I’m fascinated by data Steve King of Small Business Labs published a couple of weeks ago in Comparing Small Business Owners and High-Growth Entrepreneurs. This makes perfect sense to me: I would expect the general small business owners — which makes me think of restaurants, car washes, hardware stores, dry cleaners, etc. — to be significantly different, as a group, from high-growth entrepreneurs.

To do this we analyzed small business owner survey data from the Small Business Success Index (SBSI), produced by the University of Maryland and Network Solutions.  We compared this data with the results from a 2009 study of the motivations and backgrounds of high-growth entrepreneurs – An Anatomy of an Entrepreneur.

If you guessed that the high-growth entrepreneurs tend to be more educated, you were right. Here’s what Steve says:

About 95% of high-growth entrepreneurs have graduated from college and 47% have advanced degrees.  Slightly less than half (47%) of small business owners have graduated from college and only around 5% have advanced degrees.

And here’s a disturbing note on women:

Women own roughly 30% of small businesses.  While that’s lower than their share of the overall workforce, it’s significantly higher than the less than 7% of high-growth entrepreneurs who are female.

And I’m not at all surprised to see that motivation is also different:

The top reason for starting a company according to high-growth entrepreneurs was “building wealth.”  This was listed as the 4th reason by small business owners.  Small business owners listed “working for yourself” as the top reason for starting their business.  This came in as the 4th choice by high-growth entrepreneurs.

Finally, I like what Steve says about why this may be much more important than just idle curiosity about different demographics:

The main reason we’re interested in this topic is we believe policy makers are too focused on high-growth companies and entrepreneurs … the millions of U.S. small businesses are also important – especially for groups underrepresented in high-growth firms (women, minorities, those without a college education).

Funny how the labels work: The lean startup tends to be called that because of a trendy and fast strategy, a lot of flexibility, and a high-powered startup mentality. Emphasize the phrase “high-powered.” But ultralight startups? That sounds to me like an extremely small and economical startup. I like the image it conjures. I think of ultralight as backpacking stoves, tents, sleeping bags, plus sporting equipment. It all sounds good to me.

I saw that phrase first in Ultralight startups: little capital, just computer published earlier this month. It starts with:

From his apartment in Berkeley’s student ghetto, 19-year-old Raymond Lei runs an online T-shirt printing business that grossed more than $60,000 in August, putting him on track to post more than $700,000 in sales this year.

It turns out that he started the company–ooshirts.com–in high school and has spent $2,200 on it so far. It’s a good story. And perhaps a trend:

“We have no firm data on the frequency of such events, but there’s no doubt that the new online model makes it very easy to start a business,” says Steve King of Emergent Research, an East Bay consultancy that has tracked “ultralight” startups.

I’m happy to credit Steve King with inventing the phrase, since his company is already tracking the ultralight startups. I think it’s something that’s always been there, but is, as Steve suggests, easier now than it used to be.

(Image credit: Chad Zemendorf/The Chronicle. You can click here, or click the image, for the original)

Try this idea out: You’re starting your own business. It’s just you. You’ve already quit that other job, so you’re working on it all day, every day. Consider some of these options:

The home office: You settle into a comfortable home office, work your computer, work your phones, and work your refrigerator. You take meetings at clients’ offices or coffee shops. You do printing jobs at Kinkos.

You get companionship via Facebook and Twitter, and from your loved ones who share the house.  This worked well for me in my early stages, but a lot of people have trouble dealing with borders between home and work. My worst problem was the proximity to the refrigerator. The rent’s free, and the coffee is in the kitchen. And your favorite distractions are all there with you.

The small office: You ante up a monthly rental amount and open an office in a nearby office space. Now you have somewhere to go so you can separate work from home and draw those borders. Maybe, if it’s big enough, now you can take a meeting in the office. You have no distractions. And you walk to coffee alone, and get lunch alone. When the phone’s not ringing, you have your own thoughts to keep you company. Here too, these days, you might get companionship via Twitter and Facebook. But who are we kidding: That’s still just reading and typing.

I’ve done both of these first two options at different times. I’ve also had the home office with a couple of employees, which worked for a while but was really hard on the family, with non-family people in the house 40 hours or so a week. Back in the middle 1980s, when I was still in the home office in Palo Alto, some friends  who were also single-person businesses worked together in an open office space downtown where they could rent something like a cubicle with a desk in a large, open office space. They shared a meeting room, a copy machine and a fax machine. They also had company, and coworkers for the discussion of the latest draft, and the quick walk to the corner for coffee. And their rent, based on a desk and a cubicle, was less than for a small office. It seemed a nice compromise.

These days, that third option is called coworking.

Coworking: In this case, unlike the classic one-person entrepreneur, you’re not alone. You have an office to go to. When you get there, other people are around, talking at the water cooler or while waiting for the printer. You can talk about the game last night or your latest version of your prototype website. You can look around and find somebody to walk around the corner with for a cup of coffee or to get lunch.

