Richard Branson is yet another successful entrepreneur that indicates he was not a good student.  He goes on to define his learning style as dyslexic and suggests a low IQ score be the result of his assesment.  Intersesting how this pattern continues to emerge in the stories of particularly successful entrepreneurs.  As the need to create jobs increases it becomes more and more important to assess the WAY we educate these students instead of assess them with scores and tests that give little to no clear prediction in regards to success, fortitude or creativity in an individual’s future.  Starting a business is risky and one of the most popular traits and characteristics of an entrepreneur is their high risk tolerance. 

BLURB VS. RODALE

The challenge: Will established authors embrace Blurb’s online platform over traditional book publishers like Rodale?

What they did: David Kirsch was pretty happy with his publisher, Rodale, which released his two bestselling fitness books. But for his next book he hooked up with Blurb, a self-publishing platform.

What gives? He liked the total creative control, not to mention that after a fee to Blurb, he gets to keep all the profits. Blurb’s social-marketing tools also help build buzz.

As for Blurb, it was launched in 2005 by Eileen Gittins, 56, who couldn’t find a publisher for her photo essay book. So far, so good: Last year Blurb, based in San Francisco, sold 1.2 million books and pulled in $45 million in revenue.

MONTAGE VS. RITZ-CARLTON

The challenge: Can an upstart luxury hotel company rival the Ritz-Carlton’s sterling reputation for hospitality?

What they did: Montage says its edge is offering patrons unique experiences. “There’s no cookie-cutter approach to designing and operating a Montage,” says founder Alan Fuerstman, 53, who has been in the hospitality business for some 30 years.

His guests are registered en route to their rooms. No crab on the room service menu? No worries — the Montage staff will get it for you. At the Laguna Beach resort, an on-staff marine biologist hosts tidal pool tours.

The strategy seems to be working: Sales are up 17% so far this year, and Fuerstman plans to open a third resort in Park City, Utah, next winter.

TOP POT DOUGHNUTS VS. KRISPY KREME

The challenge: With only six Seattle shops, how does this indie doughnut chain compete with Krispy Kreme’s 619-store empire?

What they did: Top Pot co-founders and brothers Mark, 45, and Mike Klebeck, 44, were already known for their old-school coffeehouses. Why not do the same for doughnuts?

They spent months perfecting recipes based on 1920s-style “hand-forged” doughnuts. (Seahawks rookie Golden Tate made news last month when he helped himself to a few maple bars after hours. His defense: They are “irresistible.”)

The shops feature Venetian plasterwork and cabinets the brothers built themselves. Such attention to detail caught the eye of Howard Schultz, founder and CEO of Starbucks, which now sells their creations. Top Pot makes a million doughnuts a week.

–David vs. Goliath update: There must be something about this column. Since we launched in March, two of the three companies we profiled have attracted interest from outsiders: Maverik Lacrosse was purchased for an undisclosed sum by the Kohlberg Sports Group, and Kroger Co. acquired a slew of outlets from the Little Clinic, a health care provider (also for an undisclosed price). Who’s next?

–David vs. Goliath update, part 2: Since this article went to press, Blurb alerted Fortune that they are collaborating on a project with Rodale.

Retiring? What to do with your 401(k)

By Walter Updegrave

From CNN Money

(Money Magazine) – Question: When I retire, should leave my money in my company’s 401(k) or roll it into an IRA? –Mark, Plymouth, Minnesota

Answer: I hate to start with that overused phrase “it depends.” But the fact is that the right answer really does hinge on your particular circumstances, not to mention the characteristics of your 401(k) plan.

For example, two factors that can definitely influence your decision to stay or go are your age and how soon you’ll dip into your 401(k) stash for living expenses or other needs.

If you’re at least 55 when you leave your company, you qualify for an exception from penalties that apply to withdrawals prior to age 59 ½. That means you can pull money from your 401(k) account and pay only income tax on the taxable portion of the withdrawal. By contrast, if you roll your money into an IRA and begin pulling it out, you’ll not only owe income tax on withdrawals prior to age 59 ½, but a 10% penalty as well.

