Up and Running:

Joel Spolsky, founder of Fog Creek Software, posted Is the Tech Recession Over? yesterday on his Joel on Software blog. He wrote:

OK, it’s just one data point. All I know is sales of FogBugz and Copilot. But what I’m seeing is this: October-December 2008 were terrible—sales were 20% lower than usual—but starting January 5th, we saw a significant bounce back to the same level of sales as we had before this recession started, and it’s continued to this day.

As my favorite programmer-sage Mike Trigoboff would say: “from your lips to God’s ears.”

In his post Joel links over to comments on his companion site Business of Software, which are also very interesting. And somewhat hopeful too. Several software people added comments on their own sales, and most of those comments are encouraging.

Joel’s blog is always a good read, and good to follow if you’re living and working or even thinking of living and working in the software industry. He’s not just a software entrepreneur, he’s also a blogger, an industry leader, and a good writer.

Meanwhile, as they say, back at the ranch, let’s find out together how badly the credit crunch is affecting small business in the United States.

If you own a business please click here to take the survey. I originally posted this survey yesterday on the Huffington Post. It’s short and easy.

Thanks!

This month’s ADP Employment Report was bad again, 175,000 small business jobs lost. Not as bad as last month, but still bad.

I had a good talk with Joel Prakken, of Macroeconomic Advisors, which produces the monthly survey for ADP, the large payroll processor. He pointed out, correctly, that he’s just working with what information is available — economics is educated guessing at best — but he didn’t sound very optimistic about quick recovery.

I asked him specifically about the phenomenon of large layoffs generating a rise in new businesses. That’s been true in past recessions, but, Joel said, it’s not clear yet whether that’s happening this time.

Honestly, I wasn’t paying much attention to these ADP reports until the downturn really went sour last September. I posted on them a couple of times when small business employment grew, slightly, in the midst of bad news almost everywhere else. And now it seems like cheating if I don’t keep up with it, as the bad news rolls in.

Small businesses lost 281,000 jobs in December. That was 80,000 in manufacturing and 201,000 in services. By the way, ADP defines small business as having fewer than 50 employees. That works for me.

The source document is at www.ADPemploymentreport.com.

I downloaded some statistics as an Excel file available from that site. It turns out that goods-producing small businesses have lost more than half a million jobs since the high point of January of 2007, when they employed 8.1 million people. Service sector small businesses have lost more than half a million jobs since their high point of just last April 2008, when they employed 43 million people.

What’s surprising to me, also, is that this new data isn’t surprising. I’m not sure I’m going to continue to post these monthly results. I don’t want to be predictable.

Yesterday, during our weekly meeting at Palo Alto Software, sales guru David Shear, recently recruited out of a finance business sales spot, said he’d met with friends in the mortgage business over the holidays and “there’s a boom going on.”

“I heard it over and over. Swamped with refinance applications, money is flowing, all of that. One of them said he’d been working Saturdays just to keep up.”

So I say great, here’s a spot that’s jumping now, a sign of some segment responding to government bailouts and all. It’s not necessarily universal; these are Oregon and Washington people, and just a circle of friends. Still, let’s take the good news where we can find it.

Wow, the ideas just keep rolling in. Look at this opening for a press release. Start with the problem, and tag the problems of the day:

Palo Alto, Ca, November 25, 2008 — With unemployment rising, stress due to job and financial insecurity in the U.S. has skyrocketed in the last eight months. 57 million people in the U.S. today are suffering from emotional pain, stress and depression. Job stress costs the U.S. industry over $300 billion annually in productivity and compensation.

And then show how you’re solving it, plugging your business. In this case, right after the problem posed above, we get the solution:

To help local companies to cope with rising stress, Silicon Valley based Emotional Fitness Clinic, Luminific.com, is hosting on-the-job group relaxation trainings and individual one-on-one relaxation sessions for business executives.

Let me make this clear: I don’t know this company, I don’t recommend it, I’ve never used it; I just received the press release over e-mail. Still, it does get your attention, doesn’t it? I’m posting it because it’s a useful example. I wouldn’t include the link, but that would be mean, since I’m liking the angle.

Turning a bad business climate into a business opportunity. The old lemon and lemonade trick still works. Here’s the next paragraph:

As life become less and less predictable, we experience more emotional stress. “Stress is the result of unexpected crisis,” says Dr. Robert Sapolsky, professor of neuroscience at Stanford University.

