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While creating a profitable company may provide for a comfortable retirement, that's no way to plan. And many entrepreneurs, perhaps believing their businesses will be their retirement, don't plan sufficiently for their retirement. That's the finding of two reports recently released by the Small Business Administration. Saving for Retirement: A Look at Small Business Owners , written by SBA economist Jules Lichtenstein, finds that entrepreneurs' retirement account ownership, contribution, and participation rates are low. Among his key findings: Sponsor Just 36% of business owners have individual retirement accounts (IRAs), and only one-third of business owners with an IRA contributed to one during the 2005 tax year. Only 18% of business owners have a 401(k) plan, and less than 2% have a Keogh plan. Business owners are more likely to own tax-deferred individually based IRAs if they are older, female, white, non-Hispanic, citizens, better educated, and married. Entrepreneurs who own homes and have other retirement accounts are most likely to have IRA, Keogh or 401(k) participation. A second SBA study, Small Business Retirement Plan Availability and Worker Participation , surveyed the participation in retirement plans by employees of small businesses. Among the results: Approximately 72% of employees working for small businesses (almost 41 million workers) do not have a company-sponsored retirement plan available where they work. This contrasts with those who work for businesses with over 100 employees. 78% of employees for large firms have retirement plans available at their work. Of the employees at small businesses who do have company-sponsored retirement plans, 9% do not participate. Only 19.5 percent of workers in small private sector companies report participating in a retirement plan. Lichtenstein suggests the findings in his study point to the need to develop ways to help owners of small businesses, especially home-based sole proprietorships and minority-run businesses, increase their retirement savings. "There is a need to better coordinate employer-based retirement accounts with individual-based accounts like IRAs and make plans less complex and burdensome on business owners, especially for owners of micro-businesses." Are you saving for retirement? Do you even have a plan? Let us know in the comments. Discuss
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SBA Finds Entrepreneurs Aren't Saving for Retirement
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Today I spoke with a diverse group of new entrepreneurs as part of my ongoing Online Strategy Roundtables . Together, this group illustrates how a business depends on how sharply the target market is defined. One entrepreneur is well on her way and another needs to focus more on his strongest market segment. Like many entrepreneurs, the other two are clearly accomplished people, but don't come from a business background. For such entrepreneurs it is often worth looking for a cofounder who can fill in with expertise in areas where gaps exist. Sponsor Guest author Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy . She has a masters degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her three books, Entrepreneur Journeys , Bootstrapping, Weapon Of Mass Reconstruction , and Positioning: How To Test, Validate, and Bring Your Idea To Market are all available from Amazon. Her new book Vision India 2020 was recently released. Mitra is also a columnist for Forbes and runs the 1M/1M initiative. Julie Goldman did a nice presentation of her company The Original Runners . In 2003, she was the first to offer non-slip, high-quality fabric aisle runners for weddings and special events. Through her website she offers gorgeous hand-painted runners wholesale, and business has been growing to a revenue of $700,000 last year. I really like how tightly focused this business is. Niched wholesale businesses are great! Her main concern is that two dozen lower-quality copy-cat competitors have popped up over the years. To stay ahead of her competition, whom she describes as mom & pop at-home operations, I suggested she work with bloggers who are influencers with wedding planners (her main customers) to help specifically articulate why her product is superior. She has already relocated the business from New York City to New Jersey to reduce costs. To further counter the pricing pressure she is feeling from her competitors I suggested she look at relocating somewhere where it will be even less expensive for her to operate, like Vermont perhaps. She plans to launch a new brand as an accessory line and we discussed how it is only when she markets this new brand to her list of existing runner customers will mentioning "from The Original Runners company" hold any weight. New customers will not recognize the name and its association with quality products. We also spoke about SEO and search engine marketing, on tightly focusing pay-per-click campaigns on higher-end markets rather than going broad with a worldwide campaign. So far Julie's is a great case study of a growing niche business. Next up was Sonali Roychoudhury presenting for Pursue Natural . Sonali is a scientist who is working with a team that is conducting research to find and bring natural medicinal plants to market that are not in the mainstream. Like many entrepreneurs who do not have a business background, Sonali is risk averse, unwilling to make assumptions, and uncertain as to what the next steps should be. We discussed the natural breath freshener