Just Managing: Big Business in Small Businesses
Let the promise of tremendous change lure the venture money
and the easy headlines. The most successful entrepreneurs are the
ones who, instead of making promises, roll up their sleeves and
find a way to make money on the new world that is already here.
As author Peter Drucker puts it in Innovation and Entrepreneurship,
"Innovation is the specific tool of entrepreneurs, the means by
which they exploit change as an opportunity for a different business
or a service."
Indeed, exploiting change is a key concept in the entrepreneurial
Consider the emergence of the huge market spurred by the need
for existing small businesses to achieve basic competence on the
Web. While the world's largest companies have sufficient resources
to hire consultants and develop their own Internet technologies,
the 20 million or so small companies in this country are still grappling
with the most basic of questions: How can I set up an effective
Web site? How can I process orders and track customers online?
Answering such questions has enabled a handful of companies to
take off. Just as the folks who really made money during the Gold
Rush were the folks selling the pans and pickaxes, the companies
selling Web competencies to small businesses are growing healthily.
In fact, this space has become quite crowded during the past several
years, with competitors such as Onvia, vJungle and Allbusiness among
the many companies trying to become the big business serving small
While it's too soon to pick winners and losers in this exploding
market, the experience of two companies sheds light on what the
Net can support for small businesses.
First off, the Net has proved a fertile ground for service companies
that focus their attention on solving immediate and specific problems
for small businesses turning to the Net. That's certainly the case
with BizLand, a Burlington, Mass.-based company that helps small
companies with such basic competencies as setting up a Web site,
conducting online transactions, hosting real-time conferences and
offering search capabilities. BizLand also offers these services
on a private-label basis for the clients of companies such as Xerox
Soon, according to BizLand CEO Steve Sydness, clients will be
able to use his company's services to tap into a personalized "dashboard"
that tracks their key financial indicators. Small businesses will
be able to log on in the morning (or the dead of night, for that
matter) and immediately access key metrics such as outstanding receivables,
site traffic figures, online sales numbers and more. This focused
approach has enabled the company to sign on more than 1 million
customers, a fact that Sydness mentions as frequently as a politician
stumping for a recount.
But Sydness, who helped software company Great Plains grow from
a private, $6 million company to a public company with more than
$200 million in sales, now finds himself at a company struggling
to maintain a startup mentality in the face of rapid growth. So
BizLand has taken measures such as handing out its first "Big Drill"
award last week. The award, which recognizes individual ingenuity
and initiative, is intended as a reminder of the company's bootstrapping
days of just a year ago. At that time, the company could get cable
access to the Net only by literally drilling a hole in the ceiling
and tapping into the line of its willing neighbor.
The success of BizLand and others shows that launching a Web services
business requires a grounded understanding of how small businesses
are using the Web - today, not in the distant future. The fact is
that a thriving market exists now for companies that help existing
businesses on the Web, as opposed to companies that would help dreamers
looking to hatch the business world anew.
Says Steve Papermaster, CEO of Agillion, another company
that helps small businesses leverage the Web: "A lot of entrepreneurs
are enamored of the idea that they can be born under the Web and
grow under the Web." Papermaster calls that syndrome "dotcomitis"
and defines it as a mistaken belief that launching an Internet business
is neat and tidy - "no marks, no fuss," as he puts it. "That is
a reality in less than 1 percent of the cases," he says.
Papermaster argues that the Web has proven to be a tremendous
vehicle for supporting the growth of existing small businesses,
not a petri dish for a new spawn of economic life. "Using the Net
to extend a working business is the natural model in successful
businesses," he says. "Your market is not defined by the Net in
99 percent of the cases."
Agillion's main focus for its core client of small to medium businesses
centers on customer management. Papermaster, who has founded several
successful companies previously, has always found the complex logistics
of customer management to be the Achilles' heel of small businesses.
Tending to the details of tracking orders and monitoring sales distracts
entrepreneurs from the heart of small business: listening and responding
to the customer. So Agillion now offers a Web-based service that
provides personalized customer interaction tools to its customers.
"The key for small businesses is that they have to retain their
close customers," says Papermaster, "They have built up these relationships
over the years, and now the expanded reach of big businesses are
Only by achieving parity through assimilating tools that work
can small businesses fend off this assault, he argues.
Just as the widespread adoption of Quicken and Quickbooks has
automated accounting for small businesses, the continued spread
of companies like Agillion and BizLand will turn Web competence
into a business commodity as essential as a knowledge of the books
and an ability to sell. Once that happens, startups will find themselves
facing a fundamental question even sooner: What sets us apart from
everyone else? What do we offer that no one else does?
Read or print the Intro
and Chapter 1.
Read the book reviews at Inc
Read the publisher's press
this book from Amazon.com.
the companies that Tom discusses in the book
Hear a recent lecture by Tom on the Startup Garden
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Managing – articles that Tom wrote for The Industry Standard and some
written for Inc., Fortune Small Business, Harvard Management Update, and other
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