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Week of February 13 - February 19, 2006

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news.

The President’s Budget Plan: A Quick Look

President Bush unveiled his FY 2007 Budget plan this week and the debate over leading government programs is already under way. At a very broad level, there doesn’t appear to be many significant changes from last year’s budget plan. Here is a run-down on some of the highlights:

• Health Care: President Bush’s plan to expand tax credits for Health Savings Accounts (HSAs) should offer some help in reducing the burden of rising health care costs, but, for many entrepreneurs, HSAs may not go far enough. The proposed budget also promotes the use of health information technology and medical liability reform as a means of increasing access to quality care while holding down costs.

• Research and Development: Thanks in part to the President’s American Competitiveness Initiative, unveiled in last week’s State of the Union address, the prospects for federal R&D spending are pretty good. Overall spending on R&D will grow slightly (by 1.9%) compared to last year. Most of those new funds will be spent on weapons development and new space exploration programs.

• Small Business Programs: The budget for the US Small Business Administration is set to drop slightly -- to $624 million -- this year, despite new money going to support disaster relief efforts. The White House is taking several steps to reduce the cost of SBA programs, including increased user fees on programs such as the 7(a) loan program. In addition, other popular programs, such as the SBA Microloan program, are slated for elimination.

• Technology Programs: As in the past, President Bush has recommended major cuts in the Commerce Department’s technology programs. Specifically, the budget calls for the elimination of the Advanced Technology Program and a reduction in funding of nearly 60% for the Hollings Manufacturing Extension Partnerships. Both of these programs have been slated for shut-down or reduction on numerous occasions, but they continue to receive strong backing in Congress. The budget does request funds for the President’s American Competitiveness Initiative.

To view a copy of the President’s Fiscal Year 2007 Budget, visit
http://www.whitehouse.gov/infocus/budget/2007

The Power of Self-Employed Women

Self-employed women are becoming a growing economic force, according to a new study from the Center for Women’s Business Research. The report, Women-Owned Firms Doing Business Without Employees: A Growing Economic Force, describes the huge increase in the number of non-employer firms owned by women. Their numbers jumped 18% between 1997 and 2004, twice the overall national growth rate of 9%. There’s not a lot of differences between non-employer firms owned by men or women, but, surprisingly, the fastest growth rates among women-owned ventures comes in fields traditionally dominated by men—agricultural services, construction, and transportation. The other good news for these women-owned firms is that revenues are growing. Between 1997 and 2004, their revenues grew by 66%--compared to 42% for all such ventures.

To access the 2006 Center for Women’s Business Research report, Women-Owned Firms Doing Business Without Employees: A Growing Economic Force, visit http://www.womensbusinessresearch.org/mediacenter/2-2-2006.htm. The study was sponsored by Wells-Fargo & Company.

New SBA Website for Women Entrepreneurs

Meanwhile, the US Small Business Administration has recently unveiled a new website designed to support women entrepreneurs. My BIZ for Women includes lots of resources for women business owners, including listing of government programs, a calendar of events, and guest columns from fellow entrepreneurs. It also includes a new on-line newsletter, Women’s Perspective, which discusses issues of interest to women business owners.

To access the US Small Business Administration web site for women entrepreneurs, My BIZ for Women, visit http://www.sba.gov/women.

Some Good News on R&D Spending

In recent weeks, we’ve been covering lots of reports and legislative proposals designed to upgrade public support for research and development in the face of declining Federal investments. Fortunately, all is not totally gloomy on the R&D front. A new analysis from Battelle predicts that 2006 should be a pretty good year for R&D spending. Overall, Battelle analysts expect that total R&D spending will grow 2.91%, reaching a total of nearly $329 billion. Within this broad total, federal spending and private corporate spending will increase slightly, at respective rates of 1.8% and 3.5%. Spending by universities (up 1.1%) and non-profits (up 3.7%) will grow by similar margins. While the spending increases (albeit small) are good news, the researchers caution that much of the increase can be attributed to a few new and growing projects, such as increased spending for homeland security, energy development, and space exploration. They conclude that the situation is stable “for now,” but express fears about the future strength of America’s R&D base. The rise of overseas research centers, and continuing concerns over the quality of America’s primary and secondary schools rank at the top of their list of issues that deserve special attention from policymakers, scientists, and the general public.

The Battelle 2006 R&D Spending Forecast appears in the January 2006 issue of R&D Magazine and is available on-line at: http://www.rdmag.com/pdf/2006/601cvs.pdf.

Looking to optimize your cash flow?

Effective cash management, while important for all companies, literally can make the difference between success and failure for a growth-oriented entrepreneurial business. How to optimize cash flow is the subject of a new collection of articles posted on Kauffman eVenturing™ (www.eVenturing.org), a Web site for growth-oriented entrepreneurs launched recently by the Ewing Marion Kauffman Foundation. The articles, written by entrepreneurs and financial experts, provide practical advice on topics including: Focusing on Cash Management, Raising and Spending Cash, Collecting and Monitoring Accounts Receivable, Prioritizing Accounts Payable, Bootstrapping to Extend Cash Flow and Considering Debt Capital.

To read the full collection on “Optimizing Cash Flow,” please visit Kauffman eVenturing at www.eVenturing.org. 

Creating an Innovative Europe

European policymakers continue to churn out studies and programs for improving the region’s innovation capacity. The latest comes from the Aho Group (led by former Finnish Prime Minister Esko Aho), an independent expert’s group asked to design a detailed plan for taking radical actions on research and innovation “before it’s too late.” In addition to calling for an increase in R&D spending and for better standardization of European rules and regulations, the expert’s group identified a need for “structural mobility” in Europe. At present, it is too difficult for businesses, capital and workers to move across sectors and across borders within Europe. They offer several suggestions for enhancing such mobility and for increasing economic flexibility in Europe. For example, they suggest a target of having 10% of research workers moving between academia, industry, and government in a given year. In addition, they suggest creating a “Single Fund Structure” for venture investors working throughout Europe. This will help avoid the prospect of double taxation when venture funds invest outside of their home country.

The January 2006 report, Creating an Innovative Europe, a Report of the Independent Expert Group on R&D and Innovation appointed following the Hampton Court Summit, is available at:
http://europa.eu.int/invest-in-research/research06.htm

Nominations being accepted for Supporter of Entrepreneurship award

Do you know someone who has consistently contributed time, money, encouragement or skill development to further the cause of entrepreneurship? If so, the Ewing Marion Kauffman Foundation wants to know about them. Each year, the Kauffman Foundation presents the Supporter of Entrepreneurship award during the national Ernst & Young Entrepreneur of the Year awards ceremony. Past winners are individuals who have made outstanding contributions to America's entrepreneurial spirit or helped entrepreneurs become more successful. Nominees need not have founded a company (or organization) and may come from the corporate world, non-profit organizations, or any level of academia.

For more information, and to download a nomination form, visit http://www.kauffman.org/item.cfm?item=676.

National Dialogue on Entrepreneurship
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All stories © 2006 The Public Forum Institute
Content from this newsletter may be reproduced for non-commercial purposes with proper attribution to the National Dialogue on Entrepreneurship and a link to www.publicforuminstitute.org/nde. 

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