All posts by Raquel Salgado

Adopt or die: Keys to small business success

Photo credit: Eman Shurbaji

“I like to give business to our local restaurants, coffee shops and stores. I think it’s important to support them”, said Heidi Aylesworth, a personal assistant who lives in Edgewater, Chicago. Many others people share Heidi’s sentiment.

Though many Chicagoans are willing to support small businesses, few know how important these are for Chicago, and by extension, Illinois. But how can these businesses stay profitable in today’s highly competitive economic environment?

According to Illinois Department of Commerce and Economic Opportunity, 98.8 percent of Illinois establishments have less than 100 employees, which places them in the category of small businesses. Fifty-nine percent of these establishments employ only two to nine people. In the U.S. as a whole, small businesses represent 46 percent of the total Gross Domestic Product (GDP) and provide 49 percent of the total number of American jobs.

“They are crucial for our economy and also for job creation,” said Katie Hamilton, director of small business for the Chicagoland Chamber of Commerce. Since the Great Recession of 2008-2009, the number of small businesses opening every year has increased dramatically, she said. What explains this trend? According to Hamilton, “the economy was so rough for three years and so many people were laid off, big corporations were downsizing, that people were forced to open their own business.”

At the same time, more people began thinking it would be a good idea to support local, small or family owned businesses.Also, local stores and restaurants are seen as an interesting alternative for big retail chains. “It’s not a corporate feeling when you walk in here. We try to be close to our customer, to use local sources [for the ingredients] and also to offer a more personalized menu. People value these things,” said Tracy Dahlke, owner of Unicorn Cafe, an Evanston coffee shop located opposite from Starbucks on Sherman Avenue. She sees her customized service as one of her most important competitive advantages.

Tracy Dahlke took over Unicorn Cafe in 2004, after working there for two years. “We have a loyal customer base.” Photo Credit Eman Shurbaji

Embracing technology

Using local sources, having a personalized customer service, and offering a friendly and cozy environment are ways of attracting loyal customers. However, in the actual business landscape, it’s crucial to go further in order to stay competitive. “The key tool for small business to thrive now and in the future will be knowing how to adopt and profit from new technologies,” Hamilton said.

Her opinion has an empirical basis. “Ahead Of the Curve: Lessons on Technology and Growth from Small-Business Leaders”, a study conducted by Boston Consulting Group (BCG), one of the biggest consulting companies in the world, shows how small businesses that are “tech leaders” perform better than what the study calls “tech laggard” companies.

In developed economies, such as Germany and the U.S., between 2010 and 2012, tech leader businesses experienced an average revenue growth of 17 percent. At the same time, tech laggards’ business grew only 4 percent in the same period. Those classified by BCG in between both groups, the tech followers, saw their revenues grew 7 percent.

Jimmy Odom, a serial entrepreneur, did not need to read this study, because he knows the importance of adopting technology. After running start-ups and working for Apple, he decided to start a business that would help small entrepreneurs expand their business with new technology and changing the way they operate.

He founded We Deliver, a company that turns regular people into delivery personnel for local merchants. People are sharing their time, while business owners are embracing a new technology that allows them to reach customers residing outside of their immediate location, thus expanding their client base.

Odom says that for many small businesses, location is everything. “If you don’t have a wonderful location, the success of your business might not happen,” he said. With We Deliver, he aims to help small businesses overcome this obstacle.

“There is still a great majority of local business that did not adopt technology. They are still very analogic; they use paper for everything, which means there are no records of their transactions and customers. It makes it hard to do analytics with them, for instance,” Odom said.

The good news is these entrepreneurs are aware of their weaknesses and are not resisting changing their way of doing business. “When I start working with them, they get involved and embrace the novelty because they want their business to stay relevant in the future,” Odom says.

Switching lanes: More commuters biking it

Photo Credits: Flickr user Tripp

Julie Hochstadter, a 35 year-old realtor and bike activist, bought her first car when she was in college. “I was driving around Chicago all the time. I was always inside my car,” she said. Seven years ago, a trip to Israel made her rethink her everyday commuting. She participated in a five-day bike ride that promoted healthier and more sustainable communities.She loved the experience so much that as soon as she got back home, she bought a road bike and decided it would be her main form of transportation. She got so enthusiastic about cycling that she is now the director of The Chainlink, an online community that promotes bicycling in Chicago.

Julie is not alone in her journey. Between 2000 and 2012, the number of Chicagoans biking to work increased by 164 percent from 5,960 to 15,780 , according to the U.S. Census Bureau. This number tends to increase as the city expands its biking infrastructure. Today, Chicago offers 200 miles of on-street bikeways, 12 miles of which are protected. The Chicago Cycling Plan 2020 aims to have 100 miles of protected lanes by 2015 and an additional 50 by 2020.

