Small Business on The Huffington Post

Rep. Edolphus Towns: Congress Is Committed to Creating Jobs on Main Street

2009-12-22T15:26:25Z

Across the nation, in our communities and neighborhoods, we are experiencing the effects of the economic downturn. Jobs have vanished at rates not seen since the Great Depression, and many know someone who lost their job as a result of the recession.

The Democratic Congress has been focused on turning around our economy, and acted on our commitment by enacting several measures that have already created or saved more than a million jobs this year. We moved quickly at the beginning of 2009 to pass the American Recovery and Reinvestment Act, or "Recovery Act," which has helped keep cops on the beat and teachers in classrooms, while making critical investments in green technology and our nation's infrastructure.

The Recovery Act has also helped ease the recession's burden by extending unemployment benefits and increasing COBRA assistance to millions of people without health insurance.

To help turn our economy around, I worked with the Obama administration to ensure that Recovery Act funds benefit economically distressed areas. I also helped bring Department of Transportation officials to my home district in Brooklyn, NY, to help small business owners and government contractors understand how to access Recovery Act funds and meet the reporting requirements.

Another important part of speeding up our recovery is the Jobs for Main Street Act, which redirects repaid funds from the Troubled Asset Relief Program (TARP) that helped to stabilize our financial sector, and passed the House last week. During a recent interview on CNBC, I made it clear that I believed Congress needed to use repaid bailout funds to create a jobs program that helps those Americans hardest hit by the recession.

The bill invests $48 billion in infrastructure spending to rebuild roads and bridges, modernize public buildings and mass transit and clean our water and air. Moreover, the legislation includes $27 billion to save or create 250,000 education jobs over the next two years, and helps retain law enforcement officers and firefighters. The bill also directs $500 million to create 250,000 summer jobs for low-income kids and includes $750 million for job training programs at community colleges, a third of which is targeted at low-income trainees.

H.R. 2847 also includes several key initiatives to help America's small businesses. The bill expands the federal guarantee for banks that lend to small businesses, and eliminates fees on Small Business Administration (SBA) loans. We all know that small businesses are the engines of job growth in our economy, but a lack of available credit has prevented small businesses from creating jobs. By making small business loans more accessible and affordable, we can spur the creation of thousands of jobs on main street that will continue to fuel our economic recovery.

In addition to supporting job creation legislation, I have been working on other job creation-related initiatives. I worked with my colleagues in the Congressional Black Caucus (CBC) recently to ensure that the "Jobs for Main Street Act" does not raise taxes on hard working Americans or place a greater burden on our children. The CBC also urged President Obama to make decreasing unemployment and increasing job creation the nation's number one priority.

As the holiday season approaches, I am reminded of all the families struggling to put food on the table and to make ends meet. We still have a way to go until job opportunities are abundant, but my colleagues in Congress and I remain committed to boosting our economy and create jobs, especially in the communities hardest hit by the recession.

Small-Business Bankruptcies Rise 81% In California

2009-12-22T11:19:39Z

As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.

"While bankruptcies are up, overall, small-business closures are up even more," Headd said.

California has been particularly hard hit. The latest data show small-business bankruptcies up 81% in the state for the 12 months ended Sept. 30, compared with the previous year.

Small Business Lending Programs To Get $30B In Bailout Assistance

2009-12-18T15:22:30Z

WASHINGTON — The Obama administration is setting aside $30 billion from the financial bailout fund for a range of initiatives designed to encourage lending to small businesses to aid the economic recovery.

With the financial system stabilized, the administration will focus most of its resources from the $700 billion fund on programs to revive the job market and keep people in their homes, according to an internal document obtained by The Associated Press.

Scott Ballum: Don't Start a Social Enterprise -- Unless You Have To

2009-12-16T16:17:06Z

This social enterprise thing isn't all its cracked up to be. It sounds pretty good, if you believe the hype that you can save the world, make friends, make money, and party party party. But even the most successful amongst us is breaking all sorts of rules, the kind they might teach you on day one in an MBA program. Which means that all bets are off, and we're totally on our own out here.