So if you’re at least 55 but under 59 ½ and you think you’ll need access to your 401(k) money over the next few years, you’ll probably want to keep at least a portion of your dough in your company plan, at least until you hit 59 ½.

(Yes, you can avoid the penalty on early IRA withdrawals by taking “72(t)” withdrawals withdrawals — that is, substantially equal periodic payments based on your life expectancy — but that can get kind of messy.)

Generally, though, I think most people who are retiring or already retired are probably better off rolling their 401(k) balance into an IRA.

For one thing, if you stay in your 401(k), you’re limited to the investment choices within your plan. That may not be so bad if your 401(k) has a broad menu of decent investments that are reasonably priced. (To get an idea of how your plan’s investment options stack up on price, check out the 401(k) fee reports available free from 401(k) ratings firm BrightScope.) But by rolling your savings into an IRA at a mutual fund or brokerage firm, you give yourself access to thousands of different mutual funds, ETFs and other investments.

Not that you need thousands of choices. I think most people are better off keeping things simple and making a diversified portfolio with just a handful of funds. But the point is that by expanding the roster of funds available to you, you may have a better shot at finding low-cost funds. With an IRA rollover you’ll likely be able to pick and choose from more index funds and more target-date retirement funds than your 401(k) presently offers.

Another thing you want to consider is how much flexibility you would have for drawing money if you remain in your 401(k). Can you set up a systematic withdraw plan or do you have to put in a separate request each time you need cash? Can you designate which funds draws will come from, or does the plan administrator pro rate the withdrawal amount across your holdings? Does your 401(k) allow for lifetime annuity payments? If so, are the payments competitive with what you can get outside the plan?.

With an IRA rollover, you’ll probably find you’ll have more maneuvering room. You can pull money out as needed. You can ask the investment firm handing the IRA to pay you a specific amount or a specific percentage of your account value each month. You can use some of your assets to purchase an immediate annuity that will turn that portion of your savings into guaranteed lifetime income. Or you can do all three.

Until recently, there may have been another reason to go with the IRA rollover even if you were partial to sticking with your 401(k) plan: only a spouse beneficiary had the option of rolling an inherited 401(k) into an inherited IRA and then stretching out payments over his or her life expectancy. A nonspouse beneficiary was required to take the 401(k) money (and pay tax on it) within five years of the 401(k) owner’s death.

So if you were thinking of leaving your 401(k) to someone other than your spouse, you would give that beneficiary a lot more flexibility on withdrawals and taxes by rolling your money to an IRA.

But the Pension Protection Act of 2006 eliminated that discrepancy. Actually, that’s not quite right. After the act became law, initial interpretations of the legislation said that it gave 401(k) plans the option of allowing nonspouse beneficiaries to roll over the inherited 401(k)’s assets into an inherited IRA. In short, 401(k) plans didn’t have to offer that choice.

But a subsequent notice from the IRS makes it clear (well, clear to people who read IRS notices) that starting this year 401(k) plans must make the 401(k)-to-inherited IRA option available to nonspouse beneficiaries. Be aware, though, that the beneficiary has to follow some very specific rules to do this correctly, including setting up a special inherited IRA to accept the rollover and doing the transfer via a trustee-to-trustee transfer.

Bottom line: before you make a decision, take some time to think about such issues as when you’ll need access to your money, how much flexibility you’ll have getting to it in your 401(k) vs. an IRA rollover and, of course, how much you’ll pay in expenses staying in your plan vs. doing a rollover. I suspect that most people will opt for the IRA, especially if they’re 59 ½ or older. But the only way to know which is the better choice is to think it through.

Nell Merlino on What Holds Women Entrepreneurs Back

The founder of Make Mine a Million $ Business explains why her effort to get 1 million women-owned companies to $1 million in annual revenue by 2010 didn’t pan out

By Karen E. Klein

From Business Week

In 2005, when she launched Make Mine a Million $ Business, Nell Merlino set an ambitious goal: getting 1 million women-owned companies to $1 million in annual revenue by 2010. Merlino, president of Count-Me-In for Women’s Economic Independence and the creative force behind Take Our Daughters to Work Day, admits that goal was overly ambitious. But she says she hasn’t given up on advocating for women-owned businesses. She spoke to Smart Answers columnist Karen E. Klein recently; edited excerpts of their conversation follow.

