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A guide to more information on subjects covered in the Inc. magazine special issue: The State of Small Business 1997.
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Resources is the Inc. guide to more information on subjects in this issue. This information is intended to help our readers; Inc. does not profit from the sale of any of the resources listed.

Opening Argument: Churn, Baby, Churn

Any inquiry into evolutionary theories of economics must inevitably begin with the famous chapter 7 of Joseph Schumpeter's Capitalism, Socialism and Democracy, which was first published in the United States in 1942--now available from HarperCollins (800-331-3761, 1962, $16). Also worth reading is Schumpeter's earlier work (1911), Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle (Transaction Publishers, 908-445-2280, 1983, $19.95), which deals more explicitly with new firms and entrepreneurship.

On a more contemporary note, Schumpeter's modern-day disciple Paul Romer has attracted considerable attention with his controversial new growth theory, which holds that new ideas are the ultimate source of economic growth. (To download Romer's papers, visit his Web site). Then there's Bruce Kirchhoff's Entrepreneurship and Dynamic Capitalism: The Economics of Business Firm Foundation and Growth (Praeger, 800-225-5800, 1994, $59.95), which takes the empirical approach of measuring company formation and growth.

As for works by noneconomists, there's Michael Rothschild's Bionomics: Economy as Ecosystem (College Board, 1995, $17.95). Rothschild gets bogged down in his analogy of economies as rain forests, but his central point is on the mark: that economies develop, test, and select innovations in much the same way that biological evolution selects species. See especially chapter 4, "The Mythical Machine," an attack on Newtonian physics--and mechanical metaphors--as the basis for economics. Or visit Inc. Online to read senior writer Edward Welles's interview with Rothschild.

For those willing to wade through dense academic prose, the most illuminating read of all may be chapters 2 and 3 of The Sources of Economic Growth (Harvard University Press, 800-448-2242, 1996, $39.95), by Richard R. Nelson, the first post-Schumpeterian economist to revive the evolutionary perspective. A self-described quasi inductivist, Nelson advocates the intellectually unfashionable route of taking observable phenomena and trying to explain them. He rails against the tendency of economists to glorify abstract mathematical virtuosity for its own sake.

Nelson notes that the steady march of economic growth can be misleading because it obscures the tremendous turmoil underneath. "Thus the regularity and the order that the analyst sees in economic growth," he hypothesizes, "may be analogous to the 'spontaneous order' highlighted by the new work on dynamic systems...." If this sort of stuff turns you on, pick up Nelson's book.

The Next Generation: Creators of the New Economy

If you're serious about sharpening your business skills, you could do worse than begin your course of study with Peter F. Drucker's venerable (1954) Practice of Management (HarperCollins, 800-207-7000, 1993, $16). A more recent addition to business libraries, Michael E. Porter's Competitive Strategy (Simon & Schuster, 800-223-2336, 1984, $37.50; a reprint is due out this year), recommends ways to evaluate the strategic viability of individual industries. W. Edwards Deming made a name for himself in the emerging industries of post-war Japan, and the success of his systematic approach to quality improvement eventually registered in the United States. Out of the Crisis (Massachusetts Institute of Technology, 617-253-6128, 1986, $29.50) is a practical professional-management tool.

Should you care to register for formal instruction, consult Peterson's Guide to M.B.A. Programs (Peterson's Guides, 800-338-3282, 1996, $21.95). Some 900 institutions offer courses of study in business administration; Peterson's gives you the specifics you need to narrow the field to a more manageable selection. And check your local library for Bricker's International Directory, 1997: University-Based Executive Development Programs (Peterson's Guides, 800-338-3282, 1997, $325), arranged by management discipline. Experience always counts, though, so you may want to consult your library's copy of the student assessments that Albert & Co. publishes in its Executive Development Programs Guide (Albert & Co., 561-697-3430, 1997, $450).

Hot Spots: The Four Best Small-Business Neighborhoods in America

Are you thinking about relocating? These books will help pave the way. AnnaLee Saxenian's Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Harvard University Press, 800-448-2242, 1994, $24.95) assesses the forces that power two of the most economically dynamic regions on earth. Looking for action? Joel Garreau's Edge City: Life on the New Frontier (Anchor, 800-323-9872, 1992, $14.95) shows that the fringes of large cities nourish new business growth. And finally, consider with a jaundiced eye the materials that economic-development offices prepare to attract people just like you. For more information on areas mentioned in Joel Kotkin's article, consult the following sources:

While costs should not rule your choice of location, nobody can ignore dollars and cents. Regional Financial Associates (610-696-8700), in West Chester, Pa., compares typical business costs around the United States.

