The New Economy Entrepreneurs and Small Business

My friend and I wanted to address a hot new business model that is sweeping the country by storm. In fact, it is not just another trend that occurs in small business, medium size business or even enterprise business. The term "New Economy" is quickly becoming a way of thinking as much as it is a game changing way of actually doing business. Before I dive into too much detail, let me clarify one thing. There are several broad spectrum definitions of the term new economy and how it applies to the business world. We are trying to focus our conversation on the typical small business, home business or even medium size corporation. We can certainly take this topic far outside this niche and speak to global economies but that is not our purpose here today. If you were to look up new economy in Wikipedia you would get some terms that describe the new economy and the new economy entrepreneurs as those that focus on the areas of operation that are most important and have core value to the bottom line of the company. Other non-critical areas are often left to outsourcing firms. Certain core elements of a business may be branding, web design, digital marketing and other technical capabilities. Many people are under the impression that the majority of the core technical, business development, and day-to-day general operations of small businesses today are attempting to outsource these tasks. Savvy business owners that are current with their education are not going down that path. There is a place for outsourcing, but it is not what one may think. You need to be educated to outsource correctly.

In fact, extremely up-to-date firms are bringing the work back in-house. The primary building blocks of the company, which certainly include modern web technology projects, are not being sent out to India or China as often as you may think. Examples of this may include custom blog design work, custom website design work, social media marketing, pay-per-click marketing, SEO, SEM and media buying. Some extremely advanced small businesses are even doing their own in-house video production. Technology has become more of a commodity. Technical skills are becoming more common with everyday business owners. The old school concept of outsourcing everything is actually not the smartest path for many small business owners. It does not save them time, it does not give them the control of a project they need and it does not allow them other advantages like speed to market. Communication and language barriers are common, and often projects are delayed due to poor management skills on the outsourcing side. There are other areas to be concerned with, like security, which we will address on another article. This may seem completely strange to many educated people, but I assure you the New Economy Entrepreneurs and the New Economy Small Business owner will find extreme value in exercising these new models.

Why Entrepreneurs Need Small Business Credit Cards

Small business credit cards are a special type of credit cards that are meant for use by small business (as opposed to the normal credit cards or personal credit cards which are meant for the use of an individual). Some people wonder why they should go for a small business credit card when they already have one or more personal credit cards. This is a very valid question indeed. By logic, if something like small business credit cards exists in market as a separate entity altogether, there must be a special need for it. It must have some features which are useful to small businesses in particular. Though there are a lot of similarities between personal and small business credit cards (of course there would be similarities since both of them are credit cards after all), there are a few differences too. These differences are mainly in terms of the flexible credit limit, lower APR offers and attractive terms and conditions which are better for small business credit cards. Besides all the benefits which are quoted for credit cards and the additional attractive offers, there is another important reason for going for a small business credit card. The reason is business expense accounting. A lot of small businesses face this is as a major challenge. Generally speaking, two main problems quoted for small business expense accounting are business expense segregation and expense classification.

By using your small business credit card for all your small business outgo, you can very easily separate your business expenses from your personal expenses. This will thus solve your business expense separation problem. What you receive on your small business credit card bill is your business expense directly. Moreover, this report is something which your tax consultant will love too. The second problem is also solved automatically. Most small business credit cards also group together the business expenses under proper heads. Some credit cards even provide credit card statement as data feeds which can be directly fed into accounting software. Just imagine how much hassle you are saved from with this business accounting feature. Wonderful, isn't it?. The other great thing about small business credit cards is the help they offer in terms of managing the expense peaks. Though such variations are part of almost every business, they are even more critical for small businesses. So when that need for immediate purchase arises, you wouldn't need to worry if you had the backing of a small business credit card. Also, generally small business have to pay first and receive later i.e. make payments for purchases before receiving payments for services/goods, so small business credit card also acts as an intermediary who fills in the time gap at little or no additional cost. The credit card membership benefits are at its best when it comes to small business credit cards. There are discounted ticket offers, car rental offers, gift offers and many other good offers for small business credit card holders. Just check all such benefits that might be available on your small business credit card and ensure that you use them whenever and wherever required. The small business credit cards are ranked higher by the credit card suppliers too. So everything associated with a small business credit card, including the customer service, is better than the personal credit cards. Thus, small business credit cards aren't something that a small business owner can afford to miss especially with what all it offers.