Hmmm. Endorsed by Dr. Sapolsky sounds really good, because he’s a real expert. My daughter took his class and loved it, and she really liked him, and I posted his Why Zebras Don’t Get Ulcers lecture on my other blog. And while I’m sure he said what the release says he said, I really doubt that he intended to endorse this business. Look at the way the company uses him in context, making his statement seem like an endorsement. Good stuff, no?

Yesterday I posted about how the maker of the prosperity candle has a booming business. Now today it’s one-on-one relaxation sessions for business executives. See? New business opportunities are all over this dark and depressed economy. You just have to look in the right places.

(Note: I posted this earlier on Small Business Trends. I’m reposting here for the convenience of my readers at Entrepreneur.com. Tim)

A couple of weeks ago a well-known local restaurant with 40-some employees closed its doors on a Monday morning without telling anybody in advance. Employees arrived Monday to a sign saying the business had closed.

Last week a printing company with 85 employees did the same thing. The people arrived Monday morning to read signs that the company had closed.

That’s what everybody fears these days. Is it going to happen to me?

Nobody wants to be told not to worry when things are bad. If you are in charge, they want you to share your worry with them, treating them like adults.  If you do, they’re likely to feel part of the team, and pitch in and help.

And if you don’t, you have anger and resentment to deal with, as well as disappointment and worry. People who lose their job from one day to the next, without any advance notice, are very angry.

I learned this the only way there is to learn this, running a company during a recession. I laid off five of 33 people in one day in 2001. Our sales fell hard when the dotcom bubble burst. We were slow to react. When we finally did react, our people were relieved to see us taking steps. Everybody pitched in.

And it also seemed easier to lay off five people the same day than that hardest of all things an owner does, fire somebody who’s been trying but failing. At least when it’s five at once, which was about 15 percent of our work force back then, people understand that it’s a larger cause, not a personal failure.

This whatever-it-is (recession, depression or whatever) is a lot worse than 2001, but the principle still applies. If you’re running a company right now, your people want to know how you’re doing. Don’t tell them not to worry their pretty heads. They want to be part of the solution. It’s normal human nature: People naturally want to be included in things. When times are tough, they want to know.

I’ll bet every one of the 40-some employees in that closed-down restaurant situation wishes the eatery had seen the problem coming, cut costs, maybe laid off some employees but stayed in business. And I’ll bet every one of the 85 employees in the printing business wishes it had cut it to 60 or 50 or 40 employees but stayed in business.

And I’ll bet they are all angry at the surprise. Several were quoted in the newspaper. “Why weren’t we told?” they asked.

If you’re an owner, don’t think you’re doing anybody a favor by not sharing your worries.

Who says it’s not a good time to start a company?

“My phone is ringing off the hook,” said Roxanne Usleman, a psychic in Manhattan.

Ms. Usleman, who says she channels angels to advise her clients on interpersonal and financial matters, reported both a spike in traffic on her website and a significant surge in private consultations. She used to see comfortably 15 to 20 clients a week, she said. Now she meets with more than twice that number. “I’m having trouble squeezing in appointments,” she said.

That’s from Sunday’s New York Times, in a Style story called “Love, Jobs and 401(k)s.” See, it’s a blanket bad time for business; and it’s a matter of what business you have. The Times story also notes this about a Los Angeles psychic named Tori Hartman:

“In what is perhaps a sign of the times, the $70 moss-scented prosperity candle offered on her website has become her best seller, she said.”

She can’t make them fast enough.

I posted here last week about Myrtle Creek, Oregon, a town of 3,500 about 90 minutes south of Eugene and half an hour south of Roseburg, where the city government decided to help small business by investing in business planning.

It ended up being a very interesting and productive evening, a roomful of interested people, a good discussion and, I hope, a new angle on practical development in the Main Street world the presidential candidates talked about a lot during the recent campaigns.

I arrive about nightfall to find city manager Aaron Cubic, a man in his mid-30s (I think), dressed in a suit, setting up chairs and tables in the unassuming community center just a few blocks from the main street, which is named Main Street. Cubic was easy to like, seemed to know everybody as people streamed in, and appeared happy with the whole affair.

The room filled with a wide range of people, some running existing businesses, some looking to start new businesses, all with real questions and concerns.