That comes up because I noticed today that my friend Steve King is tracking coworking spaces over at Small Business Labs. His company, Emergent Research, has counted more than 250 of them, all of which meet these criteria:

1. Self-identify as providing coworking space
2. Offer a range of membership options
3. Offer community space and/or activities
4. Have coworking as an important part of the facility offering
5. Cater to those using the facility for work-related purposes
6. Be active

Personally, the home office worked really well for me. But I always saw the advantage of coworking, and I’m glad to see Steve and his group are keeping track of this trend.

If you’re interested in coworking spaces, in his post today Steve promises:

Over the coming months we will continue our research on coworking and the future of the workplace.  We will, of course, continue to report our finding on this blog and on our coworking project blog. 

(Image: from Emergent Research)

(Note: this is awkward. The list I linked to is down. I’ve emailed onlineuniversities asking about it, but in the meantime, it’s just not there. Damn. I’ve checked back at the TED site, hoping to provide a quick fix, and there does seem to be a good match with TED’s Not Business As Usual theme. You can click here to go there directly. )

My thanks to the folks at onlineuniversities.com for this list of 20 Excellent TED Talks for Small Business Owners.  I’m a believer in the TED talks as the best of the best, and this is a good list. And my thanks as well to Steve King of SmallBizLabs for pointing it out in his post last Friday.

There are several there that I’ve posted about or mentioned before in my own blogging, and one that I disagreed with, but so what: I disagree with a lot of smart opinions. Certainly it’s an excellent resource.

It makes me think of how valuable this list might be for all of those people who are already or want to be business owners. I’m adding it to my list of recommended resources for my online curriculum in starting and growing a business.

Some of my favorites:

This collection of posts on my unretirement (I think I’m adopting Steve King’s term) came up this week, I guess because of the interview Romy Ribitzky did last week with me and my daughter Sabrina, about how I stepped down from managing the company to focus on blogging, writing, speaking and teaching instead.

That was three years ago last April. In retrospect, I’m even happier about it now than I thought I would be then. It’s worked out fine for me, thanks; and I think the company is much better off, too.

• How to Rewrite Your Job Instead of Retiring | Small Business Trends
  This is my post on Small Business Trends, reflecting on the three years  since I stopped running Palo Alto Software.
• Small Business Labs: Tim Berry’s Baby Boomer Un-Retirement – Part 2
  Steve King of Small Business Labs goes back to earlier posts on my succession safe harbor new job, picking up where we left off.
• Advice For Father Daughter Father Son Businesses – Resources – Portfolio.com
  A good compilation of two-generation family business advice from fathers and daughters and sons who’ve successfully worked together, including me and my daughter, who runs my company.
• Father Child Business Talk About Working Together – Companies & Execs – Portfolio.com
  Romy Ribitzky on Portfolio.com retells the story of Palo Alto Software (among others) …

Warning: there’s a whole lot of me in those posts. The first one is by me, the second one about me, and the last two mixing me and Sabrina with some other stories.

About three years ago I attended a Web 2.0 conference at which a couple of professional venture capitalists and a couple of successful angel investors talked about trends. This was before the great recession, but in the middle of the explosion of web apps and social media.

One thing that came up repeatedly, then, was the impact of steeply declining web development costs on professional investment. People were getting real web apps up and running in a few months with a few people and a few hundred thousand dollars, instead of in a year or two with a few dozen people and a few million dollars. This was a problem for a few, and an opportunity for many. And the beneath-the-surface rumblings were about how it was screwing up the venture capital business model. VCs needed to invest hundreds of millions of dollars every couple of years, and liked to go into groups and syndications, which meant they wanted deals for a few millions dollars. But entrepreneurs, meanwhile, were looking for a lot less.

Then came the big recession, and everything got crazy. Trends were broken.

Now, however, it seems like the world of web-oriented angel and venture investment is in fact shifting toward angels, and smaller amounts.

In “The Rise of Super Angels” over at Small Business Labs, Steve King offers a good summary of a new trend. He cites “Seed Deals Account for 26% of Early-stage Web Investments” in which Giga Om points out the rise of a relatively new class of angel investors, which it calls super angels. He says, summarizing the Giga Om post:

Unlike traditional VCs, super angels actively invest in seed-stage companies. They also invest lower amounts of money than traditional VCs, between $25k and $250k.

The article suggests–and we agree–that angels are disintermediating traditional VCs in many cases.

Before we take that too far, it doesn’t mean that more companies are getting outside investment. It’s more about the changing texture of investment, and the relative weight of angels vs. venture capital. In the same post that talks about super angels, Steve King also quotes from “Calling All Angel Investors” on Forbes.com that points to how few companies actually get angel investment.

The article uses as an example Pasadena Angels, an angel investment club that reviews 400 to 600 business plans a year. Of those, roughly 20 percent are invited to present to the club, and only about 15 percent of those get funded. If you do the math, this means roughly 97 percent of the companies submitting plans get turned down.

