Small Business: Lessons of the Recession – Women vs. Men
The recent study, Small Business: Lessons of the Recession, by Chase Card Services, NFIB (National Federation of Independent Business) and the Center for Women’s Business Research (CWBR) reports on the types of responses business owners made to their businesses over the past years of the “Great Recession.” One of our interests was to see if there were differences in approaches between men-business-owners and women-business-owners. While I’ve written elsewhere about the general findings (link to Forbes blog), I’d also like to ponder about the implications of the study to entrepreneurship education so here we go, step by step:
Focus on cost control: Forty-five percent of WOBs focused on controlling costs in response to economic challenges, while 31 percent concentrated on increasing sales. In retrospect, nearly 60 percent of women are confident in their business decision. They believe they made the right decision at the right time.
What do we teach in entrepreneurship about cost control? There are lots of courses about entrepreneurial financing, however, the vast majority of them are about obtaining external financing and way too many of them are about obtaining equity financing. Good to know – but not going to help you understand your cost structure and how to make decisions based upon your costs. This type of help also doesn’t often come from traditional accounting courses which are geared to using corporate existing information to build reports. What do you do if you have to first create that cost information? Different class.
Targeting the right customers: Although more than half of WOBs (55 percent) focused on new business among their existing customer base, one in four say they are marketing to a customer base today that is different from their pre-recession targets.
The question of a “right” customer is always intriguing and has a lot to do with how the entrepreneur looks at the world for opportunity and how that person understands that it is less expensive to grow an existing customer than obtain a new one. I’d also suggest that we don’t teach hard enough for business owners to expand their geographic horizons. “Global” always seems to be in a different course, rather than a line to be at least reviewed for most products and many services.
Social media as a business tool: Half of WOBs owners now use social media compared to four percent before the recession. Of those surveyed, 56 percent said social media is “very important” or “important” to their business.
There is an intimidation factor around social media for many business owners. It looks like it would take a giant amount of effort to even enter into a very steep and daunting learning curve. Many business owners also dismiss it as not relevant to their type of business. Some kind of social media is now a necessary part of most types of businesses. We need to teach it as part of an integrated marketing program, not as a stand alone. And as usual, the entrepreneurs will ultimately decide if it is for them or not.
Promoting the business through community activities: Thirty-nine percent of WOBs increased their involvement in civic, social or school activities to increase their exposure during the recession and create value for their communities. Although these efforts may seem like they don’t involve money, don’t lose sight of the actual value of your time. After all, a business owner’s time is their most precious resource.
My outcome of the definition of entrepreneurship that I use is the creation of value and while that value should include financial value for the entrepreneur, if it doesn’t also include creating value for the community (defined in many ways), something is missing. We do teach this as an integrated part of the entrepreneurship courses that every student takes at Babson. I’m not talking about the separate entity of social entrepreneurship, but how every entrepreneur should consider their value created in multiple ways that support their vision.
And so, as we look at the latest date from the Chase/NFIB/CWBR study, we as educators can follow the lessons – and help others learn them as well.
Professor Patricia Greene
Paul T. Babson Chair in Entrepreneurship