Risky Business
-
Have TARP's Executive Compensation Limits Doomed The Small-Business Bailout?
Continue reading… 8 CommentsAccording to a new article in American Banker magazine (available online to subscribers only), Obama's plan to end the credit crunch for small businesses is "in jeopardy." (To get some background on that plan, click here.)
Treasury is using $15 billion to fund new SBA-guaranteed loans. What's the problem? It seems that the most important SBA broker-dealers don't like all the strings attached to the money--most prominently the executive compensation limits:
The conditions have already spooked the four large private SBA broker-dealers - Cantor Fitzgerald LP, Vining Sparks IBG LP, Coastal Securities Inc. and Shay Financial Services Inc. - which, according to sources, have all indicated they have no plans to participate in the program.
"I don't think anyone's going to do that," said Scott Taylor, a vice president in Memphis for Shay Financial Services.
-
Guitar Hero, Metallica, And NCAA Coaches: Together At Last
Continue reading… 0 CommentsBecause I've blogged about Guitar Hero in the past, I feel obligated to link to this video.
Also, it's really, really funny and awkward.
-
Detroit Free Press Going Digital
Continue reading… 4 CommentsHere's another reason to reconsider the newspaper bailout:
The Detroit Free Press and The Detroit News will announce today (Monday) the implementation of a sweeping set of strategic and innovative changes with emphasis on digital delivery and the introduction of new, compelling, easy-to-use editions of both newspapers available at nearly 18,000 locations throughout Michigan, in an era in which digital delivery is revolutionizing how people get information.
The changes include first-in-the-nation moves as part of its bold leadership to strengthen and ensure continued publication of two strong and independent daily newspapers in Detroit and Michigan at a time when newspapers around the country are filing for Chapter 11, going to digital only operations or closing outright.
-
Business Advice From The Mayflower Madam
Continue reading… 6 CommentsEntrepreneur has an interview with the notorious (former) madam Sydney Biddle Barrows. She is transferring her sales skills to the world of marketing at-large, and so she has a new book where she talks about what she's learned that can help even less lurid businesses. An excerpt from the interview:
One of the things that I really do want to point out--and I mention this in the book, too--is when it comes to the sales presentation, when it comes to how you talk to the customer about buying your thing, business owners really, really have to do it themselves for a while. Because it's one thing to sit down and write a script, "This is the way you should do it." But until you have actually tested it and seen how the customer responds [you have no idea if it works]. One of my perfect examples was, in the very beginning, when I booked a call and the man would choose the young lady and I would say, "OK. What's your name?" And we would lose the call. So I figured out to ask, "What name are you registered under? What name is your phone listed under?" It's the same question, but when you ask it that way, it makes all the difference in the world.
-
Newspapers Going The Way Of The Dodo? Maybe Not So Bad
Continue reading… 2 CommentsThis is certainly the comment of the week, from one Nicholas Taylor of Texas:
Capitalism is survival of the fittest. If a product or a company can't compete it goes the way of the dodo bird and the dinosaur. If the newspaper industry can not change and adapt to people's changing ways of obtaining information, they too will find themselves experiencing this same fate.
How many people still use 35mm cameras? How many people still use typewriters? Companies such as Kodak and Polaroid have abandoned their old products and are now focusing entirely on digital cameras and other electronic media devices. When typewriters started to become obsolete, such companies started to produce word processors, electronic calculators, PDAs, and other devices.
The newspaper industry is not any different from any other industry that exists under our capitalist system. It must either adapt or die. People's ways of obtaining information is changing. There are now 24 hour cable news networks and the world wide web has democratized information. Anyone can become a reporter of sorts by blogging about a event or "Twittering" about it. CNN has even capitalized on the ability of the common person to produce news with their iReport.
-
Unemployment Up To Almost 20 Percent In (Parts Of) The US
Continue reading… 3 CommentsVia Fark, I see that unemployment in Tunica County, Mississippi is up to 19.5 percent, over 11 points higher than the national average. That's pretty depressing. But to put things in perspective, Mississippi is our poorest state (although West Virginia often holds that position), and Tunica County is apparently one of the poorest counties in the poorest state. In 1933, at the height of the Great Depression, the national unemployment rate was nearly 25 percent. So some of the worst job conditions found in the entire country still don't compare to the average across the country in the Great Depression.
Looking at this New York Times map from earlier this month, I can only find three counties worse than 25 percent: Mackinac County, Michigan, Colusa County, California, and Perry County, Tennessee. (Please let me know if I missed any).
That doesn't mean the situation isn't bad, but it does mean we should pause before making grandiose comparisons.
-
Obama: Marijuana Legalization Not Good For The Economy
Continue reading… 233 CommentsThe legislative battle to legalize pot in California has gained so much attention that President Obama can no longer ignore it. In an online town hall meeting Obama rejected the argument that legalizing, regulating, and taxing marijuana would be a good way to raise money in this recession (See my previous post explaining that argument.)
