Window to Your World

Going Global

Seeking markets outside the U.S. will be a focus for the 14 percent of companies that identified the issue as one of the most critical for 2006. Twelve percent pointed to increased global competition as one of the big issues. Attitudes varied significantly among company types. Sixteen percent of high-tech firms were worried about global competition, while just 8 percent of nontech firms identified it as a leading wild card. Similarly, 15 percent of product firms picked it, compared with 9 percent of service companies.

Global competition isn't an overriding issue for ISO Poly Films, says McClure. Using cost-effective technology, being close to his markets in the U.S., and concentrating on customized products and short production runs makes it easier for him to compete against overseas rivals. "You could buy the technology and install it in China," he says. "But then you have to ship it here, and in the end, we have the shipping advantage."

Eric P. Straus, founder of, a Poughkeepsie, New York, online job board that has 35 employees and $20 million in annual revenue, sees opportunity rather than obstacles in international markets. "I love to be overseas," says Straus, 46, who partners with local radio stations to offer employers alternatives to newspaper help-wanted ads. "I'd love to be in the [United Kingdom] and Australia, but we've not been successful at signing up radio groups yet."

Unhealthy Care Costs
While the survey found no big differences across sectors on another key issue-health-care costs-individual entrepreneurs showed widely differing viewpoints. "Health care has been a major pain," Radatti says. In 2005, for the first time in its 15 years in business, CyberSoft stopped paying 100 percent of health-care coverage premiums for employees due to the rising cost of coverage. "We're working with our providers to get the best plans at the best prices, but we don't think we'll ever be able to pay 100 percent again," Radatti says.

For Straus, however, paying for health-care coverage is vital enough that he finds a way. "We moan every year about the rate increases, and we pay them," he says. "We have no brilliant solutions, but we think it's pretty important to have a good health-care plan for employees, and we do that."

Silver Linings
One entrepreneur's poison may be another entrepreneur's meat. For entrepreneurs and VCs operating in the clean-energy field, Lefteroff sees good news in higher energy costs. "One of the emerging bright spots is alternative energy sources that would provide solutions to some of the problems we see," says Lefteroff.

Even more good news came in the fact that financing appeared to be a nonissue in the survey. Only 11 percent identified decreased access to capital as a wild-card factor. "Right now, I have private equity groups and public companies chasing me, trying to give me money," says McClure.

Lefteroff says a current overabundance of venture capital makes it easy for entrepreneurs to find funding for the right business plan. "The bar has been raised compared to the internet period," he says. "You have to have a good deal and a good plan. But the positive is there's plenty of venture capital, and that should make it easy to get funded."

And while entrepreneurs overall may seem more worried than many economists would say the data justifies, not all are gloomy about the future. "I'm pretty bullish," says Straus. "I'm looking for slow to moderate growth over the short term."

Straus believes he'll profit in good times and bad. Tighter job markets drive help-wanted advertising, and an advertising recession would encourage radio stations to look for alternative sources of revenue by partnering with him, he reasons. More important for this entrepreneur is that he feels he is in the right business--one that will prosper independently of economies, competitors or other macro concerns. "There are billions of dollars in recruitment advertising in print," Straus says. "I believe that's moving online in the next decade or so. So I'm going to benefit from that regardless of where the economy goes."

The outlook of most entrepreneurs is probably similarly optimistic, or will be unless more unforeseen disasters strike. "Even in the case of a huge devastation like 9/11, within two quarters we were back to the same level of optimism we had before," says Collins. "People get used to dealing with tough circumstances and factor them in, but they're not swayed by them. Long term, the basic business fundamentals seem to hold."

Growing Pains
What are entrepreneurs' biggest challenges for 2006? We asked entrepreneurs to choose the three factors most critical to their business success in 2006. Here's what they said:

  1. Retention of key workers--73%
  2. Developing new products and services--38%
  3. Expansion to markets inside the U.S.--36%
  4. Increased productivity--35%
  5. Upgrading technology--28%
  6. Creating business alliances--23%
  7. Better management of cash flow--21%
  8. Expansion to markets outside the U.S.--14%
  9. Improving risk management--13%
  10. Finding new financing--11%
  11. Buying another company or launching a spinoff--11%
  12. Preparing company for sale--7%
  13. Going public--2%

Source: Entrepreneur magazine and PricewaterhouseCoopers' 2006 "Entrepreneurial Challenges Survey"

Danger Zone
What would be most harmful to entrepreneurs in 2006? We gave entrepreneurs a list of several wild-card factors that could affect business in 2006 and asked which three would be most harmful to their businesses and industries. Here's what they said:

  1. Unstable U.S. economy--47%
  2. Rising health-care costs--43%
  3. Shortage of qualified workers--41%
  4. Weak market demand--40%
  5. Rising oil/energy costs--24%
  6. Rising interest rates--24%
  7. New government regulations--22%
  8. Weaker capital spending--18%
  9. Weakening world economy--14%
  10. Increased global competition--12%
  11. Decreased access to capital--11%
  12. Sudden drop in U.S. real estate market--10%
  13. Tax increases--10%
  14. Inflation--9%

Source: Entrepreneur magazine and PricewaterhouseCoopers' 2006 "Entrepreneurial Challenges Survey"

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This article was originally published in the January 2006 print edition of Entrepreneur with the headline: Window to Your World.

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