I don't know if the party thing is actually part of the hype, but it does seem to be what a lot of outsiders think we're doing all day (or all weekend anyway). People with traditional jobs just see that we can go to the gym in the middle of the afternoon, or work from a coffee shop or our homes or some funky loftspace and wear whatever we want, while they have to stick to schedules and finite personal days that don't roll-over and business casual. And they're right, those things are pretty cool. I wouldn't make it without those things. But my mid-day swim? That's my health insurance. I don't get paid for sick days. If I coast for a week because I'm hosting Thanksgiving or got in a fight with my mom, if I'm hungover and spend the day on Facebook, I don't get a paycheck at the end of the week. And sometimes - even when I work the 70 or 80 hour week at my most productive clip, I still don't get a paycheck at the end of the week.

If I look at the benefits and the perks and the responsibilities, all I have is that gym break. It isn't that great, people. It takes a much broader view of our work to see what makes it worth it - to see why we break those MBA rules and bypass retirement plans. I have to know that better food in school lunchrooms, and self-sufficient cocoa farmers in Madagascar and coffee farmers in Uganda, and youth-led HIV prevention programs, all make the world a better place for me to live. And we don't get a raise if we succeed, a bonus for making urban air a bit cleaner with the green roofs we plant. Sure we get a standard of living increase, by seeing a few more folks commuting by bicycle.

So I don't recommend it, if you like weekends and vacations and stability and projected income. If you want a mid-day gym break and party party party, talk to your HR department and see if you can telecommute once a week. Because folks, this isn't easy. We have to seek out our rewards everyday. Some days we have to check to see how many hits our website gets or how many followers our Facebook page has, just to remind ourselves that someone out there cares about what we're doing. Or we need to wait until our annual trip to meet the farmers/fishermen/alpaca herders that we work with, to see first-hand the impact of our work. If our business grows, we will worry its growing too fast, if it doesn't we will worry about that, too. We take criticism badly, and suggestions sometimes even worse. No matter how noble our missions, we do not live in classy homes. We worry that we are charging too much, and we struggle to pay the rent.

Activist entrepreneurship takes a very strong kind of person, many days I wonder if it takes one stronger than me. It takes a visionary who is also a bookkeeper. It takes someone tenacious enough to face corporate competitors head on, and compassionate enough to always make decisions that benefit the community instead of their savings account, and some days someone wise enough to see when a compromise is achievable.

Why do we do it, when everything logical seems to point the other way? I don't think it's a choice for most of us. There's something inside, quite tangible some days, about the size of a softball, that pulls us into it. A part that knows that we would be far sadder for the 40 hours a week on something we don't feel passionate about, then we are about doing what we do without a 401k. A part that knows somehow, someway, we are the one capable of giving a voice and a chance to a disenfranchised community. The business plan can be learned, the networking and development will come or it won't, but without that extra bit lodged in our chests, I don't think we could do it. I'm quite sure we wouldn't want to. But if you have it, if you can feel it in there, you know you don't have any other choice. Get ready for a bumpy ride.

Susan Wilson Solovic: Social Media in the Workplace: Reasonableness Standard

2009-12-16T13:28:58Z

Social media is a hot new marketing tool that is helping many small businesses grow without spending a fortune. However, social networking can create problems for small firms when employees spend too much time using the technology for personal rather than business reasons.

I remember when I started my career employers were concerned about employees receiving too many personal phone calls during the work day. Now, the phone has been replaced by social media sites.

Recently I posed this question on my Facebook page: Should employees use time at work to post personal items on sites such as Facebook? In general, most of the responses said that unless something is work related employees should use non-work hours to post personal items.

"Facebook can be time consuming and employers should not pay for their personal time on Facebook," one friend commented.

A business owner said, "Absolutely not. If it's personal, it's not business. Employers are struggling to keep each employee on their payroll and that means each employee has to be as productive as possible. As a small business owner, if my employees don't get daily jobs done-I have to do it. Paying them to update their FB page while I'm scrubbing the restrooms or baking scones doesn't bode well with me. Maybe larger companies can absorb the nonproductive time, but I would guess most small businesses just can't afford it. Great question, Susan."

A couple of people noted the difference between hourly and salaried workers. "As long as the work is being done and you are salaried and the postings are not inappropriate, no real harm in it. Many studies show that small, frequent breaks actually increase productivity."