Frankly, those numbers don’t surprise me. I think that’s been true for a long time: Only a very small minority of startups actually land outside investment.

I’m wondering whether what seems to be a general decline in venture interest in web apps, and an increase in interest in clean technology and medical technology and clean energy, might not also be a matter of risk-return ratios on larger investments with longer cycles. That’s where venture capital is normally strong.

No, I don’t have data. I’m just wondering.

I like a thoughtful analysis that puts some conceptual order into larger sweeping trends. Take a quick read of The Medium–The Death of the Open Web on the NYTimes.com site, by Virginia Heffernan. She makes some very interesting points.

People who find the Web distasteful–ugly, uncivilized–have nonetheless been forced to live there: It’s the place to go for jobs, resources, services, social life, the future. But now, with the purchase of an iPhone or an iPad, there’s a way out, an orderly suburb that lets you sample the Web’s opportunities without having to mix with the riffraff. This suburb is defined by apps from the glittering App Store: neat, cute homes far from the Web city center, out in pristine Applecrest Estates. In the migration of dissenters from the “open” Web to pricey and secluded apps, we’re witnessing urban decentralization, suburbanization and the online equivalent of white flight.

I love a good analogy, and she’s got one: cities vs. suburbs. The teeming mass of opportunity, senses and smells, shoulder to shoulder with everybody; compared to the polite and relatively safe order. Well done.

Her conclusion:

I see why people fled cities, and I see why they’re fleeing the open Web. But I think we may also, one day, regret it.

Interesting analysis.

(And my thanks to Steve King of SmallBizLabs, who pointed it out to me.)

I posted several times here on the disturbing hundreds of thousands of jobs lost per month as we fell into the great recession in late 2008 and early 2009. So it’s a relief to see that last month the economy added jobs. I got this from MSNBC, with thanks to Steve King of SmallBizLabs, who passed it on via Twitter:

The Labor Department said employers added 162,000 jobs in March, the most since the recession began. Private employers added 123,000 jobs, the most since May 2007.

The department also revised January’s job total to show a gain of 14,000, up from a previously reported loss of 26,000. February’s job numbers were also revised higher by 22,000 to show a loss of 14,000. The economy has now added jobs in three separate months since the recession began.

Sure, it’s hardly time to celebrate, with unemployment still 9.7 percent nationwide, and 15 million people out of work since the recession began in late 2007. But it’s sure a lot better than losing more than 600,000 jobs in a month not that long ago. Maybe we can think of it as a storm starting to clear, like in this picture:

(Image: Leonid Tit/Shutterstock)

Obviously there are a lot of good top 10 trends lists for small business, social media, technology and all, as seems to happen every year at this time. I’ve seen a lot of them, and I recommend Steve King’s Top 10 Small Business Trends for 2010 from Small Business Labs, posted yesterday.

One big point in Steve’s favor, and a big credibility boost as well, is that Steve starts the piece with links to his trends posts for each of the previous two years. Good touch. And I’m impressed–he called things fairly well.

Comparing all three posts–2008, 2009 and 2010–I see some broader trends. It reads like the spread of more and smaller: more solopreneur; more baby boomer businesses; something like economic diffusion spurred on by the multiple whammy of the big recession, baby boomer demographics and technology. Green business shows up in all three. Buy local shows up in two of three. Social media and closely related factors show up in all three.

This makes interesting reading, and good food for business thought.

Here’s a very brief summary of his top 10 for 2010:

Economic Trends

1. The Shift to Contingent Workers Turns Employees into Entrepreneurs
2. Personal Businesses on the Rise
3. Small Business Lending Returns to Pre-Bubble Levels

Social Trends

1. The New Local Movement
2. There is No Place Like Home for Small Business. (More home businesses)
3. Clean and Green Creating Small-Business Opportunities

Technology Trends

1. Social, Mobile and Cloud Computing Converge
2. Location Technology and Services (GPS and so on)
3. Analytical Tools Lead to Data-Driven Decisions
4. Online Training Brings Professional Education to Small Business

With the high-tech world all abuzz about tablet computing, I enjoyed Steve King’s Lessons from OLPC post today, about the One Laptop per Child (OLPC) initiative and its version of the tablet computer

Steve put the illustration shown here on his Small Business Labs blog post. Here’s his summary of the design specifications:

Their new tablet will be made of a single sheet of flexible plastic that will be unbreakable. The hook on the corner will be used for carrying the PC and the price goal is less than $100. Low-cost components mean less power than a full-sized PC, but plenty of juice for almost all PC users.

I’ve been a happy user of tablet computers for several years now, and I’m eager for the Apple tablet to appear because I want to own one. I’ve been using Motion Computing tablets mostly.

But Steve’s right. One of the most interesting developments in computing is the low-cost student laptop. Even now, it’s because of OLPC that we can get decent netbooks for $300 or less. This is a trend worth watching in the future.

(Illustration courtesy of Steve King, Smallbizlabs)