Grow Smart Business


Search Articles

Posts Tagged ‘businessweek’

The Rise of the Homepreneur and the New Report from Network Solutions

October 28th, 2009 ::

Over the last decade many entrepreneurs have turned their homes into remote offices in the early days and over time these home-based entrepreneurs or “homepreneurs” have become a force to be reckoned with. Because what many deemed a place for hobbyists or telecommuters, the home has become the affordable and sensible place to do business. With technology today, many work virtually and teams are formed from a global pool of resources, so it quickly becomes irrelevant if you have pricey office space on K Street in DC or at 30 Rock in NY but work out of your home in suburbia. Much to an entrepreneurs desire to be competitive that smart strategy can be passed on to clients in the form of lower costs and flexible teams.

This past Friday, BusinessWeek published this article on “The Rise of the Homepreneur” which discusses the findings of the report “Homepreneurs: A Vital Economic Force” which is a new report published by Emergent Research, a small research and consulting shop in Lafayette, Calif. “We’re seeing more and more home-based businesses that are real businesses,” says Steve King, who coauthored the new report with Carolyn Ockels. To prepare the report, they analyzed U.S. Census data and Small Business Administration research, along with data from our very own Small Business Success Index, a survey of 1,500 companies sponsored by Network Solutions and the University of Maryland’s Robert H. Smith School of Business.

Highlights of the Report and Download Link

The report is a good read and here are some highlights from the paper:

  • Home businesses employ over 13 million people.
  • Nearly 6.6 million home businesses generate at least 50% of the owner’s household income
  • 35% of home businesses generate $125,000+ in revenue; 8% more than $500,000.

Reading the summary section of the report I was not surprised by the three trends why more people are becoming homepreneurs:

  1. The lower costs and risks associated with starting a home-based business
  2. Demographic and social shifts
  3. A lack of corporate jobs

To find out more and read the whole report click this link to find out more from latest SBSI Research brief.

Issuing Bonds as an Investment Alternative

September 11th, 2009 ::

Recently, I was on the airplane and picked up BusinessWeek/SmallBiz magazine that someone had accidentally left behind. I was flipping though it and I came across this really interesting article on how small businesses are using bonds as an alternative investment vehicle than loans or venture capital.

I know, you think bonds=boring, but hear me out. That is what I thought but this headline caught my eye:

“Small companies can issue low-interest Industrial Development Bonds, or IDBs, to buy land or equipment or build new facilities”

You didn’t exactly have me “at hello” but you had my attention and I wanted to read more.

In the past, small businesses had two routes – loans or investment capital. But for many small businesses who are not in the “venture capital radar” or don’t want to give up a chunk of their company that they have already worked very hard to get on a good growth track. Loans are also an alternative but many look at it as debt that has too many strings attached to it. So what is left? In this case, bonds.

Because of the credit crunch many people have had a hard time raising capital or lines of credit that they usually would be able to get and this bond investment vehicle has become a nice alternative.

Here is the heart of the opportunity taken from the article:

“By using a little-known set-aside in the public finance world called an industrial development bond, or IDB, small companies with strong track records can gain access to as much as $10 million with rates as low as 3%—similar to what large corporations get in the commercial paper market. (Up-front fees range from $70,000 to $200,000, but total costs are still about 20% to 30% less than conventional bank loans.) And while IDBs were designed to be used specifically by small manufacturers, the definition of “manufacturer” may surprise you, as the American Recovery & Reinvestment Act expanded it to include technology companies that manufacture software or other intellectual assets.”

There is a catch (isn’t there always?):

“The proceeds from such bond issues can be used to buy land or manufacturing equipment, and to build new facilities. To ensure that IDBs contribute to economic development and therefore deserve their tax-exempt status, companies that issue them must promise local finance authorities that they will hire a predetermined number of employees over the life of the bond.”

Still I would give the article a full read and see if this might be a good alternative for you.