The Social Entrepreneur: Crossover

Edward Skloot broke new ground with The Nonprofit Entrepreneur (Foundation Center, 800-424-9836, 1988, $19.95). Nonprofits, for reasons ranging from repugnance to reticence, tend to reject Skloot's redefinition of legitimate sources of organizational revenue, but aggressive, businesslike approaches are a nonprofit's salvation. Only if it's financially viable can a nonprofit hope to have impact.

The New Social Entrepreneurs, by Jed Emerson et al, is a compendium of case studies and lessons about for-profits funding nonprofits. For a free copy, write to the Roberts Foundation, P.O. Box 29906, San Francisco, CA 94129. The Roberts Foundation applies private-sector practices to social problems.

Bill Shore's inspirational Revolution of the Heart (Riverhead Books, 212-951-8400, 1995, $19) focuses on Share Our Strength (SOS), the nation's leading antihunger organization, which Shore heads (202-393-2925). SOS recruits the assets and enthusiasm of people and industry, hoping to create a clearinghouse for nonprofits seeking corporate partners. Finally, the National Center for Social Entrepreneurs (612-595-0890) helps nonprofits diversify sources of revenue in profitable ways.

The New-Economy Almanac

Big picture For population data more particularly related to your situation, start your search at the Bureau of the Census (301-457-3030).

Failure Most companies that cease operations or disappear did not fail. Quite often, their owners simply decided--for reasons not at all related to unhappy creditors--to close their doors. The circumstances that precede such decisions are not tabulated, but the Office of Advocacy of the Small Business Administration (202-205-6532) does track the number of terminations. Dun & Bradstreet (908-665-5505), which keeps tabs on businesses and their credit ratings, publishes an annual report-- Business Failure Record--that details the financial liability (among other things) of those companies that closed owing money to their creditors.

Global marketplace Does our continually expanding trade deficit trouble you? As alarming as that figure appears to be, it does not signal the imminent or inescapable demise of U.S. commerce and industry. The bureaucrats who follow our international commerce do not take into consideration exports of the U.S. service industry. Unless you can see it, hold it, weigh it, or in any other way measure its size or heft, it's not a product, and it doesn't count in the export trade statistics. Dun & Bradstreet (908-665-5505) surveys 5,000 companies of all sizes about their export activities and publishes its findings in Dun's 5,000 Export Survey.

Internet While it's more than likely that you--like most small-business owners--have yet to venture onto the World Wide Web, you still should know that a new growth industry of Web observers is already taking form. Forrester Research (617-497-7090), O'Reilly & Associates (800-998-9938), and International Data Corp. (508-872-8200) are among the most frequently cited.

Job creation; labor force and wages For nearly 20 years, David Birch--and Cognetics Inc. (617-661-0300), his Cambridge, Mass., company--have been tracking new-job formation. Birch's findings are consistent: small, young, fast-growing employers invariably create more of America's new jobs than their larger, older brethren. Should you have any doubt about which industries are expanding and which contracting, the Bureau of Labor Statistics should resolve them. The Bureau (202-606-5886) tracks wages, earnings, and other characteristics of the nation's workforce.

Money Banks, venture capitalists, angel investors, the public stock markets. Just how much money is out there for new and growing businesses? The Center for Venture Research, in Durham, N.H. (603-862-3341), follows the activities of self-made millionaires who enjoy helping fledgling enterprises. Those investors have been dubbed "angels" because, for the most part, their demands are considerably milder than those of the venture capitalists. The National Venture Capital Association (703-351-5269), in Arlington, Va., and VentureOne (415-357-2100), a San Francisco investment-research firm, are sources of information about that deep-pocketed industry.

Mood Dun & Bradstreet (908-665-5505) doesn't just count failures and their liabilities. Every year, D&B conducts several surveys, including a survey of the small-business community. D&B asks CEOs what they are thinking about the prospects for the coming year. You may want to know whether you and your peers are on the same wavelength.