Additionally, one of my FB friends noted many employees are "virtual" today, which often results in a blending of work and personal time. "Many executives are writing and responding to work e-mails at midnight . . . and I include myself in that group. For some virtual workers, Facebook replaces the social conversations found in more traditional office environments. In that context, most 'employees' are giving their employers 50-60 hours of work per week and are on call 24/7 . . . so a little bit of Facebook connection is probably a healthy thing," she wrote.

Personally, I think each business owner needs to set guidelines for their employees and apply the rule of reasonableness. There are always going to be times when we need to handle personal issues during working hours. That's a simple reality.

But taking advantage of an employer's time to network via social media sites is basically like stealing from the company. You are being paid to focus on business, not promote your personal agenda.

Let me know your thoughts on the subject. Join my Facebook Fan Page.

Nation's 4 Biggest Banks Cut Business Lending By $100 Billion Since April

2009-12-16T12:14:52Z

While the administration and Congress work to increase bank lending, the nation's four biggest banks have collectively cut their loans to businesses by more than $100 billion over the past six months, according to new federal data released on Tuesday.

Bank of America, JPMorgan Chase, Citigroup and Wells Fargo cut their commercial and industrial lending by a combined 15 percent from April to October, representing $100 billion, according to the most recent Treasury Department data. Loans to small businesses are down $7 billion, or four percent.

President Barack Obama announced his administration's small business lending initiative in March. As the unemployment rate hovers around 10 percent, there's been an increased push recently by the administration and members of Congress to stimulate lending to small businesses in hopes of increasing the availability of jobs. But loans to businesses by the top four banks are down $107 billion since April.

The reduced lending by the four biggest bank-holding companies, all of which are largely considered to be "too big to fail," appears to be steeper than in the overall banking sector. Over the same time period, commercial and industrial loans at all banks declined about 10.8 percent, or $166 billion, according to Federal Reserve data -- that figure includes Bank of America, Citibank, Wells Fargo and JPMorgan Chase.

Among the big four, Wells Fargo had the smallest decline at 5 percent; Citigroup had the largest at 29 percent. JPMorgan Chase cut its loans by $21 billion, or 13 percent.

Bank of America led the pack in terms of its cuts. The bank slashed commercial and industrial loans by 21 percent. Thanks to its enormous size, that translated into a $58 billion decrease -- by far the largest decline in business lending by any U.S. bank.

After Monday's meeting at the White House with Obama and the nation's top bankers, Bank of America pledged to increase lending to small- and medium-sized businesses next year by at least $5 billion.

There's no clear reason to explains big banks' decline in lending. Analysts have pointed to a number of different possibilities including decreased loan demand, a decrease in credit-worthy borrowers with sufficient collateral, cautious regulators protecting banks from potential losses and banks' need to shore up their balance sheets in anticipation of future, unrealized loan losses.

And big banks are able to generate large profits through their trading desks, enabling them to book profits without having to lend in an uncertain economic environment. After all, the banks' borrowing costs are at historic lows; for the biggest banks it's even lower. So why not roll the dice if one can borrow cheaply?

While Federal Reserve survey data and the banks themselves point to decreased demand for loans, small business advocates say the fact remains that banks are cutting back, making it even more difficult for credit-worthy businesses to secure financing.

"Lending isn't easing. It's just as difficult to get loans now as it was six months," said Molly Brogan, vice president of public affairs for the National Small Business Association, an advocacy group. "For months we've heard the administration talking about getting TARP funds to small businesses" in the form of increased bank lending. "But the proof is in the pudding. You're either going to do something about it or you can keep talking," Brogan said.

Christina Erickson: The Iron Chef and Climate Change: What A.B. 32 Means for Small Business

2009-12-15T03:26:43Z

In the first nine months of 2009, over $300 million was spent by corporate interests to lobby Congress on the Clean Energy Jobs and American Power Bill - more commonly referred to as the Climate Bill. Over a third of that has been spent by petroleum companies alone, while the U.S. Chamber spent over $65 million to lobby on a variety of issues, including climate.

Greenbacks have carpeted Capitol Hill in connection with the debate over climate change legislation, effectively muting the many small business owners who support climate change legislation. Unlike Apple, Nike, and Exelon, American small business owners simply don't have the bandwidth or the budget to raise their voices in opposition to the short-sighted position the U.S. Chamber has taken on the Climate Bill.

