Risky Business
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Of Guitar Hero, TARP, and the Credit Crunch
Continue reading… 0 CommentsI was reading Inc's fascinating article about Harmonix, the developer of the first two Guitar Hero games and the current smash Rock Band games. It's a terriffic read--Harmonix went from being a company that hadn't made a dime in almost a decade, to being one of the most successful video-game developers ever.
But one portion I think is quite revealing in terms of just what we have to lose from this current economic crisis. This excerpt describes what Charles Huang, founder of Red Octane, the former partner of Harmonix and designer of the little plastic guitars that launched a million fingers, had do to keep Guitar Hero alive:
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The Best iPhone Apps for Entrepreneurs
Continue reading… 1 CommentSarah Scrafford at WebPreneur Blog has a handy list of the 20 most useful iPhone apps for entrepreneurs. Most of these would be useful for anybody dealing with a busy work life. Let me highlight the apps that would be most useful for entrepreneurs specifically:
iBillTo: Financial transactions take place whether you’re in the office or not, so it’s important that you have a way to enter them from anywhere you happen to be. Using iBillTo, you’ll be able to keep track of client billing information, so it’s all available to you whenever and wherever you need it.
Attendance Countdown: Don’t let your working hours get away from you. Use this app to count exactly how many hours you’ve spent working, and count down how many you have left available.
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Despite Recession, Maybe Now Is Not The Time for Layoffs
Continue reading… 0 CommentsAlmost everyone is expecting the unemployment rate to only increase. Small businesses are certainly going to be hit by those job losses. The most recent NFIB survey said that in the month of October, small business employment fell by eight percent, and it went down ten percent the month before that. Laying off employees is an obvious way to save money during a recession.
But could it actually be costlier in the long-run to lay off an employee?
This New York Time article from yesterday gives some reasons to think so:
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What Businesses Get Hit Hardest In a Recession?
Continue reading… 0 CommentsWhen US News published my list of five Most Overrated Small Businesses, I knew I was getting into controversial territory. Restaurant associations are not pleased with the number of people who call the restaurant industry a bad area of business for the small-business owner.
They have some good points. Claims about the failure rate for restaurants are often grossly overstated. It's not around ninety percent, but around two-thirds for restaurants in their first few years. Still high, but not much higher than for your average small business.
But it's still a difficult business, as almost anyone involved in it will tell you. And in today's economy, it's only getting more difficult.
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Despite Credit Crunch, Small Business Lending Still Alive and Kicking
Continue reading… 1 CommentThe SEC is holding some interesting panel discussions regarding small businesses and capital, and securities regulation and smaller public companies, going on live right now. Webcast is available here.
On this morning's panel I heard one of the best descriptions of the credit crunch as it applies to small businesses. Andrew Sherman, a partner at Dickstein Shapiro LLP in DC, said regarding small business access to capital that "the patient is sick, the patient is ugly, but the patient is not dead."
Despite all the turmoil in the recent weeks, and the failure of the bailout plan (so far) to stop the bleeding, the initial assessment that I wrote about back in early October seems to hold true: lending standards have certainly tightened, but money is out there if you know where to look.
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Credit Card Users Keep Getting Squeezed, Rates and Fees Rising
Continue reading… 19 CommentsWhenever credit card use becomes more difficult for consumers, small-business owners are one of the most deeply affected of that group. Credit card debt is a huge source of small-business financing (some would say too big of a source).
But it is indeed getting more difficult. The Wall Street Journal reports today that even though the Fed is lowering its benchmark rate--which should be increasing lending activity--credit-card issuers are tightening in a number of ways: raising interest rates, hiking punitive fees, and lowering limits.
The exact responses differ. But it all points to one message: if you've had a large outstanding balance on your card for some time, the party's over. For example, Chase is now charging a $10 monthly fee for some customers with outstanding balances of over two years.
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The Detroit Bailout: Automaker CEOs Talking Out of Both Sides of Their Mouths
Continue reading… 13 CommentsI was perusing the testimonies that the CEOs of Ford, GM and Chrysler gave before the Senate Banking Committee yesterday, and I can't help but be slightly amused. The nature of this proposed bailout has put the heads of the Big Three in an uncomfortable situation.
On one hand, they must show that money given to them is an actual investment, and not just a drop down a bottomless well. That means they need to argue that they have reformed themselves into mean moneymaking machines with one foot ahead of the competition, ready to face the changing trends of the industry.
On the other hand, they need to show that they need the money, and that the federal government needs to give it to them right now. That means they need to argue that they are in complete dire straits, on the verge of collapse, and ready to take everyone down with them.
