM PST

hp elitebook 850

There are plenty of small laptops on the market if you want to reduce the weight in your business bag. You could even rig up an Apple iPad or Android tablet with a wireless keyboard to really trim things down. But if you need a serious workhorse machine, that is both light, powerful and secure, this review of the HP EliteBook 850 laptop is for you.

As small business owners make decisions on technology, price is often considered the most important option. There are some very good reasons to consider spending a bit more than the lowest priced machine you can find – let me give you three:

  • Easy-to-configure
  • Security
  • Warranty

A Laptop That is Easy to Configure

Let me start with my favorite thing about this device (as you can see in the photo below): On the back of the 850 laptop there is a latch which allows you to easily access the components (RAM, hard drive, battery, etc.).

For an IT manager, it's an invaluable feature that allows quick upgrades or repairs. This may not seem like a big deal, but anyone who has ever tried to open up a laptop knows that this is terrific. Some manufacturers use special, proprietary screws or latches that make these changes difficult, or downright scary, to say the least. Extra points to HP for making this so easy.

hp elitebook 850

PC Security

The 2013 Symantec Internet Security Threat Report (PDF) says that small businesses are "the path of least resistance" for attackers. In 2012, half of all targeted attacks were directed at businesses with less than 2,500 employees. But the largest growth area for targeted attacks is businesses with less than 250 employees – accounting for 31 percent of all attacks. [Note: The above link is to the Symantec PDF report which can take a while to download.]

HP's SureStart technology is designed to catch and stop security breaches before they can get to your data. Without going out of my own tech understanding zone, this technology is part of the firmware loaded at the chip level. It will automatically restore your computer's Basic Input/Output System (BIOS) within 30 seconds if it is ever attacked or corrupted. You can even install an optional tracing program that will allow you to find a lost or stolen computer.

3-Year Warranty

I have a 3-year business warranty on my current laptop, but it was an additional cost. [Note: my current work machine is not an HP but the principle applies here.] I have used the on-site service option two or three times so far and this is from a well-known manufacturer.

Things go wrong, that's life. However, I want to know that I'm not shelling out more cash for fixing a machine that should work for at least three years. HP has gone above and beyond by making this warranty a standard "feature."

Things I Really Like:

  • Intel® Core™ i7-4600U processor (Here is a link to a site that does speed checks, not an HP site.)
  • 8GB of memory (Expandable, of course).
  • 180GB SSD (Keeps it cooler and quieter, in my experience, but you'll likely need a backup drive when you fill this up.)
  • 15.6 inch screen, full HD display (1920 x 1080).
  • Backlit keyboard (This comes in handy in low light situations, of course.)
  • 4 USB ports.
  • The keyboard is made of aluminum and the rest of the machine is made out of magnesium, so that makes it a lot more durable than the usual plastic. I did not do any "drop tests."
  • These machines start at $814 for the base model. You can see the various models, prices and configurations at the main HP site, then click the “configure” button to see different options.

Things I'd Like to See:

Aside from Sure Start, it has a fingerprint reader so you can lock down the machine to a specific user, which is cool in a lot of ways – no password to remember, for one.

But, I would like to see this moved away from where your hand rests because I kept thinking I'd trigger it to lock the machine. To be fair, I didn't have this happen, but I kept thinking about it and this is my personal quirk, to be sure. Thankfully, it is to the far right side.

All in all, this is a great machine. If you are in the market for a lightweight laptop, the HP EliteBook 850 is worth a serious look.

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Why Should You Pay More for a Static IP Address?

Posted: 24 Feb 2014 07:30 AM PST

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static ip address

As a business owner you are always faced with financial considerations. That question, “How can I save money?” Or, “Do I really need this?” They are common questions. When it comes to your Internet connection, we have recently described how saving money on your Internet connection is often times, not the best choice.

Then there is the matter of the static IP address. Why is this also costing you more money? Those Internet providers are always trying to find a way to take more of my money! Or, are they?

What is the Difference Between a Static IP Address and a Dynamic IP Address?

In order to understand its importance and the reason for additional costs, we must first understand the difference between a static IP address (always assigned) and a non-static IP address (called dynamic because it changes at timed intervals).

IP addresses are 32 bit numbers identifying a computer/networked device on the Internet. They are currently represented in 4 parts with dots between them, such as 10.0.0.1 or 192.168.0.1 as some of you may recognize from setting up a residential router. Those numbers represent the calling card of that computer, similar to that of your cell phone number, a unique address that lets other systems know how to find you.

Computers inside your home are most typically using dynamic IPs assigned by your home router, known as private IP addresses, because they are only known to other machines in your own network. Your router also has an dynamic IP address assigned from your Internet provider from its pool of IPs, called public IP addresses, because these addresses can talk to one another all over the world.

So your router is connected to your Internet provider which can talk to other public computers/routers. It’s also connected to you personal computer so it can make connections to those public computers. Got it?

Why Do We Have Dynamic IP Addresses?

The need for dynamic IP addresses is due to the limited number of public IP addresses available in Internet Protocol version 4, also know as IPV4.

With dynamic IP addresses, there is a pool of IPs your Internet provider can assign. When you connect to the Internet, your router is leased one IP address from that pool for a timed interval. When the interval is completed, usually at disconnection of the IP address, it is sourced back into the pool of available IPs. This allows Internet providers to have more customers than IPs.

With broadband connections, it’s easy to just lease IP addresses when needed. That’s why dynamic IP addressing is widely used today. The downside is, your IP address can change any time you get disconnected.

The fact that you get disconnected does not necessarily mean the IP address is going to change, just as the fact that you get the same IP address does not mean it is assigned statically.

Losing that IP address may result in other computers/routers inability to locate you.

The Need for a Static IP Address!