An important study has just been released, however, that provides some critical data on what climate change legislation will really mean for small businesses here in California. As A.B. 32 moves into an implementation phase in 2011, California businesses of all shapes and size will face the realities of what this legislation will mean for their bottom line. Mary Sue Milliken, Iron Chef competitor and small business owner, agreed to have her business scrutinized as the subject of a study commissioned by The Union of Concerned Scientists on the financial impacts of California's climate change legislation on small business.

Milliken co-owns a business, The Border Grill, a Mexican restaurant that has been operating for over twenty years and employs 79 people. Perched a few blocks from the beach in Santa Monica, it is a favorite of both locals and tourists alike. The Border Grill served as an optimal case study candidate because restaurants represent the largest sector of small business by category and account for over 10% of small business employment statewide. Restaurants are typically above-average users of energy - suggesting that the "average" small business in California will experience even less impact than the The Border Grill.

As Milliken discovered when the study was released this past week, the study projected that having her business comply with the demands of carbon legislation was, effectively, negligible. Even in the more extreme cost scenarios where the projected costs of compliance where passed along to the consumer, a customer's bill of $20 in 2010 became $20.03 in 2020.

While the UCS study really focused on costs to small businesses, the costs to California of not addressing climate change include potentially severe damage to California's recreation, tourism, real estate and forestry sectors. The benefits of job creation and certainty in business planning that climate change legislation brings is, for the most part, not addressed by the study. Citing the business' longstanding commitment to sustainability, Milliken identifies some of the intangible benefits that "come back in a million ways"; employee retention and customer loyalty are two critical benefits Milliken ties directly to to The Border Grill's business commitment to more sustainable business practices.

There is some irony in the "grassroots" veneer crafted by the creative folks behind the multiple campaigns engineered to defeat climate legislation. But dig a little deeper into the people behind the "stories" on some of these sites (check out the postings on EnergyCitizens.org) and you'll see that the 'roots are actually pretty limp. As the climate debate has migrated from the Hill to the national airwaves, I'd vote for the likes of Mary Sue Milliken to represent the real face of American small business as the debate moves forward.

Banks Could Heed Obama's Call To Lend More -- If They Wanted To

2009-12-14T16:00:52Z

After his meeting with top bank executives Monday, President Obama said his main message to them "was very simple: that America's banks received extraordinary assistance from American taxpayers to rebuild their industry -- and now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."

Specifically, he called on them to lend more money to small and medium-size businesses.

Could banks start doing that? Absolutely. Will they? Not if the past is any indication.

Banks certainly have money to lend. Collectively they are sitting on nearly $1.1 trillion in excess reserves, defined as cash above the level that federal regulators require them to keep. It's the highest amount ever recorded in the 50 years the government has been keeping track, even if one accounts for inflation. By comparison, in the decade before the financial crisis blew up in September 2008, the nation's banks held an average of $1.7 billion in excess reserves.

Banks' cost of funds is at record lows, thanks to the federal government. One gauge for determining banks' cost to borrow -- the Federal Reserve's interest-rate target for overnight loans between banks -- averaged 0.12 percent in November. Two years ago the rate was 4.49 percent.

Also, the spread between the interest rates at which banks borrow and the rates at which they lend to businesses is widening, according to bank loan officer survey data from the Federal Reserve.

And yet, despite all these enormous financial incentives -- and despite repeated entreaties in the past from Obama on down -- this hasn't translated into increased lending. In fact, banks' loan balances are at a two-year low. Over the past three months, loan balances at the nation's banks have averaged a bit less than $6.8 trillion, a six percent decrease from this time last year.

Loans to businesses have fared even worse. Commercial and industrial loan balances have been decreasing every month since last October, and are now down 17 percent since last year.

So what's going on?

Banks point to lower demand for loans and overleveraged consumers and businesses. Indeed, bank loan officers have been reporting lower loan demand all year, according to Fed surveys. Many businesses have cut back on investment because consumption is down, and households are saving more and spending less, cutting down their debt in the process.

