Up and Running:

Once upon a time the so-called “home office” market was a pot of gold hidden at the end of a rainbow. Maybe it will be someday. And, maybe more important than that, home office businesses are at the very least real, employing people, getting things done and growing.

I first noticed the so-called home office market back in the middle 1980s, when I did my business from a home office (so perhaps my attention wasn’t entirely by coincidence). I was consulting for a living in those days, doing planning and related research mostly for high-tech companies. I was also writing a monthly column in Business Software magazine. And one of the markets most of my clients wanted to reach was what they called the home office.

The problem, however, was that the people who ran their home office businesses didn’t really make a market. They were out there diffused in the world, without an identity, without much in common with each other and without product identity.

What did a home office need that was different from what small businesses needed? What did a home office buy, different from a general small business? It was hard to tell. In comparison, the mobile travelers needed some predictable items and read predictable magazines. So did the students, the engineers and so on. But not home office businesses. Or so it seemed back then.

Earlier this week Steve King of Emergent Research tipped me off to new research about home-based businesses that adds a new angle on the lure of the pot of gold. In his post “The Rise of the Homepreneur,” he offers real numbers from a new report based on data from the Network Solutions Small Business Success Index. The report is available here. And some of the key findings are:

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

So with new data from a new angle, it’s not that home office businesses are necessarily a market; it’s that they are a lot of people doing business, making money and doing (I hope) what suits them. And a reminder, as well, that “home office business” doesn’t mean inconsequential; the millions of businesses in this study are supporting people, employing people and generating real money.

And if you dig into the study, they are being taken seriously by customers and clients. And they offer lower-cost startup alternatives, too.

Now where was that rainbow?

With all the talk surrounding the landmark book Free by Chris Anderson, I want to recommend Steve King’s post “Free isn’t a Business Model, But it is a Business Strategy” on his Small Business Labs blog.

I’ve followed the Free controversy myself, and posted about it here on this blog, and  here on the Huffington Post, when two of my favorite authors, Malcolm Gladwell and Seth Godin, squared off about it a few months ago. Gladwell essentially hated the idea, and Godin declared it here whether we like it or not.

If I had to choose one short description of the basic idea, it would be this paragraph from Anderson’s 2008 story in Wired:

Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multi-player online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

King has a gift for summary. He says in his post:

Free has been used effectively as a business strategy and marketing tactic for pretty much as long as businesses have existed. Given how widespread and successful free is and has been, I don’t see how you challenge the concept.

The only place I see room for criticism is if you think Anderson is suggesting that free is a complete business model. Obviously, if free means no source of revenue then it is destined for failure. But I don’t think this is what Anderson is suggesting.

King goes on to point out several examples. He also points out that it could be tactic, strategy or something else. And it’s not that new an idea, either (Chris Anderson would agree with all three).

Are you looking at using a free offer as part of a business plan? You’ll have good company. I do hope, though, that you define for yourself the specific business objectives (traffic, visibility, whatever) and put in some metrics so you can measure results.

(Image credit: from Wired.com, Free! Why $0.00 Is the Future of Business)

I think I know the “content” business. I’ve been a journalist, a columnist, an expert article writer, a speaker, a blogger and an author of books published by Entrepreneur Press, McGraw-Hill, etc.

I had a talk yesterday with a good friend who’s struggling to make it in the content business. She’s a true expert in entrepreneurship and a very good writer. But it’s slow going for her.

Part of the problem is that the content business isn’t always a business. The world is full of experts–me included–willing to write for free, not for money, because they make their money somewhere else. Some provide content in exchange for links, some for visibility, some just because they want a voice. So it’s getting harder to sell what other people give away.

When I was a journalist we were filling the spaces between the ads. Today it’s a lot more complex. Why do major intellectuals and celebrities post for free on Huffington Post? Because they want to, not because they have to. Why do most people blog? Because they want to. It’s a rare blog that actually makes its author money (sure, there are some, and they are well known; but they are also one in a million).

I don’t think the future bodes well for selling content for money. Maybe creative content, but not business content. It seems like the world is full of experts willing to write, speak and blog for free (or maybe for links). They get paid back in visibility and, they hope, eventual sales of whatever it is that they actually sell. And lots of them simply want to write about what they like. They make it about having a voice, and having some visibility. That seems like it permanently changes the business of just selling content.

And I’m one of those experts. So I’m in the middle of this particular wind of change. For me, at least, I love it.

Denise O’Berry’s post last Friday called Get Your Company on the Online Video Track – It’s Easy on her Just for Small Business blog is a good reminder, with good resources. The key point:

If you’re intimidated by the thought of jumping into the online video pond, don’t be. It’s a piece of cake to do and YouTube simplifies the process for you.