Click to enlarge.
Click to enlarge. Graphic by Raquel Salgado.

“I believe the changing demographic of the city has influenced this trend,” said Steve Schlickman, Executive Director of the Urban Transportation Center at the University of Illinois Chicago. “Young people from the Millennium generation would rather bike than drive a car. Some of them are also postponing getting a driver’s license.”

Mitch Salm, a 27-year-old actor who has never owned a car, exemplifies this bike-friendly generation. “Biking makes me see the city from another perspective,” he said. Salm estimates he rides about 70 to 100 miles every week.

Swapping cars for bikes is a trend that is not unique to Chicago. U.S. Census Bureau data shows biking has experienced the most growth among modes of commuting nationwide. The number of American workers who ride their bikes everyday to work has risen from 488,000 in 2000 to 786,000 in 2012 — a 61 percent increase.

A combination of personal motivation and government initiatives have contributed to the rise of cycling in the U.S. and in Chicago.

Traffic congestion has played a role in some people converting. In 2000, for instance, a Chicagoan lost, on average, 39 hours in a year due to traffic congestion according to the 2012 Urban Mobility Report by INRIX Traffic Data. In 2011, this figure increased to 51 hours.

“After getting rid of my car, I realized how much faster and convenient it is to bike,” said Julie Hochstadter, a Chicago bike activist. To many people, her statement might sound surprising. Drivers tend to believe that cars are the most convenient way of getting around a city. After all, you can drive a car anytime you want without having to think ahead about the bus schedule or what outfit you should wear.

“Of course you need to plan your trip before you ride your bike,” Hochstadter said. “However, I save a lot of time because I don’t need to look for parking and I don’t stay stuck in traffic.” She said she is always the first one to arrive at meetings, while her friends who drive cars are often running late.

Divvy stations might be empty from time to time, like this one on Adams Street, but with stations every few blocks there's usually one available close by.
Divvy stations might be empty from time to time, like this one on Adams Street, but with stations every few blocks there’s usually one available close by. Photo Credit Raquel Salgado

In recent years, the number of cities with bicycle sharing programs has increased considerably, according to the U.S. Census Bureau’s Biking and Walking report. “These efforts reflect ongoing changes in infrastructure and travel options across the nation’s dynamic transportation systems,” the report said. Such changes influence decisions people make about their trip to work, according to the U.S. Census Bureau. People for Bike, a bicycling organization, said that 30 cities in the U.S. have bike sharing systems, involving 17,000 bicycles and 1,700 stations.

Chicago is an example of a city investing in cycling infrastructure. “Mayor [Richard M.] Daley and now Rahm Emanuel have given high priority to accommodating bike usage throughout the city,” said Schlickman. Last year, the city launched Divvy, its first bike-sharing system. The initiative has already attracted 23,000 annual subscribers.

Protected bike lanes provide more safety for Chicago bikers, like the one on Dearborn Street, but most streets do not offer them.
Protected bike lanes provide more safety for Chicago bikers, like the one on Dearborn Street, but most streets do not offer them. Photo Credit Raquel Salgado

For Hochstadter, the city has been doing a good job at promoting biking, but there is still much to be done. One important thing would be allowing more bikes on public transportation. “It’s possible to put your bike in any bus, but the same does not happen on the trains and the Metra,” she said. Bikes are not permitted during rush hours.

In Schlickman’s opinion, Chicago could be even more bike friendly if the city administration continues to expand the Divvy system, spreading bike stations in areas further downtown, and improves traffic enforcement for drivers, bicyclists and even pedestrians.

“People must be more aware of the fact that they share roads not only with cars, but with all kinds of transportation,” Schlickman said.

Thinking about riding your bike to work? Here are some tips:

Ride with a friend
Find people who are already commuting to work and ride together. You’ll feel safer and more excited about cycling.

Plan ahead
Don’t want to be sweaty? Think about taking a shower after you ride. Maybe you can register at a gym near your office or ask your company to install a shower. Pack what you need the day before so you won’t be late.

Keep clear of car doors
You must ride four feet away from parked cars. If you need to avoid an object, you may temporarily take a whole lane of traffic.

Be careful at intersections
This is where the most crashes occur. Try to stay out of drivers’ blind spots and always make eye contact. Use your bell and lights to make yourself noticeable.

Use hand signals
Left turn: arm extended horizontally beyond the side of the bike
Right turn: arm extended upward beyond the side of the bike
Stopping or slowing down: arm extended downward beyond the side of the bike

Sources: Chicago Department of Transportation and Active Transportation Alliance