But small businesses argue that demand for good-quality loans from credit-worthy borrowers is still there, and that they are hurting. "Small businesses rely on banks for 90 percent of their financing needs, compared to large businesses, which use banks for only 30 percent of their financing," said Jon D. Greenlee, associate director of bank supervision at the Federal Reserve, during a Congressional hearing last month before a House panel.

The real reason banks aren't lending? After lending too much and taking too many risks with too little capital to guard against potential losses, banks finally sustained losses last year on a scale that nearly brought down the world economy. Now they're risk averse.

Households and businesses are being asked to pony up increasing amounts of collateral before they can get a loan -- but with so much of homeowners' and small businesses' equity tied into real estate -- and with real estate values down roughly a third from their peak -- it's increasingly difficult for them to find the right level of collateral for banks to extend loans.

And besides, the country's biggest banks don't deal much in small loans -- they mostly securitize big collections of loans. With the securitization pipeline largely frozen since last fall, banks aren't finding too many willing parties eager to accept banks' risks. With no one to pass the risk off to, banks are having to stomach it themselves.

The American Bankers Association says as much. "The collapse this past year of the secondary markets for mortgages and other consumer credit products, such as credit cards and auto lending, has taken out an important pipeline of credit. Thus, many of the stories about the lack of credit are due to the weakness of non-bank lenders and the weakness of the securitization markets."

Read more: Banks, Small Business, Obama, Business News

Liz Hamburg: Lessons from Bikram Yoga: A Lot of Hot Air for Free

2009-12-11T12:52:52Z

Hot yoga is hot. Bikram Yoga, the original "hot yoga," was developed by Indian yogi Bikram Choudhury. Today, there are over 4,000 of these yoga centers worldwide. But, guess what--according to Bikram, he hasn't gotten a cent from them!

Why? He never knew that he needed to trademark his name or set up a franchise system. So, for over 50 years, he's been charging fees for his training programs, but after that, anyone who has gone through training has been able to open a yoga studio using the Bikram name without paying licensing or franchise fees.

Bikram thought he was living the American Dream. He arrived in this country in the late 1970's thanks to former President Nixon, who heard about Bikram from the Prime Minister of Japan and sent for him on an Air Force jet without visa or passport to help with his Phlebitis. Bikram never left.

Bikram, has been practicing yoga since he was a young boy in India and teaching all over the world, but he says that he did not start doing this for the money: "I never knew that it was going to be a business. Teaching yoga in India is free, still today." He claims that he "has never taken one penny from anybody in over 50 years. I'm a yogi -- I don't care for money. Money comes to pay the bills. I never charged anyone one penny until today, this moment." He may be the only yogi in the U.S. who is not thinking about money! Yoga is big business--estimated to be over $5.7 billion a year including classes and merchandise.

Bikram got wise thanks to former Attorney General Janet Reno. Reno's former assistant was a student at a Bikram Yoga Center and supposedly introduced her old boss to Bikram to help with her Parkinson's.

According to Bikram, "I asked her how to protect Bikram yoga name. She said, 'Welcome to America. We protect your money by putting it in the bank, we in America protect intellectual property through patent, trademark, copyright, franchising, etc." No one had told him that before. "Some of the center owners are using the brand without my permission." So, the yogi who never thought about business hired a law firm. So far, it's taken almost 7 years to complete putting together the licensing and franchising. Today, after spending an estimated $3-$5m on lawyers' bills, Bikram has permission to franchise in 49 states, but is still waiting for approval from New York State.

Maybe being a yogi has helped Bikram stay calm about the whole process, but for the rest of us, having unauthorized use of our name or product is enough to cause some major heartburn. The key is to protect what's yours but putting things into place early. It's very difficult and costly to go backwards and try to fix things later.

For many small businesses without a patentable product or service, the trademark can by the most important and valuable asset. According to New York attorney Lori Smith, a partner in the corporate and technology practice groups at Sedgwick, Detert, Moran & Arnold, LLP, "there are many entrepreneurs who spend a lot of time and money developing and marketing their brand only to find out they didn't do their diligence, someone else actually owns the name and they are infringing on third party rights or they can't protect their business against copycats or even innocent third parties who establish similar businesses under the same name."