Karen E. Klein: When I spoke with one of your program’s backers in 2006, you hoped to have 1 million women entrepreneurs over the $1 million barrier by this year. What happened?

Nell Merlino: We didn’t make it! We have 38 that have cumulatively crossed that barrier and we’ve lost very few women off that list. But we’ve also raised $10 million and helped women generate $100 million in revenue and create 6,000 jobs.

Between 1997 and 2006, businesses that were fully or majority women-owned grew at nearly twice the rate of all U.S. firms, but the numbers haven’t budged much since then. There are still just over 10 million women-owned companies in the U.S., generating around $1.9 trillion in annual sales. What happened?

The 2008-2009 recession slowed a lot of people down. For a lot of women, their top goal over the last couple of years was just to survive. Fortunately a lot of them got through it and did better than they expected.

What is Make Mine a Million doing now?

We do regional events all the time that attract many participants. And in 2009 we did a $100,000 online competition that 1,500 women entered. The top 54 companies grew 59 percent in 2009 over 2008 and increased their employment on average by 113 percent.

What made those 54 particularly successful?

We looked at that and it turned out they did everything that we recommended. They came to at least half of our webinars, they did 15-minute telephone speed-coaching sessions, and they got business coaches as we suggested. They were looking for guidance and they took it.

The woman who won the competition, who runs a technology security business, grew from $500,000 to $1.5 million in annual revenue and hired nine new people. She used to think that the way to grow was to put more of her time into the business. Her breakthrough was to hire someone full-time to help her get new contracts.

Is hiring a stumbling block for women business owners in general?

We did a survey of women-owned companies doing from $150,000 to $700,000 in revenue and 87 percent said they want to grow. But 54 percent believed they could grow without hiring anybody else.

Why the reluctance?

We’ve found that many women are afraid to hire. There’s a fear that you won’t be able to meet payroll and you’ll have people relying on you. There’s a fear that if you cede control, you don’t know how others will manage your brand.

Most women have to manage family and business, so they believe that if they keep their businesses small, they can handle it all. But the opposite is true! If your company gets bigger, you can break off large pieces and hand them off, letting go of the day-to-day work yourself. Creating new products and selling are usually the strong suit for women entrepreneurs. They should do more of that.

Only about 20 percent of U.S. companies with $1 million or more in revenue are women-owned. And 6 percent of male-owned firms are at $1 million compared with 3 percent of all women-owned firms. What is holding women entrepreneurs back?

Not knowing enough about their finances and where their company stands financially. And not enough big thinking. For instance, the cupcake business is really big now. Do you want a retail shop, or do you want to figure out how to sell to Starbucks (SBUX)? The ones who do best are those who figure out how to sell to as many customers as they can find. Women coming out of corporate jobs know they need to find corporate customers, but the others do not.

How has the lack of credit affected women business owners in the last couple of years?

Access to capital and credit for women sucks worse than it ever has. All of the things the [Obama] Administration has done have been helpful, like the 90 percent guaranteed loans. And some women have done well with community banks, which have a lot of women employees and not just gray-haired white men. They are the ray of light at the moment. But the bigger banks have really shut down on small business.

Are you still optimistic about women in business?

I’m always cautiously optimistic. I keep seeing it. We’ve learned that it costs about $6,000 to $8,000 to move a woman-owned business to $1 million. That’s for the coaching, the webinars, and those things, not the funding. But it’s really not much! By 2045 I’d like to have a million women-owned businesses at $1 million. I’m going to do it! I may be dead, but it’s going to happen.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

So You Want to Be Your Own Boss…

8 tips to get you going, even if you don’t know where to start

By Tamara Monosoff

From Entrepreneur.com

If you want to start a business but don’t know where to start, don’t worry–you are not alone. In fact, given the new economic reality of our time, more people than ever before have found the “job” they thought was waiting for them doesn’t exist. Others have come to the conclusion that they would rather create work they love, constructed to fit with their own life goals. No matter what the motivation is to be your own boss, you can start today.

