Risky Business
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How to Deal with Slowing Payments in a Recessionary Economy
Continue reading… 1 CommentThe Wall Street Journal reports today about the growing problem of slow payments for small businesses.
Back in May I wrote about some concrete ways that small businesses can improve their debt collection methods. This can be important to keep up one's cash flow, which really can be the lifeblood for small businesses.
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Though Economy Contracts, Small-Business Owners Stay Optimistic
Continue reading… 4 CommentsThe news that GDP contracted in the third quarter vindicates people saying that the U.S. economy is going into a recession. Of course, you need two consecutive quarters of negative growth to be in an official recession, but it seems likely that more contractions are coming.
But take a look out your window. Notice that people are not lined up in the street for bread. War, Famine, Pestilence, and Death have not mounted their horses. I'm not trying to make light of a situation that is dire for many people, but just to say—for most small businesspeople in this country, life will go on as normal.
Don't just take my word for it. Intuit Inc. released a survey yesterday that found small-business owners are "optimistic but realistic" about the state of the economy. A strong 82 percent of small-business owners still see opportunities for their businesses, and 64 percent expect their business to grow. The survey is from the second week of October, so it definitely wasn't taken before the worst of this crisis (or at least what we hope was the worst).
While both of those numbers were lower than the comparable figures six months ago, they're still stronger than perhaps the conventional wisdom about a recession would have it.
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Election 2008: Where Do Small Businesses Stand?
Continue reading… 74 CommentsBoth parties in this election want to present themselves as the party of small business. But we rarely hear about the opposite perspective—what do small-business owners think about the issues of their political parties? The American Express OPEN Small Business Monitor has compiled a fact sheet based on its survey of small-business owners:
Issues that will have the most influence on your vote in the elections this November Democratic Republican Independent No Party Overall Economy 39% 37% 43% 36% 38% Tax policy 8% 24% 14% 31% 18% Energy policy 10% 14% 12% 16% 12% Healthcare 21% 7% 8% 3% 11% Iraq 15% 5% 7% 9% 9% Immigration 2% 6% 11% 4% 5% None of the above 4% 5% 4% 3% 4% -
John McCain Campaign: Obama Is a Big Spender, but...
Continue reading… 16 CommentsJohn McCain gave up on Michigan a while back. Maybe that explains why he's allowed Carly Fiorina, one of his top economic advisers, to make the statement she made last night that cuts against his previous open hand extended to the Detroit automakers:
"I don't think the government can rescue the industry," Carly Fiorina, former chief executive of Hewlett-Packard Corp, told Reuters at an event in suburban Detroit.
"Whatever the government does, it should not take away the fundamentals of risk-taking. Sometimes it leads to rewards and sometimes consequences, downside," she said. "In other words, the auto industry cannot be saved from its own bad bets."
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4 Things Entrepreneurs Do in College
Continue reading… 3 CommentsWhat's the education of an entrepreneur? That is a question I have explored a few times in the past. Chad Moutray of the SBA Office of Advocacy has just written an interesting paper that looks at the empirical data on what college means for self-employed people.
According to the study, if you did one or more of the following in college, you are more likely to be working for yourself as an entrepreneur than working for somebody else:
- majored in something outside of the hard sciences (engineering, math, chemistry, biology, etc.);
- tended to be a "jack-of-all-trades"—taking many different courses, but not mastering any;
- did not go on to graduate school;
- had a lower GPA than your peers who ended up working in the nonprofit and government sectors.
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What the Financial Crisis Means for Small Businesses
Continue reading… 1 CommentIt's going to be interesting to see how the surveys of small businesses fare when we see results AFTER the financial tumult of late September and early October. But we're still trying to figure out what the environment was like before that. The United States Federation of Small Businesses released a survey today that was done in August, saying that 95 percent of small-business people feel that they have been challenged. It does not appear to be online anywhere yet. What are some of the specific challenges?
- 23 percent of respondents have cut staff
- 36 percent of respondents have decreased business travel
- 36 percent of respondents have minimized marketing efforts
- 29 percent of respondents have put a freeze on bonuses and raises
How will these results change after the recent developments? One thing to note: Only about 180 people participated in this survey.
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Solo 401(k) Limits Increased
Continue reading… 4 CommentsTons of self-employed people aren't saving for their retirement as they could be because they don't think they're able to start a 401(k). But solo 401(k)'s are quite possible, as I have written about. They just got more advantageous:
For self-employed individuals with a simplified employee pension—a SEP plan—or a solo 401(k) designed for independent contractors such as consultants or real estate agents and sole proprietors, the contribution limit increases from $46,000 to $49,000.
I wrote in my previous article about how the annual $46,000 allowed for a solo 401(k) could drop someone a tax bracket. It's now an even better tax shelter thanks to this limit increase.
Of course, 401(k)'s have gotten a bad rap in the media recently after so many lost value because of the drops in the market. But really, despite the ups and downs of the market, over a long period of time, your 401(k) will very likely benefit.
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Do Federal Agencies Hate Small Businesses?
Continue reading… 2 CommentsYou might have seen several headlines yesterday saying something like "The Federal Government Misses Small Business Contract Goal." The federal government is obligated to make sure that at least 23 percent of its contracts go to small businesses. They've failed to do that in recent years, it turns out, and the Washington Post reports that mistakes, such as considering subsidiaries of big businesses like Lockheed Martin to be "small businesses" and giving millions of dollars in contracts to them, have been made.
Government contracting has, of course, become a highly publicized and controversial topic in recent years because of the scandals involving Halliburton and Blackwater. The American Small Business League, whose president is quoted in the Post article, puts a lot of effort into making the argument that the federal government is screwing over the little guy in favor of doling out favors to big, connected corporations.
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Last Post on Joe the Plumber
Continue reading… 8 CommentsI was reading through the whirlwind of discussion that my post last week on "Joe the Plumber" set off, and I noticed that most readers were in agreement about one point: I am dead wrong about licensing.
Here's a good example from commenter "Ol' Whip":
Yes it does matter. It is an outside certification that he actually knows what he is doing and won't cause your house to flood, your sewage to back up or your boiler to explode.
Lot's of folks can change a light bulb but I sure don't want them claiming to be electricians and working on my house.
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How Will Entrepreneurs Fare in a Recession?
Continue reading… 3 CommentsWhen something gets riskier, you get less of that thing. Just look at how the trend of a decline in venture capital activity has amplified as the economy has worsened.
So consider the following claim a blow against the conventional wisdom about small businesses and start-ups:
Turns out that even in a downturn, the number of business start-ups is pretty constant, hovering at around 640,000 a year. Economic slumps typically last six months, so they don't tend to affect entrepreneurial plans that have been years in the making. Nor is the start-up success rate hurt by the vagaries of the business cycle, says Brian Headd, economist at the Small Business Administration.
