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STRATEGY

The Entry Level

Inc. magazine's editor-in-chief discusses the promise and reality of small-business Web sites; how the merger process goes beyond financials; why there's plenty of funding to be had, just none for you; and cutting-edge cross-sector partnerships.
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FYI: From the editor

There's no doubt the new small-business Web sites have great potential. The question is, How well do they deliver?

Long before the Internet co-opted the word, portal was understood to mean a grand and imposing entryway, which gives you an idea of the expectations we brought to our review of the small-business portals included this month in " Managing the Web." We're talking about Web sites designed to provide one-stop service for small-business owners and managers, offering -- in theory, at least -- three major benefits heretofore unavailable from any single source:

1. Content on demand. Unlike a traditional information provider -- this magazine, for example -- a small-business portal gives customers access to information, such as advice on management issues, when they need it and free of charge.

2. Aggregation. A portal also has the potential to pull together, or aggregate, customers into enormous buying groups, on whose behalf it can purchase a vast array of products and services at significant discounts. The customers thus get both online shopping convenience and highly competitive prices.

3. Applications. Most important, in my view, the portal can provide access to tools that, at their best, allow customers to systematize some aspect of their business's operations.

That's the theory, at any rate. How do the small-business destinations out there measure up? We asked 34 seasoned company founders, CEOs, and entrepreneurs to rate the sites according to about 40 criteria, ranging from the relevance of the editorial content to the usefulness and accessibility of the online tools.

You'll note, by the way, that we did not include at least one small-business portal in our review, namely, the site that bears our name. Inc.com is a business that grew out of the magazine -- like the Inc. conference business, the Inc. video business, and so on. When those businesses began appearing several years ago, we were faced with the touchy question of deciding how to treat them and their products in the pages of the magazine. In the end we realized that we should avoid trying to evaluate them altogether. Why? For the same reason parents shouldn't be judges at events in which their children are competing. It's almost impossible to be objective. Besides, unless your reviews are negative, no one will believe you.

So by all means, check out inc.com, but I'm afraid that when it comes to deciding how well it meets the criteria for a good small-business portal, you're on your own.

Never-ending mergers
For years the conventional wisdom held that real entrepreneurs didn't merge -- they grew their companies from within. Lately, however, that thinking has begun to change as industries have consolidated and founders have been faced with a choice between acquiring or being acquired. At the same time, more companies -- especially small service companies -- are finding that they can use mergers to diversify, extend their geographic reach, and broaden the range of jobs and customers they can handle.

Which is not to say that mergers have become any easier. In " Merge Now, Pay Later," senior staff writer Christopher Caggiano gives us a vivid reminder that long after the transaction is completed, the task of merging cultures goes on ... and on ... and on. ...

Where the money isn't
Finance editor Jill Andresky Fraser has been both architect and author of our wildly popular annual feature called " How to Finance (Almost) Anything." This year's edition has a bittersweet edge. There may be more capital available than ever before, but it isn't readily accessible for traditional nontech businesses. For even the best-performing ones, writes Fraser, the financing options are "somewhere between limited and nearly nonexistent."

That hardly seems fair, given the stratospheric valuations of even marginal Internet start-ups. No doubt the market will correct the imbalance over time. Until then, it will take patience and discipline for traditional businesses to raise the capital they need.

Doing well by doing good
Even if I didn't sit on a couple of nonprofits' boards with Eli Segal, I'd feel compelled to recommend the new book he has written with Shirley Sagawa, titled Common Interest, Common Good: Creating Value Through Business and Social Sector Partnerships (Harvard Business School Press, $27.50). Alliances have been a hot topic for more than decade, and much has been written about them, but this book looks at a type of alliance that has been largely ignored, namely, "cross-sector partnerships" between nonprofit organizations and for-profit businesses.

Such alliances are becoming more important for a variety of reasons. To begin with, the demands on the private social sector are growing as government spending continues to decline. Nonprofits find themselves competing for fewer dollars and searching for new funding sources. Meanwhile, competitive pressures are forcing for-profit companies to come up with imaginative ways to enhance brand identity, connect with customers, and attract top-notch employees.

In their book Sagawa and Segal offer seven case studies of cutting-edge cross-sector partnerships. The analysis is first-rate, identifying the pitfalls and the challenges as well as the opportunities, while avoiding the breathless hyperbole that often accompanies discussions of such social experiments. The book is a superb introduction to a topic that's bound to attract increasing attention in the years to come.

Please e-mail your comments to editors@inc.com.




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