Here are eight tips to get you started:

1. Take a Stand for Yourself.
   If you are dissatisfied with your current circumstances, admit that no one can fix them except for you. It doesn’t do any good to blame the economy, your boss, your spouse or your family. Change can only occur when you make a conscious decision to make it happen.
2. Identify the Right Business for You.
   Give yourself permission to explore. Be willing to look at different facets of yourself (your personality, social styles, age) and listen to your intuition. We tend to ignore intuition even though deep down we often know the truth. Ask yourself “What gives me energy even when I’m tired?”

   How do you know what business is “right” for you? There are three common approaches to entrepreneurship:

   Do What You Know: Have you been laid off or want a change? Look at work you have done for others in the past and think about how you could package those skills and offer them as your own services or products.

   Do What Others Do: Learn about other businesses that interest you. Once you have identified a business you like, emulate it.

   Solve a Common Problem: Is there a gap in the market? Is there a service or product you would like to bring to market? (Note: This is the highest-risk of the three approaches.) If you choose to do this, make sure that you become a student and gain knowledge first before you spend any money.

1. Business Planning Improves Your Chances for Success.
   Most people don’t plan, but it will help you get to market faster. Abusiness plan will help you gain clarity, focus and confidence. A plan does not need to be more than one page. As you write down your goals, strategies and action steps, your business becomes real.

   Ask yourself the following questions:
   - What am I building?
   - Who will I serve?
   - What is the promise I am making to my customers/clients and to myself?
   - What are my objectives, strategies and action plans (steps) to achieve my goals?

2. Know Your Target Audience Before You Spend a Penny.
   Before you spend money, find out if people will actually buy your products or services. This may be the most important thing you do. You can do this by validating your market. In other words, who, exactly, will buy your products or services other than your family or friends? (And don’t say… “Everyone in America will want my product.” Trust me–they won’t.) What is the size of your target market? Who are your customers? Is your product or service relevant to their everyday life? Why do they need it?

   There is industry research available that you can uncover for free. Read industry articles with data (Google the relevant industry associations) and read Census data to learn more. However, the most important way to get this information is to ask your target market/customers directly and then listen.

3. Understand Your Personal Finances and Choose the Right Kind of Money You Need for Your Business.
   As an entrepreneur, your personal life and business life are interconnected. You are likely to be your first–and possibly only–investor. Therefore, having a detailed understanding of your personalfinances, and the ability to track them, is an essential first step before seeking outside funding for your business. This is why I recommend setting up your personal accounts in a money management system such as Mint.com to simplify this process.

   As you are creating your business plan, you will need to consider what type of business you are building–a lifestyle business (smaller amount of startup funds), a franchise (moderate investment depending on the franchise), or a high-tech business (will require significant capital investment). Depending on where you fall on the continuum, you will need a different amount of money to launch and grow your business, and it does matter what kind of money you accept.

4. Build a Support Network.
   You’ve made the internal commitment to your business. Now you need to cultivate a network of supporters, advisors, partners, allies and vendors. If you believe in your business, others will, too.

   Network locally, nationally & via social networks. Join networks like NAPW.com, your local chamber of commerce, or other relevant business groups. Here are some networking basics:

   - When attending networking events, ask others what they do and think about how you can help them. The key is to listen more than tout yourself.
   - No matter what group you join, be generous, help others and make introductions without charging them.
   - By becoming a generous leader, you will be the first person that comes to mind when someone you’ve helped needs your service or hears of someone else who needs your service.

5. Sell By Creating Value.
   Even though we purchase products and services every day, people don’t want to be “sold.” Focus on serving others. The more people you serve, the more money you will make. When considering your customers or clients, ask yourself:

   - What can I give them?
   - How can I make them successful in their own pursuits?
   - This approach can help lead you to new ways to hone your product or service and deliver more value, which your customers will appreciate.

6. Get the Word Out.
   Be willing to say who you are and what you do with conviction and without apology. Embrace and use the most effective online tools (Twitter, Facebook, YouTube, LinkedIn) available to broadcast your news. Use social networks as “pointer” sites; i.e., to point to anything you think will be of interest to your fans and followers.