Outsourcing Although most of the smaller companies that D&B canvassed claimed they had no use for outsourcing, Big Six accounting firm Coopers & Lybrand (212-259-2109) found that the fastest-growing companies did, for the most part, consider outsourcing a strategic asset. The Outsourcing Institute (800-421-6767; www.outsourcing.com) forecasts dramatically increasing levels of outsourcing over the next five years.

Start-ups and home-based business After collecting, confirming, and filtering through all the new corporation and partnership filings at the 50 offices of the secretaries of state, county and city trade-name filings, sales-tax license applications, and local business applications, County Data Corp. (800-545-3237) in Winooski, Vt., developed a uniquely clean collection of last year's new business formations, including those businesses people started at home. The question raised by the remarkable statistics is, How long do home-based start-ups stay home-based? Some, like Hewlett-Packard, outgrow their garages and back bedrooms pretty quickly.

You might be amazed by the number of organizations claiming to know the grand total of home-based businesses. We thought that the estimates of Find/SVP (800-FindSVP), a New York City­based market-research firm looked the most reasonable.

Workstyle The Bureau of Labor Statistics recently released its long- awaited study of alternative employment arrangements. Details of that study are available on the World Wide Web at stats.bls.gov/news.release/conemp.toc.htm. An article in the October 1996 issue of Monthly Labor Review, "A Profile of Contingent Workers," comments on those findings. Two market-research organizations, Access Media International (212-627-0202) and International Data Corp. (508-872-8200) conducted extensive studies for decision makers who are planning their small-business software-product strategies.


How to contact companies, organizations, and individuals mentioned prominently in this issue (some listings have been omitted by request)

The Inc. Directory
Each name is indexed to the first page of the article in which it appears.

BAY PHARMACIES, Doug Meredith, 112 Cherry Point Mall, Sturgeon Bay, WI 54235; 414-746-2970. See article .

BUREAU OF ECONOMIC ANALYSIS, U.S. Department of Commerce, Washington, DC 20230; 202-606-9900; www.bea.gov. See article .

BUREAU OF LABOR STATISTICS, 2 Massachusetts Ave. NE, Washington, DC 20212-0001; 202-606-5886; fax, 202-606-6426; http://stats.bls.gov. See article .

BUREAU OF THE CENSUS, U.S. Department of Commerce, Washington, DC 20233; 301-457-3030; www.census.gov. See article .

CENTER FOR VENTURE RESEARCH, Jeffrey Sohl, Bill Wetzel, Whittemore School of Business and Economics, University of New Hampshire, Durham, NH 03824; 603-862-3341. See article .

COGNETICS, David Birch, 100 CambridgePark Dr., Cambridge, MA 02140; 617-661-0300; www.cogonline.com. See article .

COMPUTER RESCUE SQUAD, Carol Conway, 4426 SE 16th Pl., Suite 3, Cape Coral, FL 33904; 941-542-8450. See article .

COUNTY DATA , 136 West Canal St., P.O. Box 428, Winooski, VT 05404-0428; 800-545-3237; fax, 800-972-5919. See article .

DUN & BRADSTREET, Mike Azzi, One Diamond Hill Rd., Murray Hill, NJ 07974-1218; 908-665-5505; www.dnb.com. See article .

THE ENTREPRENEURIAL DEVELOPMENT INSTITUTE (TEDI), Melissa Bradley, 2025 I St. NW, Suite 1114, Washington, DC 20006; 202-822-8334; mbradley@nicom.com. See article .

HAHT SOFTWARE, Richard Holcomb, 4200 Six Forks Rd., Raleigh, NC 27609; 919-786-5100. See article .

DONALD A. HICKS, School of Social Sciences, University of Texas at Dallas, Box 830688, Richardson, TX 75083-0688; 972-883-2733; dahicks@utdallas.edu. See article .

INTERNATIONAL DATA, 5 Speen St., Framingham, MA 01701; 508-872-8200; fax, 508-935-4015; www.idcresearch.com. See article .

JUMA VENTURES (formerly Larkin Business Ventures), Diane Flannery, 116 New Montgomery St., Suite 600, San Francisco, CA 94105; 415-247-6580. See article .

BRUCE KIRCHHOFF, New Jersey Institute of Technology, Newark, NJ 07102-1982; 201-596-5658; fax, 201-596-3074; kirchhoff@njit.edu. See article .