Understanding SMEs (Small and Medium Entrepreneurs)

Understanding the characteristics of contribution of small businesses at local level and its impact on overall economic growth is a crucial factor. The term SME originated in the world of Economist, denoting firm categorized on the basis of a set of criteria including employment size and the value of their assets. The size classification varies within regions and across countries relative to the size of the economy and its endowments. It is important to note that there is a minimum as well as a maximum size for SMEs. Small Medium Enterprises (SMEs) play a very significant role in the well being of any economic system. This role assumes still greater importance if the economies are in transition or belong to developing countries. As per a report by the Economist Intelligence Unit Survey economic growth (averaging 4.6% annually) has largely been due to the SMEs. While there can be a long list of benefits the SMEs offer, the weightiest is considered to be the freedom a small business offers to the entrepreneur to experiment and devise and take risks. It thus generates entrepreneurial zeal and a desire for personal achievement which motivates small investors and professionals. As per the same Economist report, almost half of those surveyed got into businesses for personal fulfillment. This urge for fulfillment then paves the way for the success of these small and medium businesses which in turn provide boost to the overall growth engine of any economy.

The benefits of SMEs are not confined to the developing world only but are predominantly visible in the developed world as well. Small and Medium Industries and small business community are the backbone of Europe's economy. There are more than 23 million SMEs in the European Union, which represents 99% of European undertakings and are responsible for 60% of Europe's GDP. They are also Europe's main job creators as they employ over 100 million people. For any economy, SMEs with high turnover and adaptability play a major role in reducing sector imbalances in that economy. Moreover, easy entry and exit of SMEs make economies more flexible and more competitive. Due to this ease of entry and the resultant increase in the number of small and medium businesses, a competitive market pressure is created which dilutes monopolies and helps increase quality of products and services. Interestingly, most of the current larger enterprises have their origin in small and medium enterprises but downsizing, layoffs and mergers have made jobs in large corporations more risky and less attractive to employees. The beneficiaries of this are the smaller companies as more creative talent is usually keener to join smaller outfits where it can have a better opportunity to utilise and explore its potential.Smaller businesses also tend to have closer customer relationships and cater to the client needs more effectively and promptly. Smaller businesses also offer better position to their owners to take quick decisions on innovation, pricing and other business strategies which render useful competitive advantage. SMEs tend to employ poor and low-income workers and are sometimes the only source of employment in poor and rural areas. They are usually wide spread and reach out to a vast population of a country even in remote areas. This role of SMEs is particularly important in the developing countries where there is lot of poverty.

Financing is one of the many problems the smaller businesses face. For SMEs, financial resources are often limited which often force the companies to select solutions which appear to be cheap initially but later the hidden costs surface during various stages of execution resulting in financial crises. Higher costs of R&D (Research AND Development) and training are issues where SMEs find difficulties especially in the face of limited capability of development and production.Due to their small size, SMEs usually lack management capacity and their ability to access and analyse information is particularly weak. They cannot afford costly support services like financial, human resource, legal and training etc. At a more strategic level, SMEs do not have the capacity to influence the overall business environment in their favour as larger firms possess. In addition to assistance provided by SMEDA, SMEs themselves have to take measures to address the problems. They must develop strong management teams and adopt a culture of learning and sharing of knowledge with other SMEs. For financial assistance, SMEs have to rely on banks and have to find ways to overcome banks' shyness to finance smaller businesses.