And what was Obama's reasoning? Well, there wasn't any. He just stated in direct terms he does not think legalizing pot "is a good strategy to grow our economy." Read more about the town hall meeting here.
Does that mean he thinks it's not a good strategy because it would not actually grow the economy? Or does he think legalizing pot would have other costs that would subsume any economic benefits, thus making it not a good strategy? We don't know, but they are questions to ponder.
-
Recession Not As Bad As 1980, Says Small Biz Economist
Continue reading… 1 CommentWe hear constant comparisons between today's economy and the 1930s. But it's not apt to compare this recession to the one just 29 years ago, says William Dunkelberg, chief economist at the National Federation of Independent Business. Read on here:
While the economic indicators are now hovering near the low levels we saw nearly three decades ago, Dunkelberg isn't panicking and doesn't think small business owners should be fearful either.
"We'll get through this year as always," he said. "It's the private sector that will save itself, not the government." -
Newspaper Bailout Seriously Considered
Continue reading… 22 CommentsWhile there have been serious proposals for a bailout of the ailing journalism industry, I never thought such a bailout would be taken seriously politically. I'm proved wrong by yesterday's news:
With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.
"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.
-
Obama Op-Ed Shows He Won't Embrace Protectionism
Continue reading… 1 CommentBarack Obama's op-ed in newspapers today--running in 30 papers around the world, and only a handful in the US--doesn't say much that is new. But what is significant is what he doesn't say. Namely, there is little indication that Obama will embrace a protectionist stance in reaction to the recession. A Smoot-Hawley 2.0 seems highly unlikely (many economists believe that the Smoot-Hawley tariff turned a great recession into the Great Depression.)
While people in his party are talking about the importance of "buying American" only, Obama in this op-ed is actually emphasizing the benefits of exports:
A crisis in credit and confidence has swept across borders, with consequences for every corner of the world. We have learned that the success of the American economy is inextricably linked to the global economy. If people in other countries cannot spend, markets dry up—already we've seen the biggest drop in American exports in nearly four decades, which has led directly to American job losses. And if we continue to let financial institutions around the world act recklessly and irresponsibly, we will remain trapped in a cycle of bubble and bust. That is why the upcoming London Summit is directly relevant to our recovery at home.
-
United States Still Number One When It Comes To Entrepreneurship
Continue reading… 0 CommentsIf you haven't already read it, I highly recommend the Economist's special report on entrepreneurship. Here's an explanation of why, despite everything that has happened over the past year, the US economy is still fundamentally sound in one aspect: its propensity for entrepreneurship.
Part of the reason why is that the rest of the world has barriers to entrepreneurs that the US lacks. I wrote about a few in a recent article, and the Economist adds some European-specific ones:
These cultural problems are reinforced by structural ones. The European market remains much more fragmented than the American one: entrepreneurs have to grapple with a patchwork of legal codes and an expensive and time-consuming patent system. In many countries the tax system and the labour laws discourage companies from growing above a certain size. A depressing number of European universities remain suspicious of industry, subsisting on declining state subsidies but still unwilling to embrace the private sector.
-
LOLCat Your Way To Internet Millions
Continue reading… 0 CommentsAs old-school media enterprises shut down all around us, the issue of "how can we actually money off this Internet thing??" is becoming more important. Many people have no idea how to answer that question. I don't know if they should be heartened or disheartened by this article from Slate's The Big Money. Apparently, Icanhascheezburger.com--the primary purveyor of those LOLcat images that everyone finds so darn adorable--has figured out a way to monetize the massive traffic it generates, and might even be profitable.
Shortly after the site launched, it was snatched up by the web entrepreneurs who run Pet Holdings Inc, which runs a number of other popular internet meme sites.
Now, the Pet Holdings empire gets about 5.5 million daily pageviews, making it one of Web's the most popular blog networks. The company has a full-time staff of 10 developers, designers, and administrators. Most of the sites' content—the cat pictures, the FAIL videos, the Engrish signs—are contributed by a vast, devoted community of regular readers, a business model that scales well and helps Pets' bottom line. Huh says that the company is profitable and has been growing during an otherwise grim time for the advertising market, though he notes that "profitable" doesn't mean "cash cow." "Right now, it's not like printing cash—far from it," he says. "I work out of a 6-foot-by-6-foot server closet with no windows. We're conserving a lot of costs to stay profitable, but it's certainly a growing business."
-
Philadelphia Law Firm Wolf Block To Possibly Dissolve
Continue reading… 8 CommentsThe Philadelphia Business Journal is reporting that WolfBlock LLP, the 149th-largest law firm in the country according to National Journal, is currently considering dissolution.
A couple of weeks ago I pondered if the recession is causing a shift from large law firms to more nimble ones.