   Even though social networks are essential today (you must use them!), don’t underestimate the power of other methods to get the word out: e.g., word-of-mouth marketing, website and internet marketing tools, public relations, blog posts, columns and articles, speeches, e-mail, newsletters, and the old-fashioned but still essential telephone.

   If you take these steps, you’ll be well on your way to becoming your own boss. It’s important to remember that you are not alone. If you want to “be your own boss” but you still feel stuck, reach out and connect with other entrepreneurs in a variety of ways. You may be surprised by the invaluable contacts that are right at your fingertips.

Tamara Monosoff is the author of Your Million Dollar Dream: Regain Control & Be Your Own Boss (hit #1 on Amazon in 3 categories: Marketing, Entrepreneurship & Home-Based Businesses). She is also the best-selling author of The Mom Inventors Handbook, Secrets of Millionaire Moms, co-author of The One Page Business Plan for Women in Business, and CEO of www.MomInvented.com. Connect on Twitter and Facebook.

How to Create an Overnight Success

Natalie Zaun just wanted to make a few extra bucks. What she got is a six-figure business that just keeps growing.

By Natalie Zaun

From Entrepreneur.com

While chasing kids around the kitchen in the fall of 2006, a friend and I decided we wanted to do more than pick up toys and change dirty diapers.

She sewed and, as a former junior high school English teacher, I was comfortable in front of others. So we thought we’d give the idea of selling custom purses at parties a try. After contacting a few friends to host parties, we quickly felt the excitement of giving women an opportunity to design their own purse. So with a little effort and research, PURSEnally Yours officially launched in January 2007, specializing in customer-designed purses.

Our intent was to make a little extra money, spend some time away from our lives as moms and perhaps even hire someone to work with us by the end of the year. It didn’t exactly happen that way. We hired another seamstress within two weeks, and we began to get quite busy just with the sales I was generating. In the first month, we had sewn 31 purses designed by our customers. By the end of the year, we had sewn thousands of them. Our sales topped six figures our first year in business.

During that first year, we hired six seamstresses and fabric cutters, and 13 direct-sales consultants. Because we need people who can sew well, we start them out sewing samples for us. Currently, we have a production team of 10 independent contractors and a waiting list just as long of women interested in working for us. I’ve been very cautious in hiring, consulting our attorney and our accountant to make sure these ladies fit the parameters of independent contractors.

A couple of blurbs in the local media, Fishers/Geist Magazine and at Geist.com, helped spread the word in the early days, but our customer base that first year grew largely by word of mouth through our customers and their handbags.

While the early success was certainly exciting, it was also overwhelming. About midway through the year, my partner needed to give up her portion of the company because of family conflicts. By the time we hit the last quarter of the year (aka, the busiest time), I was overseeing all aspects of the company, including production, which I knew nothing about. Fortunately, the seamstresses working directly with me were very excited about our success, and they were very helpful in navigating me into the next year.

After happily surviving the first year of owning a business–and succeeding–I was able to create a system that is still very effective and efficient today. The beauty about creating and owning your own business is that you can really design it however you wish. I have done just that.

PURSEnally Yours operates as a direct-sales company, which allows me to recruit ladies independently to sell purses through in-home parties or online. It also allows me to expand my reach. The company originally only had consultants in Indiana; now we have consultants throughout the country.

Initially, the biggest challenge in adding consultants was the cost of producing a sales kit. Each kit costs from $500 to $600–a lot to ask of women who wanted to join the team. So in the beginning, we didn’t charge consultants for the kits. Today the kits cost consultants $299 to $399, depending on whether we have specials at the time.

The design kit includes all of our current sizes and styles of purses and accessories, and consultants continue to receive new fabric swatches, fringes, etc., throughout the year. In addition, I work directly with each of them offering communication via e-mail or the phone to answer questions, provide support and give suggestions. We also offer incentives for consultants to get active quickly and earn cash back. Most of the women on our team are previous customers or have heard about the company through family and friends.

We also advertise for consultants via the web and encourage our sales team to spread the word. And we include a note in every customer’s purse mentioning our consulting opportunities. Turnover is high, so we’re always on the lookout for new consultants.