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Things Every Small Business Person Should Know About Google
Continue reading… 0 CommentsGoogle has so many apps these days it can be hard to keep them straight. Even if you use its search engine or maps feature as much as I do, there may be other tools you don't know about. Kudzu has a good rundown of the best apps and how they matter for small businesses. Example:
If you’re not already running a Google AdWords campaign for your business, it’s definitely worth a try, particularly if the bulk of your business is conducted online. You can open a Google AdWords account for free then start an online ad campaign for as little as a $25 investment. With such a low startup cost, Google AdWords gives small businesses the ability to not just advertise online but to test keywords, spending, and more to find the right mix before investing a more significant amount.
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Immigration--A Source for Entrepreneurial Innovation
Continue reading… 5 CommentsImmigrants in the U.S. are much more likely to be entrepreneurs than native-born Americans. So it makes perfect sense when Sharon McLoone of the Washington Post reports the following:
Traditionally in the United States, most of the owners of start-ups and small businesses have been men ages 18 to 34. But new data compiled in 2006 and 2007 show that today's entrepreneur is an urban, middle-income, middle-aged immigrant.
The entire Global Entrepreneurship Monitor report, by researchers from Babson and Baruch colleges, has plenty more interesting findings. For example, it helps debunk the myth that poor immigrants do not contribute much to economic growth and only serve as "cheap labor." In fact, a not-insubstantial number become entrepreneurs. For example, according to the report, about a quarter of early-stage businesses started by Mexican-Americans are started by people of lower household income (under $40,000).
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Youth Interest in Entrepreneurship Declines Amid Recession
Continue reading… 0 CommentsA new poll released today (but not posted online) :
In its seventh annual “Teens and Entrepreneurship” poll, Junior Achievement has found that 13-18 year olds are less interested in starting their own businesses than they were a year ago. In 2007, 67 percent of teens indicated an interest in entrepreneurship; in 2008 that number declined to 60 percent—perhaps as a result of the stagnating economy. Teens cited “unemployment,” “possibility of recession,” and “the federal budget deficit” as the top three threats to the U.S. economy. But in a show of optimism, more than half (53 percent) predicted they would be better off financially than their parents.
There has been talk about the Facebook/Myspace generation being destined to be the most entrepreneurial yet, and I've expressed skepticism about that theory.
I don't think this poll is reason to be more skeptical and conclude anything dramatic about deteriorating entrepreneurship, though.
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The Small Business Side of the Automakers' Financial Woes
Continue reading… 0 CommentsThe controversy over the bailout of Detroit's Big Three--a package whose passage is looking more unlikely all the time, at least in its current form--is mostly focused around the problems facing those large corporations. Not that those problems aren't significant, but the AP has a useful report today showing that small auto suppliers are in about as much trouble as the big boys.
...if the companies at the bottom of the supply chain don't find a way to recapitalize, Fitzgerald warned, numerous bankruptcies and liquidations among the small companies will set off a string of parts shortages that could reach all the way to the vehicle assembly line.
The resulting disruptions could negate any help the government might give General Motors Corp., Ford Motor Co. and Chrysler LLC.
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Hip Hop and Entrepreneurship Go Hand In Hand
Continue reading… 2 CommentsHere's an interesting event to put in your calendar: On November 19th in Kansas City, the Kauffman Foundation will be holding a panel discussion on hip-hop and entrepreneurship , featuring such luminaries from the hip-hop community as Chuck D (Public Enemy) and Master P. If you can't make it to Kansas City, don't fear--it will be webcast live, from 6:15 to 9 pm.
Some things they'll be talking about:
- Contributions to American business that Hip Hop youth have spearheaded via the Hip Hop cultural explosion.
- Traditional entrepreneurial efforts that created, marketed and promoted Hip Hop music, fashion, publishing, etc.
- Current social entrepreneurial efforts within the Hip Hop generation—activist organizations who focus on electoral politics as well as other pressing social problems of our time (police brutality, environmental concerns, education reform, etc).
- The role that information technology and broadband access has played in the spread of Hip Hop music and culture.
- The explosive economy that Hip Hop created—new jobs and cottage industries.
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Quantum of Solace: The James Bond Theory of Entrepreneurial Innovation
Continue reading… 4 CommentsHere’s the theory: any technology deployed as a gadget in a James Bond film will become available in real life at some point within about twenty-five years after that film’s release, if it was not already available.
Don’t believe me? Let’s look at some notable examples.
From Russia With Love (1963) - All the Bond movies are famous for their fabulously tricked-out automobiles with various rocket launchers, machine guns, ejector seats, etc installed. In this movie, Bond wowed 60’s audiences with a car complete with a built-in phone! Ok, let’s move on from this one…
Thunderball (1965) - Bond did some underwater stalking while a wearing a watch with its own Geiger counter. Today, something similar is commercially available.
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Republicans Taking A Stand Against Detroit Bailout?