that they have produced. It seems like the cost of entry into this small niche market is too high for this to make sense. She then explained how a small but loyal customer base has grown for this product through their process of testing the marketplace. By just setting up a direct Web sales business targeting their existing fans and the extremely high end natural product boutiques, I believe she could build a very nice small business selling small quantities month-to-month. As long as it is profitable, a small business is more than worth building. Lorenz Lannens and his company Online Design Bureau started as a consulting business that grew into to a Web solution for small and medium sized companies that helps them to develop their Web marketing strategies. His product and service enables clients to set up their Web marketing system, and he has metrics from early customers showing the system works. As we discussed his current customers, it became clear that his service is not really for startups, but more for businesses that are not Web savvy. I believe if he goes after companies that are not doing Web marketing as his segment and targets the verticals that his current clients fall in (like architecture firms), his list of customers will grow. I liked this presentation and clearly there is a need for this service. Many entrepreneurs who have pitched at these roundtables could probably use Lorenz's help. In fact I suggested that both Sonali and Felice tap into his expertise. Lastly, Felice Gerwitz presented Scholar Square , a beta site targeting the homeschool community. She is an educator and author who specializes in homeschooling and hopes to sell a wide range of presentations and seminar classes through this site. As Felice explained her ideas, it became apparent that she is trying to do too many things for too many people, the classic "spray and pray." I may have been a bit hard on Felice when she told me she did not go through the Clarify Your Story questionnaire as she was asked to on the roundtable registration page, but I think it needed to be said. There are no shortcuts when you are an entrepreneur. You need to do your homework. Felice needs to focus on the segment of the home school market that she tackles the best and is passionate about, and let the other ideas go. This should help her site find its center of gravity and its customers. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million ( 1M/1M ). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. If you are an entrepreneur working on an idea or an early stage business, I am also very interested in hearing what you are looking for from 1M/1M. Please weigh in here . We are crowdsourcing the design of 1M/1M, and requests that have come up include Receivables Financing as a way to bridge to a validated business without giving up precious equity, I would love to hear your thoughts. You can find the recording of this roundtable session here . Recordings of previous roundtables are all available here . You can register for the next roundtable here . Photo by Nick Cowie . Discuss
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Startup Strategy Roundtable: Well-Defined Niches Work Best
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A recent study by the Kaiser Family Foundation found that the amount of time young people spend with entertainment media has risen dramatically, with 8- to 18-year olds devoting an average of seven hours and 38 minutes a day to media use. And because they spend so much of that time "media multi-tasking," young people actually manage to pack a total of 10 hours and 45 minutes worth of media content into those 7½ hours. With this key role that media plays in children's lives, it is crucial to support the creation of innovative educational technologies that can be used for teaching and learning. Sponsor Are you the parent of a child 12 years old or under? Click here to take a survey about how kids perceive the Web. With this in mind the Venture Capital in Education Summit 2010 will be held in New York City on June 8 and 9. The summit examines some of the key trends in education technology and showcases some of the leading-edge ed-tech entrepreneurs and investors. Keynotes speakers include industry, education and government experts, along with investors. The recent National Education Technology Plan (NETP) indicates the Obama Administration's support for a number of key technologies, including open-source software, virtual worlds and cloud computing. But funding for these recommendations remains uncertain. The Venture Capital in Education Summit is "designed for the innovators in the K-20 education markets, and those committed to providing the capital and resources to support these change agents." The difference between consumer technology markets and school technology markets are important, and the summit seeks to share this and other insights into developing and marketing to the education sector. The announcement yesterday that Netflix chief executive Reed Hastings and the non-profit venture capital firm Charter Fund had acquired math-game company DreamBox Learning , and the announcement last week that language learning company Babbel had its first profitable quarter (notably after abandoning the freemium model ) point to education technology as a promising area for tech startups. As ed-tech blogger Kirsten Winkler says , "People are willing to pay for well developed educational products." Discuss
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As Kids' Media Use Increases, Will Ed-Tech Investment Follow?