Members of our production team also work independently from their homes. They pick up orders from the office on a weekly basis, sew the purses and accessories at their discretion, and return them by the date requested. This has been a great opportunity for those ladies to turn their hobby into a full-time living.

PURSEnally Yours has been successful in growing without much risk. Because everyone works as an independent contractor, the “office” is still located in my basement. And because our products are custom designed, the company carries virtually no overhead. The office also doubles as my warehouse.

More than 80 varieties of fabrics are numbered and lined up on shelves. Each week, my production leader (head seamstress) sends me an e-mail with all the orders that have been collected, and I fill totes with fabric for our cutters to pick up and return by the weekend. They’ll cut the order per customer designs. Once they are returned, notions get added, and then they’re ready for the seamstresses to pick up.

The excitement of PURSEnally Yours continues to spread as more women are exposed to the fun, fashionable concept of designing their own purses. Currently, we are on track to have our best year yet. The recession did slow us down a bit, so I expect this year to be closer to what I was anticipating in the second or third year of business. We tend to do about 65 percent of our sales during the fourth quarter. But based on our gross sales and continued expansion of our consulting crew, we hope to reach $250,000 by the end of the year.

Think Outside the Bag
Here are some tips detailing what I’ve found helpful in developing my company:

• Stay involved. I was so tired after the first full year of business that I passed along as much work as possible the next year. In doing so, however, I found myself frustrated because not everything was being done the way I thought it should be, such as communicating with salespeople and encouraging unique approaches to working with new consultants. I also noticed a decline in overall sales. Since it’s my company, nobody was going to care more than I did. I quickly became fully engaged again. I believe that in time I will have the opportunity to be comfortable and less involved, but it wasn’t meant to be in the second year of business.
• Be proactive. I did not need to make a big financial investment when launching Pursenally Yours. This made it easy to get started, but challenging when trying to promote my business. I knew the concept was great, as the feedback from customers and consultants was phenomenal. So I did some research, created a press release and started contacting local and national print and broadcast media. I went to them instead of waiting for them to come to me. I get a response about 30 percent of the time, which often turns into free exposure for the company.
• Change with the seasons. I see numerous designs from repeat customers throughout the year. This tells me that, as seasons change, so do purses. I make sure we continue to update our inventory by launching new fabrics every three months and a new product twice a year. Not only do ladies have the opportunity to design their own unique purses, but they can do it all year long. It’s just as exciting for us as it is for the customers to see the new selections available.
• Give back. It’s easy once the company grows and you start earning money to want to keep as much as you can. It’s important, however, to make sure you take the time to give back. We have worked with numerous schools, churches and other nonprofit organizations to create FUNdraisers! It’s an opportunity to share the concept of the company with others, while they enjoy raising money for their favorite organization. Hosting a purse party to raise money can certainly be more creative and memorable than flipping through a catalog to place an order.

I was a junior high English teacher before I had children. I didn’t start PURSEnally Yours until both of my kids were born. I’m happy to report that I’ve been able to maintain my stay-at-home mom status while successfully growing and managing a nationwide business.

Harry Potter and Personal Branding

By Nick Nanton and J.W. Dicks

From Fast Company

The Wizarding World of Harry Potter opened at Universal Studios Orlando June 18 and the studio is reporting rising attendance and guest spending. This is of particular significance since Universal’s theme park attendance had been hurt by the global recession and travel slowdown. The opening of the new attraction had been a long awaited event for Universal and Harry Potter fans, so the news of positive performance brings a welcome sigh of relief for the hefty $250 million bet Universal placed when they went after the Harry Potter attraction and scooped it out from under Disney who resides only a few miles away.

While all looks great with Harry Potter and the investment Universal made, the naysayers have been wondering out loud if Harry Potter will indeed have legs for years to come, after the last movie is out. After all, J.K. Rowling has said she will write no more Potter books and she certainly has enough money (Forbes estimates her net worth at more than $1 billion) to make that statement believable.