According to Smith, "you can obtain certain common law rights in trademarks just by usage but registration adds significant additional rights and protections. Common law rights are difficult to prove and are territorial - only valid in the location of use - so if your business starts in California, and that is the only place where you are using the mark then that is the only state where you have common law rights (subject of course to satisfying the requirement of first use) - it will not protect you against someone who without knowledge of your business, starts up a business under the same name in another state. This may not be important initially, but it will be if either or both of you try to expand your respective businesses nationally. A federal registration is national in scope."

Make sure that you are protecting your mark with your own partners. If you are planning to license to others, put proper protection in place--this can be as simple as a license agreement. According to Smith, "don't forget to include a provision for quality control."

Creating a new brand name is one of the most critical steps in developing a new product or service. But sometimes, people get so excited about the perfect name that they forget to check if it's being used somewhere else. Make sure you search for companies with similar names in similar businesses not just locally but around the country and ideally, around the world.

Don't forget about online presence. Registering your trademark offline is not enough--make sure that you grab the domain name if it's still available. If it's not available, think hard about using a different name so there's no confusion.

Believe it or not, even big companies can mess up. Supposedly, American Express "forgot" to protect their "Black Card" mark (they were marketing it as the centurion card, but everyone called it the "Black Card") so Visa registered the mark and domain name!

Treat your name and your business name and logo as the valuable assets that they are. You don't want to be fighting to protect your own "hot air" years from now.

TARP For Small Businesses: White House Looks To Bring Wall Street Rescue To Main Street

2009-12-10T21:27:03Z

The Obama administration is developing a major initiative to tackle the economic and political problem of unemployment by getting federal bailout funds into the hands of small businesses.

The proposal involves spinning off a new entity from the Troubled Assets Relief Program that could give banks access to the government money without restrictions, such as limits on executive pay, as long as they use it to make loans to small businesses.

Lincoln Mitchell: Making Job Creation a Priority

2009-12-10T15:24:02Z

The White House job summit came and went, and seemed somewhat overshadowed by the Afghanistan speech, the climate change conference in Copenhagen, President Obama's Nobel Peace Prize acceptance speech and even the White House party crashers. The result of the summit was a proposal for a battery of necessary and unsurprising, but probably not sufficient, recommendations. These recommendations were then followed by news reports that the latest job numbers are worse than expected.

Putting the more than fifteen million unemployed Americans back to work in the midst of an ongoing recession is not an easy task, so faulting the administration for not coming up with a brilliant and politically achievable plan for doing this is a little unfair. Nonetheless, the administration's position on jobs has at times suggested an unexpectedly poor understanding of the impact of the economic downturn on ordinary Americans.

The timing of the jobs summit itself reflected this as well. It is not clear why Obama waited ten months into his term to address this issue in a high profile way. The unemployment rate when Obama took office in January was, while not as high as the current 10%, still quite high at 7.2%; and more layoffs and business closings were not exactly unforeseen at that time.

The Obama administration, however, did seek to address unemployment early in their term through the stimulus bill which was passed in February. Interestingly, although the bill allocated resources for projects that would have, and almost certainly did, create some jobs, the administration allowed the legislation to be spun and described as primarily aimed at the financial crisis, not the unemployment crisis. Thus, Obama was perceived as having not made job creation as high a priority as bailing out the financial sector. Obama did little between February and November to change that perception. By late summer it was not uncommon to hear talk about the economic recovery, but this occurred as unemployment numbers continued to get worse. Some economists spoke of a "jobless recovery", which soon became the consensus interpretation of economic trends.

A jobless recovery is, of course, not a recovery at all. For most ordinary people losing a job is a devastating financial blow that for which a recovering stock market is very cold comfort. Linking the two words jobless and recovery suggests an understanding of the economy in which as long as the markets are coming back, massive, and rising, unemployment is not a big problem. If you commissioned an advertising firm to come up with a two word description of the economy that would provoke great feelings of anger and resentment, they would have a tough time coming up with something better than "jobless recovery," yet this is the phrase which became relatively broadly used a description of Obama's economy.

For most Americans, the job security issues have been central to their experience of the recession. Millions have indeed lost their jobs, but most of those who have not lost their jobs have either been worried about losing their jobs or been working extra hard, often without additional compensation, to increase their chances of keeping their jobs. Declining investment and retirement portfolios as well as home foreclosures have been the other two parts to what Obama's predecessor might have called the economic trifecta, but jobs have been a front and center concern.