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Figures released in February suggested that VC investment in cleantech startups, particularly those focused on energy efficiency, was on the rise. To help prepare college students for jobs in this emerging green economy, Columbia University and IBM are announcing the launch of the Smarter Cities Skills Initiative. Sponsor The Smarter Cities Initiatives opens IBM's global resources to Columbia faculty and students, including access to the 40 IBM Innovation Centers worldwide. The intiative builds upon Columbia's existing research efforts on sustainability issues, spanning several academic disciplines including business, law and engineering. The initiative will provide students with free access to: IBM software, both on campus and in the cloud, to develop software for sustainability and green projects Technical support for green technology courses that show students how to build energy efficient IT infrastructure for smart buildings, smart grids and smart water systems Energy efficiency and open standards software development tools on IBM developerWorks 100,000 global business partners and academic communities through 40 IBM Innovation Centers in 30 countries "Smart urban infrastructures are key to long term environmental and economic sustainability," said Rich Lechner, vice president, IBM Energy and Environment. "IBM and Columbia share a common goal to ensure the next generation of entrepreneurs have access to the skills they need to accelerate sustainability projects and to be competitive when they enter the workforce." Lechner says the necessary skills for being successful in the emerging green economy include technical skills, particularly in the areas of data analytics, visualizations and security, understanding of business processes, and the historical and policy-based knowledge that can help transform industries like the energy sector. In recognition of Earth Day, the initiative will be announced on Thursday at Columbia University to faculty, students, venture capitalists, policy analysts, and industry leaders at the first annual Smarter Students for a Smarter Planet forum. More than 150 schools around the world are expected to participate via webcast. The forum will explore the skills necessary to prepare students for green jobs, and help academia and industry jumpstart a global collaboration toward developing sustainable technologies and a green economy. Discuss
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Columbia and IBM Launch Green Tech Skills Initiative
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In early December a Supernova session entitled, How Startup Companies Can Change the World had presenters brainstorm ways to connect the technology industry with policy makers. Coupled with many of the discussions already taking place in the Gov. 2.0 movement, the session looked at how technologists can contribute to projects they might not normally be associated with. This morning we received news on how one initiative is taking this collaboration further by applying the labor-on-demand service model so common to startups and putting it to use for disaster relief. Sponsor Three months after the earthquake in Haiti, workforce-on-demand service Crowdflower issued the results of its latest initiative with Mission 4636 . Following the quake, Mission 4636 members - in association with open-source disaster technology provider Instedd , refugee microwork provider Samasource and real-time mapping and tracking service Ushahidi - issued a text message short code (4636) for Haitians requiring urgent help. From there, Crowdflower and Samasource's remote labor forces collected, translated and geocoded over 16,000 messages. The messages were then released as an RSS feed and groups like the Red Cross, charity:water, UNDP and FEMA tracked the feeds for messages that pertained to their work specifically. According to the group, at peak volume more than 5,000 Haitian distress messages were processed in one hour. This single stream of information helped ensure that duplicate efforts from these normally fragmented government and NGO groups were kept to a minimum. Said Crowdflower CEO Lukas Biewald, "Harnessing thousands of volunteers would normally create a logistical nightmare, but it is specifically this kind of amorphous virtual labor force that the CrowdFlower platform was built to accommodate." While it's certainly unconventional to see a remote labor force employed for disaster relief of this magnitude, it's not unrealistic to think that this practice might become common in a location where cell tower infrastructure remains intact. Perhaps the bigger question for the startup community is what other world-changing solutions are sitting right under our noses? If you've got examples of how startup processes can improve disaster relief and emergency services let us know in the comments below. Discuss
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Using the Startup Process to Change Disaster Relief
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