First, it will be a very long time before all of the Harry Potter fans even have an opportunity to go to the attraction. By then, many of the readers will have had more of their children come of reading age and turned into Harry Potter fans. And at some point, the books will pass down to the next generation. Additionally, just because J.K. Rowling doesn’t want to write any more books, doesn’t mean she won’t license different forms of Harry Potteradventures, from cartoons to video games. All of this brand continuity is up to Universal, who has both the burden and the opportunity, to make the Harry Potter brand stay fresh and make its product line continue to flow.

The lesson in all of this for us is to remember that we too must be vigilant with our own brands and work to keep them fresh with new ideas and expanding products that not only grow in number, but also lead into new business verticals and opportunities. Like Universal, most of us have invested lots of time and money to build our brand and in doing so have secured a bit of intellectual property that we have that is unique. While our brand may not have the value of Harry Potter, it doesn’t have to for it to be an opportunity to create more jobs, economic growth contributions, and a nice nest egg for ourselves and families. That’s a bit of “Wizarding” magic in and of itself.

JW Dicks (@jwdicks) & Nick Nanton (@nicknanton) are best-selling authors that consult for small- and medium-sized businesses on how to build their business through Personality Driven Marketing, Personal Brand Positioning, Guaranteed Media, and Mining Hidden Business Assets. They offer free articles, white papers, and case studies at their Web site. Jack and Nick have been featured in The New York Times, The Wall Street Journal, USA Today, Newsweek, FastCompany.com, and many more media outlets.

Wayne Burton, MD, Adjunct Professor University of Illinois, Chicago. Discussing Health Risks and Employee Productivity.

Social Media Draws a Crowd

Start-Ups and Established Agencies Look to Carve a Niche in Online Action

By Suzanne Vranica

From Wall Street Journal

As more and more advertising dollars flow into social media, some Madison Avenue firms are seeking to grab a piece of the action. But it will be a tough fight as the space is overrun with companies seeking to own the segment, from start-ups to public-relations firms.

Universal McCann, the media-buying firm owned by Interpublic Group of Cos., is bolstering its social-media offering by launching a practice this week called Rally. The division will help marketers develop campaigns, track online chatter about their brands and measure how those campaigns perform. Headed by Heidi Browning, a former MySpace executive, Rally will house several new social-media hires. MySpace, like The Wall Street Journal, is owned by News Corp.

Publicis Groupe‘s digital umbrella organization, Vivaki, says it also will open a social-media consulting practice by the end of the year. The new group will pool Publicis’ social-media tools and experts and use them to beef up the social-media practices that many of Publicis’ agencies have already established. Rishad Tobaccowala, chief strategy officer at Vivaki, says he is willing to use his mergers-and-acquisitions budget to bolster the practice if needed.

The push to form a more formidable presence in social-media advertising is being fueled by the increasing number of marketers who are eager to figure out how they can use sites such as Facebook Inc., which has almost 500 million users, and Twitter, with more than 120 million registered users, as a marketing weapon.

“Social media is now part of all our clients’ plans; we can’t not be in this space,” says Matt Seiler, chief executive of Universal McCann.

Ad spending on social networks world-wide is expected to rise 14% this year to $2.5 billion, according to research firm eMarketer. Although social media represents only a fraction of the $55 billion online-ad market, it is one of the fastest-growing segments.

Some corporations have taken a hands-on role in crafting their efforts: PepsiCo Inc.’s Gatorade, for example, recently created its “Mission Control Center,” which is set up like a broadcast-television control room and is charged with monitoring the sports drink around the clock across social-media networks.

But as marketers look to make bigger commitments, they are increasingly seeking experts to navigate the burgeoning space.

Earlier this year, Chrysler Group LLC tapped New Media Strategies, a unit of publisher MeredithCorp., to handle its social-media tasks. In March Kraft Foods Inc. hired 360i, a digital ad agency owned by Japan’s largest ad company, Dentsu Inc. The agency has been tasked with monitoring the social-media sites for some of its brands such as Oreo and Jell-O. It also develops campaigns. The agency recently created the “World’s Fan of the Week” promotion that appears on Oreo’s Facebook page.

Microsoft Corp. is currently searching for a social-media firm to handle duties for its Xbox videogame system, work that is now handled by several of Xbox’s agencies, according to people familiar with the matter. Asset-management firm State Street Corp. also has begun looking at firms. A spokeswoman for Microsoft declined to comment.