Putting Americans back to work was indeed one of the early promises made by the Obama administration, but as the first months went by this seemed to become less of a priority. This was partially due to the rancorous debate over health care that has dominated domestic politics for several months, but the lack of perceived emphasis on jobs by the administration cannot be explained away quite so easily. Allowing the term jobless recovery to be used so frequently, speaking of a recovery when unemployment was only getting worse and sandwiching a jobs summit between other events in December also helped send this message.

There is very little in Obama's background to suggest that he does not care about jobs. From his work as a community organizer to his work as a legislator and his public statements as a candidate president, it is clear that Obama understands how serious the problem of unemployment is. Moreover, the economic stimulus bill and the current proposals on job growth will create some, but not enough, jobs. Even the proposed health care reform bill, which would help small businesses control health care costs, will help reduce unemployment.

Obama can combat this perception but only if he visibly and concretely makes jobs a clear priority. The jobs summit must not be a one off event so that a box can be checked but should be part of very public and sincere effort by the White House to refocus their energy on job creation. Obama may not be successful in creating jobs right away as his ability to influence the economy is often not that significant, but if he is not seen as sufficiently concerned about jobs, his support will inevitably and sharply decline and his presidency will ultimately become less relevant.

Lita Smith-Mines: Sell Off The Yarmulkes, Here Comes Chanukah!

2009-12-10T14:03:13Z

Anyone who doubts in the unraveling of the middle class is welcome to join my Chanukah celebration this year. Just please bring the latkes, no-drip candles, and some presents for the kids.

I'm a private business owner in a very down market. My income has dropped significantly lower than even my curtailed expenses can cover, and each month I stretch things further and thinner than I imagined was possible just 30 days before. I don't receive a regular unemployment check or heating assistance or even reduced price haircuts and discounted clothing (one local ad advised patrons bringing proof of unemployment would get 50% off a haircut and another enticed those seeking work to come in for 70% off "select work attire"). When I don't have a client buying or selling a home or building, I earn bupkis (that's zero income for those of you lacking an English-to-kvetching dictionary).

I don't want to whine excessively. I am well aware that I still have much more than so many in this depressingly recessionary year. The roof over my head is not leaking, there's heat in every room, and a semi-stocked refrigerator. I know that someday, though I've depleted all my savings and retirement funds and ransomed everything but my children and my canines, I'll recommence earning more than I do now. I am thankful that my profession has not been totally outsourced and that my skills have not become obsolete, plus it is gratifying to hear clients specify that my experience (I read that as "age") is actually a plus. But oy, the holiday season has really thrown me for a loop-- and into a tizzy-- and then tossed me a curve for good measure.

It isn't just the loss of gifts and the holiday trappings that are weighing so heavily on me. We eliminated most presents last year, and have currently chopped our mini-list even further. We'll buy the cheapest candles we can find and frankly, jelly donuts and potato latkes are as far from expensive as they are nutritious. What I cannot evade at this most wonderful time is my real estate tax bill, bringing its own tidings of discomfort and distress.

Each and every year, in good times and bad, my town, county, and school district collectively send out huge, honking tax bills that arrive in mailboxes at the same time as the Chanukah and holiday greeting cards. With one-half due no later than January 10th, my yearly increases this decade have runs upwards of $1,000. For the total amount commanded by my last tax bill, I could have purchased a new Ford Focus, with bells, whistles, upgrades and a partridge in the back seat.

My middle-class neighborhood is still very nice, though my property values have sunk significantly even as the tax bills (allegedly based on the value of my home) have swelled. Thus, in a holiday season in which my loved ones and many, many neighbors could use a bit of a distracting celebration, we'll instead be scrimping and saving to pay the real estate taxes. Oh yes, we'll also be praying for some variation on the Chanukah miracle so we may make the few dollars in our accounts last a whole lot longer.

Francine McKenna: Sarbanes-Oxley for Everyone: To Be or Not To Be?

2009-12-10T12:32:02Z

Sarbanes-Oxley (SOx) made law what is best practice for all public companies or companies that issue public debt.