-
Sex Shop In Historic District Is An Entrepreneur's Revenge
Continue reading… 4 CommentsThe owner of a hunting and fishing store in Old Town Alexandria, Virginia--which advertises itself as the place where the Founding Fathers used to hang out--wants to expand his store. The city's architectural review board, intent on preserving the colonial vibe of the neighborhood, blocks him. So what does he do? He rents part of his building to a new store that the Founding Fathers probably would not have frequented:
Old Town’s latest offering, though, has been stopping visitors in their tracks since it opened in January. It is called Le Tache, a “couples boutique,” more commonly known as a sex shop, which is sandwiched between art galleries whose offerings are more common in Old Town than colorfulvibrators and steamy DVDs. The boutique’s owner leased the building after a dispute between the property owner and the city.
-
How To Compete With Wal-Mart? Don't Try
Continue reading… 0 CommentsVia Independent Street, I see a new study on how Wal-Mart affects small retailers. The study found that when Wal-Mart comes into town, local mass merchandisers, supermarkets and drug stores all see significant sales declines. For supermarkets, cutting prices only "mitigates" the harm, and doesn't work at all for mass merchandisers and drug stores, the study found.
But while it makes sense that Wal-Mart has a negative effect on small businesses that directly compete with it, it does not follow that Wal-Mart is overall harmful to the small-business sector. In fact, by driving down prices and thus freeing up resources in communities, Wal-Mart might actually help small enterprises overall. Check out my previous interview with West Virginia University economist Russell Sobel for his empirical research on this issue.
-
Can East Tennessee State Buccaneers Repeat David v. Goliath Performance?
Continue reading… 1 CommentMost small businesspeople know the feeling of being a David up against a Goliath. In the world of sports, perhaps the ultimate David v. Goliath scenario is when a first seed meets a sixteen seed in the first round of the NCAA tournament. So far, Goliath hasn't been too easy on David: since the 64-team tournament began in 1985, a one seed has never lost in the first round.
This afternoon, sixteen seed East Tennessee State will face one seed Pittsburgh. While the point spread is at 20 in favor of Pitt, the ETSU Bucs have at least one piece of history on their side. They are one of only a few 16 seeds to come tantalizingly close to victory over a number one seed. In 1989, ETSU lost to Oklahoma by just a single point. The final score was 72-71. That same year, a 16 seed Princeton team had another single-point loss to the Georgetown Hoyas. A year later, 16 seed Murray State actually managed to take Michigan State to overtime.
I don't know if ETSU has it in them to come so close again this year, but underdogs everywhere will be rooting for them.
-
The Trouble With Obama's Small Business Rescue Plan, Part II
Continue reading… 11 CommentsAt today's Senate Small Business Committee hearing, Senator Kit Bond (R-MO) made comments agreeing with my initial assessment of the recently announced Treasury plan to save small-business lending. He said that it will "only likely provide limited help for small businesses. We must attack the root of the crisis," which mean dealing with toxic assets.
Also, one of the people who testified explained another problem with the plan. Bob Cockerham of Car World, Inc. is a small-business owner who operates two car dealerships in New Mexico. Since August of 2008, his business has dropped from 80 employees to just 17, and he's had to close a location since his lenders have withdrawn financing. That's despite the fact that he testified that he has never been late on a payment. So obviously Cockerham is quite interested in the attempt to fix the small-business credit crisis.
-
Obama Will Stop Medical Marijuana Raids—Good News For California Drug Decriminalizers?
Continue reading… 20 CommentsAttorney General Holder officially announced yesterday that the Justice Department will no longer raid medical marijuana distributors in enforcement of drug laws.
Could the Obama administration’s seemingly less harsh stance on drug prohibition give political buoyancy to the attempt to legalize pot in California? Tom Ammiano, the California legislator who introduced that legislation, is happy about the administration’s move, for one. As the SF Weekly reports, Ammiano’s press secretary said, “"This really describes what we're seeing already which is that things are changing with regard to marijuana now.”
Or could the move rally the opposition in California?
-
Best And Worst States For Business: Another Ranking
Continue reading… 0 CommentsChief Executive magazine released the results of their 2009 "Best and Worst States" survey. It's based on a survey of 543 CEOs, who were asked to evaluate their states based on "proximity to resources, regulation, tax policies, education, quality of living, and infrastructure." They also graded their states based on three criteria: Taxation & Regulation, Workforce Quality, and Living Environment.
Read the results to find your state. Here are the top and bottom five:
Five Best States
1. Texas
2. North Carolina
3. Florida
4. Georgia
5. Tennessee
Five Worst States
1. California
2. New York
3. Michigan
4. New Jersey
5. Massachusetts
-
Employee Free Choice Act Critics Strike Back At Poll
Continue reading… 5 Comments...or do a majority of Americans support the EFCA? Dave Weigel at the Washington Independent has the scoop on criticism of the Gallup poll. Click here for more.