“We have talked to some PR firms that appear to have established valid expertise over the years, and we are also interested in the new social-media firms that are bubbling up,” says Hannah Grove, State Street’s head of global marketing.

Creative ad agencies, digital ad firms, social-media boutiques, public-relations outfits and publishing companies are all clambering to offer advice, all claiming to be best suited to handle the task.

“You can’t walk out your house without bumping into a social-media expert today, says Sean Corcoran, an analyst at Forrester Research. “The reality is the space is still very much a Wild West.”

Analysts say many marketers are more interested in hiring smaller firms that have expertise in the field. Last year Domino’s Pizza Inc. hired New Media Strategies, a word-of-mouth marketing firm, as its agency of record for social media.

“A lot of companies right now that specialize in PR or advertising are trying to do this on the side and the thing we liked in NMS is they specialize in social media,” said Chris Brandon, a spokesman for the pizza chain.

Analysts and ad executives say the space won’t be dominated by small competitors for long because advertising holding companies and bigger public-relations firms will likely ramp up acquiring the smaller boutique firms, much like they have done with other digital areas such as search advertising.

“I do think this is the year for consolidation in social media,” says Ms. Browning, president of Universal McCann’s Rally unit.

Write to Suzanne Vranica at suzanne.vranica@wsj.com

A Test to Identify Entrepreneurs

Harvard researchers have a way to help banks screen loan applicants easily. The goal: to spur lending to small and midsized companies in the developing world

By Caroline Winter

From Business Week

1. Do you like taking things apart to see how they work?

2. Do you enjoy going to parties?

3. Given five seconds, how long a sequence of numbers can you memorize?

If your answers to these and about 150 other questions add up, you could run a small business in Nairobi. Or Lima. Or Bogotá. All because a new test identifies the traits that make for successful entrepreneurs in developing economies.

The Entrepreneurial Finance Lab (EFL), a branch of the Harvard Kennedy School’s Center for International Development, has devised a psychometric test to help banks in emerging markets easily screen loan applicants. The goal is to spur lending to small and midsize companies, a vital sector often underfunded in the developing world. These companies are too big to rely on microfinance, yet not big enough to be served efficiently by the banks. “There are millions of businesses in developing countries that could earn significant returns on additional capital that aren’t financed,” says Bailey Klinger, EFL’s director. “And it’s not that banks aren’t interested in them. Quite the opposite. They just don’t have the right tools.”

The 40-minute computer-based test assesses traits like honesty, ethics, intelligence, and motivation. The EFL says three years of pilots in South Africa, Kenya, Rwanda, Colombia, and Peru have shown that the test achieves the same—or better—results than traditional ways of assessing a borrower’s future success and ability to repay a loan. With the test, local banks can cut default rates by 25 percent to 40 percent, says D.J. DiDonna, EFL’s director of business development. They will also be able to extend loans to clients whose credit histories are sparse or nonexistent.

In developed countries, psychometric tests are widely used by blue chip companies to evaluate possible hires. Klinger and his colleague Asim Khwaja came up with the idea of applying these tests to evaluate creditworthiness, in part because academic research showed that characteristics like IQ influence the rate of credit returns. The EFL consulted industrial psychologists, studied the literature on entrepreneurs, and extracted elements from existing tests. The resulting evaluation can be customized to reflect an applicant’s business, company size, and country, though the core questions remain the same. The EFL says the tool can save banks time and money, since standard screening can take three days or more when banks don’t have existing borrowing histories to draw on.

South Africa’s Standard Bank, the continent’s biggest, has signed on to become EFL’s first paying client and roll out the test in South Africa and Kenya this August. “We’re hoping a flagship client like Standard Bank, as they scale up quickly, will open the door for other banks,” says DiDonna. “As you can imagine, banks are pretty risk-averse.” If the test works in Africa, EFL hopes to introduce it to the U.S. and Canada, where many immigrant entrepreneurs also lack credit histories and collateral.

The bottom line: Harvard researchers have devised a simple, inexpensive way to test the business skills of would-be entrepreneurs in emerging markets.