The city had copies of Business Plan Pro available for participants, who only had to fill out an application to get the software. And I had been asked down to talk about business planning for a couple of hours. Of course, it was my view of business planning, based on my Plan-As-You-Go book, starting with plans only as big as you need to run the business better.

I talked afterward to a man concerned with what inventory to carry in his fly-fishing store and a woman looking to start up a nonprofit. She’d been convinced when she arrived that doing a business plan would be too hard, but left intending to do one the next day.

I am very happy with the whole event. It feels like something real, tangible, that one town is doing to help its community. All the politicians talk about helping small business, but how many concrete things can they really do?

I hope Myrtle Creek becomes Oregon’s next boom town.

Sometimes things come together and mean more together than they would separately. Looking forward, clean energy is going to be very big.

I don’t want to get into one of those “this-is-a-good-business-to-start” suggestions, because you don’t just decide to do a new business, look at what’s hot, and end up with clean energy. Obviously you have to be operating in that area already, with interests and outlook and probably education and skill set, to be building a business. Still, there are the come-along clean energy businesses, the websites, the information sites, distribution, and so on. I think this is worth special attention.

Consider these three things which happened this week and last:

1. Barack Obama and Energy Policy

Most of us have seen it in the news coverage, or the debates, or on his websites. One of Barack Obama’s most important points is the need for a huge push in clean energy. He’s talked about finding ways to invest $15 billion per year. This looks and feels like it could be the equivalent of John Kennedy’s national call to action in 1962 when he challenged the nation to have a man walking on the moon before the end of the decade.

2. Thomas Friedman’s Public Vision

His new book is called Hot, Flat, and Crowded and I’ve posted about it before on this blog. Tuesday night he offered a quick summary on The Daily Show. I think he’s on the right track. (If you don’t see the video here, try the source video on Comedy Central.)

3. Venture Capital and Clean Energy

John Doerr has been a venture capital industry leader for 25 years (or so). Click on this video (or, if you can see it below, watch it here) of an interview-style presentation he did last week at the Web 2.0 conference. Notice what he’s saying about venture investment and clean energy.

This conversation goes over a lot of important ground about financial crisis and venture capital, so it’s worth listening to the full 32 minutes. But in this context of clean energy, notice how clear John Doerr is talking about the investor interest.

I think the message, coming from all over the place now, is pretty clear.

Here’s a wonderful new business idea for today’s hard times: Become an expert on how to survive in business during today’s hard times.

Seriously, isn’t it amazing how many people are suddenly experts on surviving a recession? What percent of your e-mail offers from vendors involves helping you get through hard times?

Hmmm . . . let’s see . . . mind your costs. Watch your sales. Keep your cash in the bank. Avoid debts. Stay close to your customers . . . what else?

Yes, I admit it, I’m guilty, too.

But here’s an idea: Let’s all watch for something new, different and particularly relevant on this topic. Where are the surprises?

I’ve heard several interviews with Thomas Friedman lately, and over the last week I bought and read his latest book, Hot, Flat, and Crowded.

I think the book is something that startups and small businesses should read. It strikes me as about as reasonable and accurate a projection of the future as is possible in this rather random world.

Hot, because climate change is real and it threatens humanity. Flat, because we’re in a world economy now, with very few borders and a very level playing field. And crowded because, well, do the math. Our numbers double every generation.

What this book and the thinking behind it should mean, if there is any common sense left in the world, is a big investment boom for clean technology and alternate energy technology.

In regard to new business–especially emerging business–and growing small business, Friedman is calling for an all-encompassing new wave of political, social and economic resolve, which he hopes will be led by the political, to change the way the human race consumes energy.

Drilling for oil, in Friedman’s picture, may or may not be useful as a drop-in-the-bucket stopgap measure, but in the broader view it gets in the way. It obscures the real picture. What we need, badly–and that’s not just we the United States, although we’re the worst of it–is to focus our efforts on new sources of energy, using new technologies to end the economic dependence on something we don’t have much of and we need a whole lot of: oil.

If Friedman had his way, the U.S. would jump on new alternate sources of energy in a way that would greatly surpass our efforts to get a man on the moon after the 1961 John F. Kennedy call to action, and also the technology revolution of the personal computer a generation ago, and the Internet in our current world.