Most businesses use high speed Internet to run private or public servers. These people want their Internet address to stay fixed with the same numbers all the time, so people know how to access their server.

People with a static IP address may have a domain name or corresponding email accounts, such as [InsertYourBizNameHere].com, linked to their IP address. So if the IP address changed whenever they had to turn their modem or router off, their server and thus the email could become unreachable.

A static IP address can also help when VPNs are being set up for remote access to your business office resources. Without the ability to also know your offices “calling card,” work would be cumbersome.

The Additional Cost…

So the additional cost of a static IP address is a result of multiple things:

  • There are a limited source of public IPv4 IP addresses. While they are working on IPv6 to expand the IP pool, the tech and implementation still has a ways to go.
  • ARIN, the American Registry for Internet Numbers, is responsible for the allocation of all public IP addresses to providers. Providers must prove the necessity of the need for all IP addresses they are provided. There is a cost associated to the provider for each pool of addresses. In other words, the providers don’t get IPV4 addresses for free either.
  • There are more resources, both technically and in man hours, to managing static IP addresses because of their “always on” nature. It limits maintenance and provides more accountability for the provider.

So if you are a business, looking at the costs at the end of the day – know that your static IP address is worth the small price you pay for it for all it gives you in return.

Ethernet Photo via Shutterstock

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Number of Non-Employers Grows, but Average Sales Shrink

Posted: 24 Feb 2014 05:00 AM PST

non-employer businesses

The number of non-employer businesses – companies that have at least $1,000 in annual sales and pay federal income tax, but have no paid workers – continues to grow, increasing by 1.7 percent in 2011, the Census Bureau's latest estimates show.

Despite a small decline during the depth of the Great Recession, the number of non-employer businesses has been on a long-term upward trend, rising almost continuously since the late 1990s. Between 1999 and 2011, the count of non-employer firms increased by 39.2 percent, and now totals 22.5 million companies.

The rate of growth of non-employers has far exceeded that of employer businesses (see the Small Business Administration’s picture here). As a result, non-employers now account for four-out-of-every-five U.S. companies, up from three-in-four back in the late 1990s.

Before we get too excited about this growth in entrepreneurial activity, we need to consider what non-employers look like. While non-employers do include some corporations and partnerships, the vast majority – 87 percent according to Census estimates – are self-employed people operating unincorporated businesses as sole proprietors. Many of the companies, the Census Bureau believes, are sideline businesses.

Despite their large numbers, non-employer businesses have relatively little economic impact. The Census Bureau estimates that, collectively, they account for only 4 percent of business receipts, 7 percent of capital spending, and (by definition) no employment. Their average sales are below $45,000 per year.

Americans have been forming non-employer businesses at a rate far greater than these companies have been increasing their revenues, leading the average sales at non-employers to shrink, particularly in inflation-adjusted terms. Receipts at the average non-employer peaked in 1998 and have declined 22.2 percent since then. (A quadratic term fits the pattern in the data pretty well, as the figure above indicates, suggesting initially rising and then falling average revenue.)

In recent years, the decline in the average sales at non-employer businesses has moderated. Real average receipts fell by more than predicted by the trend line for 2008 and 2009 – probably because of the Great Recession. However, the rate of decline in average sales was lower than predicted in 2011, the most recent year data are available.

When the Census Bureau releases the 2012 non-employer business data in April, it might show that their average sales have finally stopped shrinking. But my bet is that the number of non-employers has continued to grow faster than their (inflation-adjusted) revenues.

Image Source: Created from data from the U.S. Census

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The Power of Optimism: 91 Percent of Entrepreneurs Confident

Posted: 24 Feb 2014 02:30 AM PST

Power of optimism entrepreneurs

Startup entrepreneurs have to be optimistic in order to overcome the challenges of starting a business. So in a way, it really isn’t a surprise that the majority of entrepreneurs surveyed are optimistic about the year ahead.

That confidence seems to come from within entrepreneurs – not necessarily from conditions around them.

The survey, released recently, says a whopping 91% of entrepreneurs are confident that their businesses will be more profitable in the next 12 months. Of those, 49% are “very confident.”  The survey was conducted on behalf of the Ewing Marion Kauffman Foundation by LegalZoom, based on numbers from the the fourth quarter of 2013. 

Yet, interestingly, a majority don’t believe the economy will actually improve during the next year.  In the survey 47% think the economy will improve.  Yet 32% think the economy will remain the same and 21% think it will deteriorate.  That right there tells you something about the psyches of entrepreneurs.

Many entrepreneurs have an unstinting faith in themselves and their ability to start and grow a business, regardless of the conditions around them.  Yes, they may be pragmatic and recognize that the economy and market conditions might not be ideal.  

But when are conditions ever “ideal?” 

Some household name businesses were launched and built during slow economic times — Microsoft, Revlon, FedEx just to name a few.  Even during slower economic times, customers still buy.  The economy goes through cycles.  There will always be times of slower growth and times of faster growth. 

If you are waiting for conditions to be just perfect, you may wait forever.  While one entrepreneur is making plans for when things will be “just right,” another is out seizing the day and grabbing that opportunity.  The economy isn’t ever going to be just right.  Instead of waiting for the economy to “get better,” be a leader and be part of making it better by seizing and building opportunities.  Successful commerce drives the economy.

And that’s what the entrepreneurs in this survey seem to know instinctively.   It’s about the power of optimism and belief in their businesses.

A total of 1,375 entrepreneurs responded in the survey, from startup entrepreneurs who formed their business entities in the previous six months.  The Kauffman Foundation is known for its support of startups.  LegalZoom provides incorporation filing services. The company had been planning to file an IPO, but withdrew that in early 2014 and instead announced plans to sell a large stake to Permira, a European private equity firm.

Image: Kauffman LegalZoom Startup Confidence Index

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