With a simple camera like a Flip and a few minutes, you too can add good value and content to your website or blog.

She also points to this simple YouTube tutorial from Small Business Trends:

If you don’t see it here, you can click this link to see it on YouTube.

I don’t know that anybody is arguing this point anymore, but I thought I would pass on this Mashable post from yesterday titled 5 Reasons Why Twitter’s Growth Cannot Be Stopped. This is pretty much a given in our constantly changing business environment. Not that every company must necessarily restructure its strategy to accommodate Twitter, but certainly, if you’re operating in the world of startups and small business, it’s foolish to ignore a trend this size.

1. Consistent Growth.

Post author Vadim Lavrusik uses the chart here to show how Twitter.com’s unique visitors have grown from about 2 million to about 20 million per month in this year alone. That’s astounding growth.

2. Big companies jumping on the bandwagon.

“54 percent of the companies have a Twitter presence and for the companies that use only one social media platform, 76 percent of them use Twitter as their preferred choice.”

3. Number One Most Social Brand

Social Radar ranked Twitter number one for June and July.

“Social Radar analyzes the Web to see what brands are mentioned most by unique sources. This includes blogs, other social networks, forums, etc. The analysis includes brands, not just social networks. Facebook is at number 4, with the iPhone and Google at number 3 and 4, respectively.”

4. Millions in Free Media Coverage

“Twitter received $48 million worth in media coverage in 30 days, according to Ad Age, which also notes that the figure is about half of what Microsoft plans to spend on marketing Bing.”

5. Continued Growth Internationally

“Right now, about 55 percent of the audience is international, according to comScore. This number too will continue to grow.”

Darren Dahl brought back some bad memories with his A Small-Business Guide to Intellectual Property in The New York Times last week. Not that his story is off base, either: He seems to have things pretty much straight. Even so, he may be way too optimistic. Out here in the real world, from my experience at least, things are often worse.

For the first example, he tells how Daniel Lubetzky discovered that a competitor had done a knock-off package that looked like his company’s snack bar:

He kept hearing how one of his competitors had copied the packaging, look and feel of his bars.

Fortunately for Mr. Lubetzky, he had secured crucial components of intellectual property like trademarks, trade dress (the look and feel of a product) and web addresses after founding his company. Unlike a patent, which can cost up to $25,000 to secure, trademarks and web addresses can be obtained relatively cheaply and without the aid of a lawyer.

Several years ago my company had a bad experience with a competitor who brought out a new box that was so much like our market-leading box that our sales reps called complaining we’d brought out a new product without telling them. We had one of the best intellectual property lawyers I’ve ever heard of, and we had all the trademark protection he could think of, but it turned out that copying packaging is not illegal. You watch the key trademarks, make things look the same, and the consumer gets fooled.

You’re probably thinking we didn’t have the right lawyers, but if so, take a stroll down the retail shelves of any office superstore or a grocery store and count how many packages look like their competitors. The imitators copy market leaders.

I think the package knock-off strategy sucks. But it also works. People make money that way. And most of the time, it’s not illegal, and trademarks and copyright are easy to work around.

And then, second example, patents: The patent system is broken. Just read what Wikipedia says about patent trolls. Here’s what a patent troll does:

• Purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent
• Enforces patents against purported infringers without itself intending to manufacture the patented product or supply the patented service
• Enforces patents but has no manufacturing or research base
• Focuses its efforts solely on enforcing patent rights

Unless you’re running a business, you probably have no idea how widespread this is. My company is a small business, barely 40 employees, and we got caught in it. And I know a guy who had a family photo-sharing site, no employees, and he got caught by one. He had no revenue, but he still had to pay $1,000.

But to be fair to Darren Dahl, he doesn’t talk about patent trolls, but he does summarize very well the frustration of patents in general:

Actually, what a patent does is give you the right to prevent someone else from producing what your patent covers. “Having a strong I.P. position helps ensure that other people pay you for your innovation like they would a toll on a road,” Mr. Kocher said.

But even if you do have a patent, there’s no guarantee that someone won’t try to get around it. There’s also no guarantee that you will win if you fight that person. But if you have your I.P. ducks in a row and a commitment to do whatever you can to defend those rights, you do have a fighting chance–even in a fight against a much larger company.

I don’t want to be too negative, but sometimes it seems that the “fighting chance” he mentions is also too optimistic. The world of high technology is littered with the corpses of companies that eventually won their cases on appeal, but the company was lost in the meantime.

