Hotline: Small Business News from April 1988

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Keep an eye on the Texas Quality Consortium, a group of 12 Dallas electronics companies that banded together last October to form what may be the nation's first small-business quality-control cooperative. Their problem: they couldn't afford to send employees off for big-name quality-control training. Now, the consortium, under the direction of local CEO-turned-consultant Warren Hogan, offers half-day employee-training seminars every month, along with a management breakfast meeting to discuss progress and problems. CEOs also meet privately with Hogan for advice. Participants pay a monthly fee of $500, plus seminar tuition of $50 to $200 per person.

Fairleigh Dickinson University, in New Jersey, has raised $3 million toward starting a freestanding entrepreneurship institute. The school's eventual aim: an accredited entrepreneurship degree, separate from its standard M.B.A. The theory? That people who want to start their own companies need a curriculum, focus, and atmosphere different from those offered by traditional business schools, which are geared toward training managers for large corporations.

There's a new trend in strategic alliances, reports Mark Radtke, a vice-president of Venture Economics Inc., which tracks such deals. It involves something called a spinout, in which a large company hands over proprietary technology to a start-up in exchange for stock. Practitioners include Monsanto Co. and Hoechst Celanese. What does a spinout offer the parent company? Some value from a technology that probably wouldn't be used otherwise, Radtke suggests. But the trend also reflects a growing realization that startups are better suited than big companies to developing new technologies. "If you do it in the parent company," notes Gerald McAchran of Monsanto, "everybody keeps pulling it up to see if the roots are growing."

The Bureau of the Census has finally figured out that independent businesses are booming. Seems the Census people had for years been underestimating the size of the entrepreneurial class by tracking only self-employment. A new survey adds in the owners of incorporated private companies, as well as those who have both outside jobs and their own businesses. The result: the number of business owners suddenly jumped 60% to 12.8 million -- almost 12% of all nonagricultural workers.

The latest catchphrase in economic development is "flexible manufacturing networks." The idea comes from Europe, where small companies have teamed up, with phenomenal results. Cooperation among Italian textile makers, for example, has allowed individual firms to specialize in different aspects of the manufacturing process, turning a cluster of small job shops into world leaders in innovation. Now, U.S. economic-development officials want to foster similar networks here. One program would help knitwear makers in Queens, N.Y., develop new markets. In the Midwest, there are plans for networks of metalworking, plastics, and electrical equipment manufacturers. Says Robert Friedman of the Corporation for Enterprise Development, "I've never seen any idea catch on as quickly as this one."

Fortune 500 companies are stepping up efforts to tap into the small-business market. "At this point, every large corporation knows that the growth of this country is in small business," says Bettianne Welch, who manages a Bell Atlantic small-business program. But large companies also know they won't get very far if the smaller firms fail. So companies like Bell Atlantic are focusing on programs that provide entrepreneurs with information and training, in hopes that the new enterprises will thrive -- and then have fond memories of the sponsoring corporations. The hard part? Locating start-ups to assist, says Bob Weisman, manager of Digital Equipment Corp.'s Technology Executive Roundtable.

Last updated: Apr 1, 1988




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