Continue reading… 6 CommentsSo last week I wrote that the Detroit bailout is a perfect opportunity for the GOP to take a pro-entrepreneur, anti-special-interest stance. Today John Boehner made an announcement:
Why are Democratic leaders in Congress discussing an additional taxpayer-funded bailout on top of that $25 billion package instead of ensuring these loans are made available to the automakers as quickly as possible? Why have the Democratic leaders of Congress been willing to provide this money without insisting that the companies receiving these federal dollars demonstrate to Congress and to taxpayers that they have a credible plan to strengthen their financial health?
Certainly encouraging. The White House is also voicing opposition to this bailout--but not because of any principled stance against corporate welfare (no surprise there). Bush just doesn't want it draining Treasury funds from his other bailout.
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Small Business Administration Loans: Antidote to the Credit Crunch?
Continue reading… 6 CommentsThe Small Business Administration announced today that it is changing two aspects of its lending programs in an attempt to shore up flagging loans for small businesses. These changes are in line with what Senators John Kerry (chairman of the Senate Committee on Small Business and Entrepreneurship) and Chuck Schumer have been recommending.
The changes, according to the committee's press release, will consist of:
One of the changes being made by the SBA would give lenders the discretion to use an alternative variable interest rate to the Prime interest rate. Lenders will now be able to use the London Interbank Offered Rate (LIBOR). Additionally, the SBA will allow loans with various interest rates to be pooled for sale on the secondary market rather than allowing only loans with the same rate to be pooled. These various rate pools are also known as Weighted Average Coupon (WAC) pools.
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Immigration--Will Obama Seize This Key Small Business Issue?
Continue reading… 27 CommentsImmigration was the talk of the country about two years ago, but it was barely mentioned in the election after the primaries ended. That's probably because it was one of the issues where Obama and McCain agreed the most, both having voted for President Bush's comprehensive immigration reform bill.
But for those interested in enhancing America's entrepreneurial spirit as it goes through a rough time, immigration is an issue that should not be ignored. A new study for the SBA by Rob Fairlie of UC Santa Cruz lays out why:
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Small Business Agenda 2009: A Bill That May Haunt Obama
Continue reading… 3 CommentsCoyote Blog resurrects a bill Obama co-sponsored last summer that business owners may want to keep in mind looking ahead to 2009. This bill, which never made it out of committee, would have made several requirements for employers to qualify for a federal income tax credit. The lucky ones are dubbed "patriot employers," in the vein of a similarly jingoistic piece of legislation most of us remember.
Here are some of the things you have to do to be a "patriot employer" according to the bill:
--maintain your headquarters in the U.S.
--pay at least 60 percent of your employees' health care premiums
--if you have at least 50 employees, you have to maintain your ratio of workers outside the country compared to workers outside the country.
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Post-Election Agenda: From One Bailout to the Next
Continue reading… 1 CommentSo what group might the Democrats first help with the political capital they gathered from their impressive electoral victory?
Average, working-class Americans?
Poor children in inner-city schools?
Giant automotive corporations?
If you answered C), you're correct. It appears that the Democrats may soon push through $50 billion in loans for the Detroit automakers, a doubling of the number previously discussed.
At least they never pulled an about-face on this issue like John McCain: saying that the jobs lost in Michigan aren't coming back, and then supporting this bailout anyway.
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What President Obama Will Mean for Small Businesses and Entrepreneurs
Continue reading… 6 CommentsSo it's finally over. Now we can say with greater certainty what issues will be on the table pertaining to small businesses and entrepreneurs.
President Obama is likely to at least consider, if not push through Congress, the following:
- for small businesses that pay their employees' health care, a refundable tax credit up to 50 percent of the premium. This is likely to be part of a greater health care package.
- removal of capital gains tax for small businesses and "start-up businesses" (not clear how those will be defined)
- Obama's proposed $500 "Making Work Pay" tax credit is supposed to reduce the "double taxation" that occurs for self-employed people: they pay both the employer and employee sides of the payroll tax.
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Election Day 2008: How to Cash In on the McCain v. Obama Race
Continue reading… 11 CommentsToday is not a big day for business news given the election. But one entrepreneurial innovation that people will be watching closely are the online prediction markets. In 2004, when the polls were pointing toward Kerry, the futures markets correctly predicted that Bush would come out on top. The best-known online prediction market, Intrade, is currently trading an Obama victory at high prices. Right now might be a good time to check out how other Senate and House races are trading, and then tomorrow we'll know just how on the mark the consensus opinion among traders on Intrade was.
Businesspundit has an intriguing interview up with Intrade VP for Business Development Chad Rigetti. The site was founded in 2001, and acquired by Dublin-based Tradesports in 2003. Intrade focuses on all events not sports-related--you can bet on everything from the weather to the future value of works of fine art. After the jump--how much can you benefit from starting your own prediction market site?