And I’m not saying that as an entrepreneur you should ignore patents, trademarks or copyright. No. You do what you can to protect yourself as best you can; but don’t think that it’s easy. And don’t think the system actually works.

I had a long talk yesterday with a good friend at the back end of a bad business experience. Call it recession-related, banking, credit cards and a website that might be valuable someday–good information, nice interface–but was taking too long.

We had a talk about web apps, trends and the long-term problem of free. My friend is safe, thanks; he’ll be fine while what he’s been working on falls apart through no fault of his own.

But free? Are you ready for free? If you’re looking at a web business or information or expert business, you’ll probably have to deal with this. People on the web–you included–expect free.

Unless you’ve been hiding under a rock, you already know about the dustup between Malcolm Gladwell, Chris Anderson and Seth Godin . . .

Anderson’s book, FREE, came out a few weeks back, arguing in part that the distribution costs of any intellectual property that can be boiled down to digital format, be it a song, a book, a video or a game, have become so low that you should essentially round down to zero and accept that if you don’t make it available for free, someone else will.

So, rather than fight it, just suck it up and give it all away.

That’s from Jonathon Fields’ post last week: Why I Hope the Free Brigade Got It Wrong. He adds:

Because if the Free Brigade are right, if we who create information, performances, music, writings, recordings and any other electronic “commoditized” form of our work are required to give our creations away whenever they appear in digital form, that effectively shuts down one of the most powerful and lucrative ways to scale a small business built around creative or strategic output.

Which brings me back to my conversation with my friend from the besieged website. Somebody has to make payroll.

Very interesting piece on BusinessWeek.com today, “Is Entrepreneurship Declining.” John Tozzi gets two contrary points of view from two people I’m proud to know and admire: Scott Shane and Steve King. John picks up the right links:

Scott says yes and

Steve says no.

Both pieces are well-written and well-researched. William Blake said, in The Marriage of Heaven and Hell, “anything possible to be believed is an image of truth.” I’ve always liked that quote.

Tozzie concludes:

I can’t argue with the entrepreneurship numbers. But as one of Scott’s commenters points out, you get different trend lines depending on where you start counting. I think there could be an inflection point around the beginning of this decade that reflects growth of new types of ventures. Curious to hear more thoughts on this in comments or on Twitter.

What do you think?

This 18-minute TED talk offers a very intriguing broad view of the changing face of information, media and communication in general as new phenomena–cellphones, Facebook and Twitter–change the way information travels and multiplies.

If for any reason you don’t see this video here, you can click this link to jump to the source as it was posted on YouTube.

Steve King at Small Business Labs posted this morning that U.S. personal businesses grew by almost 1 million in 2007, to 21.7 million, according to the U.S. Census.

Of course that’s before the big economic crash, but still, that’s interesting to me. A personal business is a non-farm business with no employees. The growth in personal businesses fits right in with the research Steve and his company have been doing for Intuit, on the new artisan economy.

The individual experts, consultants, graphic artists, bookkeepers,  designers, programmers and bloggers, among others, are part of this trend. You might be, too.

My thanks to Steve King and Carolyn Ockels of Emergent Research for this slide show of their small business trends predictions for this year. I’m a regular reader of Steve’s SmallBizLabs blog. This collection is class food for thought.

I just caught Ann Handley’s latest post on Marketing Profs Daily Fix, in which she gives us several good links and a short video interview on Twitter as “An Enormous Opportunity.” This is important.

Among other things, Stephen Berlin Johnson–who did last week’s Time Magazine cover story on Twitter, says:

“We’re getting to invent what this new platform can do.”

What’s happening with Twitter, including the easy-to-poke-fun-at aspect of Twitter as trivial boring updates–an idea we get when the late-night comics take it on–is that it’s caught on with the early adapters and opinion leaders, whom Seth Godin calls the sneezers, people who tend to be communicators.

Although it’s a lesser example, it does remind me of what I saw (and lived through) about 25 years ago with the personal computer revolution; and again, about 15 years ago, when the business world caught onto the web.

It’s not as big as either of those, because there’s no fundamental change in technology. But the phenomenon of bandwagon is there, and in that sense it’s similar.

Why do you care? It’s not that you have to be at the bleeding edge to be an entrepreneur; you don’t have to. But it helps.

And believe me, it’s not just what people had for breakfast: It’s what they’re reading, watching and thinking.

My suggestion, concretely, is that if you’re reading this blog and you aren’t already on Twitter, go to twitter.com and join. Follow me and everybody else on Anita Campbell’s The Ultimate Small Business Twitter List, and just see how the ideas flow.