METROBANK, Don Wang, 9600 Bellaire Blvd., Suite 252, Houston, TX 77036; 713-776-3876. See article .

NATIONAL CENTER FOR SOCIAL ENTREPRENEURS, Jerr Boschee, Bassett Creek Office Plaza, Suite 310, 5801 Duluth St., Minneapolis, MN 55422; 612-595-0890. See article .

NATIONAL COMMUNITY PHARMACISTS ASSOCIATION, 205 Daingerfield Rd., Alexandria, VA 22314; 703-683-8200; www.ncpanet.org. See article .

NATIONAL VENTURE CAPITAL ASSOCIATION, 1655 N. Ft. Myer, Suite 700, Arlington, VA 22209; 703-351-5269. See article .

OSAGE INITIATIVES, Barry Johnson, 1111 Osage St., Denver, CO 80204; 303-892-8300. See article .

PIONEER HUMAN SERVICES, Gary Mulhair, 2200 Rainier Ave. South, Seattle, WA 98144; 206-322-6645. See article .

RESEARCH INSTITUTE FOR SMALL & EMERGING BUSINESS, Regina Tracy, 722 12th St. NW, Washington, DC 20005; 202-628-8382; fax, 202-628-8392; rise@bellatlantic.net. See article .

PAUL REYNOLDS, Center for Entrepreneurial Studies, Babson College, Forest St., Wellesley, MA 02157-0310; 617-239-5608; reynoldspd@babson.edu. See article .

ROBERTS FOUNDATION, Jed Emerson, P.O. Box 29906, San Francisco, CA 94129. See article .

RUBICON PROGRAMS, Rick Aubry, 2500 Bissell Ave., Richmond, CA 94804; 510-235-1516; rub2500@aol.com. See article .

BILL SAHLMAN, Harvard Business School, Soldiers Field Rd., Boston, MA 02163; 617-495-6000. See article .

SAS INSTITUTE, Les Hamashima, Sas Campus Dr., Cary, NC 27513; 919-677-8000, ext. 5447. See article .

SEARAIL INTERNATIONAL, Charlie Wilson, 723 Main St., Suite 610, Houston, TX 77002; 713-863-0011. See article .

SHARE OUR STRENGTH (Community Wealth Enterprises program), Bill Shore, 1511 K St. NW, Suite 940, Washington, DC 20005; 202-393-2925. See article .

SMALL BUSINESS ADMINISTRATION, 409 Third St. SW, Washington, DC 20416; 202-205-6532; fax, 202-205-6928; www.sba.gov. See article .

SOCIAL ENTREPRENEURSHIP PUBLIC MANAGEMENT INITIATIVE, Alison Carlson, Public Management Program, Graduate School of Business, Stanford University, Stanford, CA 94305-5015; 415-725-5399. See article .

HOWARD STEVENSON, Harvard Business School, Soldiers Field Rd., Boston, MA 02163; 617-495-6000. See article .

BILL WETZEL, Center for Venture Research, Whittemore School of Business and Economics, University of New Hampshire, Durham, NH 03824; 603-862-3341. See article .

W3-DESIGN, Nick Rothenberg, 8522 National Blvd., Culver City, CA 90232; 310-815-1177; info-la@w3-design.com. See article .

Editorial Contributors


Margherita Altobelli is editorial manager at Inc.

Elyse M. Friedman is a freelance editor living in Newton, Mass.

Michael Hopkins is an executive editor at Inc.

Joel Kotkin is a senior fellow with the Pepperdine Institute for Public Policy, a fellow in urban studies at the Pacific Research Institute, and a contributing writer at Inc.

Heather McLeod was a founding editor of Who Cares magazine, a publication for and about new leaders in the nonprofit world. She is a freelance writer and consultant, and will attend Stanford Business School in the fall.

Tom Richman is an editor at large at Inc.

Jeffrey L. Seglin is an executive editor at Inc.

Jerry Useem is an associate editor at Inc.

Edward O. Welles is a senior writer at Inc.


State of Small Business Staff

Associate Art Directors
Paul DiMattia, Nancy Lynn Goldberg

Designer
Alyssia Newton

Copy Editors
Susan Abbattista, Marilyn Weissman

Research Editors
Larisa Badger, Kascha Piotrzkowski

Last updated: May 15, 1997




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