That includes "smaller" companies.

Some argue that the cost of SOx for companies under $75 million in capitalization -- the thresholds mentioned in some legislation -- is prohibitive. I would argue that identification of internal controls over financial reporting, documentation of them and verification of their effectiveness is what's owed to their shareholders and debt holders and is a reasonable cost of being public.

Isn't there something perverse about soliciting public shareholder and debt holder investment but refusing to be accountable?

The New York Times' Floyd Norris on November 5th:

Section 404 was adopted with little controversy in 2002, and for good reason. It simply mandated that public companies report on the effectiveness of their internal financial controls, and that auditors render an opinion on them.

Since the law already required companies to maintain effective controls -- and had done so since 1977 -- it seemed unlikely that would increase costs much for any company that was already in compliance. And it was crystal clear that controls either did not exist, or were evaded, at WorldCom and Enron.

According to reports in the Huffington Post on October 28th, Rep. Carolyn Maloney (D-NY) originally proposed that firms with market capitalization less than $75 million be exempt. This loophole would have applied to about 55% of publicly-traded firms. How can 55% of the public companies be "small" companies?

Have the standards for listing on NYSE, NASDAQ, Amex loosened because they are chasing listing fees and sacrificing quality? Are too many companies allowed to have listings, even though they're not ready, willing, or able to play in the big leagues?

Many intelligent and reasonable people believe there should be a permanent SOx 404 exemption for small companies. Some are worried about the increasing liability exposure to the audit firms. Hell, some think Sarbanes-Oxley should be repealed all together.

Pish-posh.

Some think more cost benefit analyses will tell us definitively whether identifying internal controls over financial reporting, documenting them and verifying their effectiveness is worth it. "Small" business has effectively used the rhetoric of entrepreneurship and "small business is the key to the economic recovery" to imply that imposing regulations, responsibility and their attendant cost on willing companies who want to take public investors' money is somehow un-American.

Maybe the cost-benefit should have been done before going public?

Dear Mr. "It's my company I can do whatever I like" President of a closely-held, family-owned company...

Dear CEO of a venture capital or private equity-backed development stage company...

Dear Mr. Entrepreneur, eager for the prestige and ego boost that comes with ringing the NYSE or NASDAQ bell....

Were you really ready for prime time?

Take the example of Protonex, profiled by the Financial Times in September 2007, a US-based company that's a Sarbanes-Oxley refugee on the London AIM Exchange.

Most chief executives of [AIM] companies will argue that their shares are undervalued, while investors will complain that small company stocks are illiquid. Both sides have a point, but the situation is even worse for the US companies that join the junior market.

They have usually come to [AIM] to avoid the burden of Sarbanes-Oxley -- but the land of the free has a long regulatory reach. It has been felt by Protonex, a US fuel cell company that floated on [AIM] in June last year. Whole weeks, if not months, have passed without a single share trading.

Part of the reason is Regulation S of the US Securities Act of 1933. It effectively stops UK listed shares in a US-based company, which does not file accounts with the US Securities and Exchange Commission, from being traded through the Crest electronic settlement system.The restriction, which lasts for two years, stops US retail investors from buying the shares. At the same time many UK private client brokers refuse to deal in shares that have to be traded through an old-fashioned paper trail.

Scott Pearson, Protonex's chief executive, is unhappy with the liquidity of the shares. Not unreasonably, he believes that further value would be unlocked "if only we can get the shares trading".

Where is Protonex today?

I say, let the Brits have 'em.

And then there's Overstock.com. More pixels have been wasted on a company that should not be public, should not still be listed, should have never been in business this long, and should have never attracted any reputable accounting firm to certify its financial statements. It's not about Sarbanes-Oxley in many cases. It's about companies that go public to raise capital to enrich management, pay off VCs, buy off owners, pay exorbitant bonuses, milk the company, then leave it to die. They resist oversight and playing by the rules. Internal controls over financial reporting, clear documentation of those controls and verification of the effectiveness of those controls by management, with a judgment regarding management's assertions, is just good business for any size company that wants to take public investment.

Here's an excerpt from a letter written to the SEC from a "Smaller Reporting Company," one with only $5-6 million in public float (stock held by other than company officers, directors and other qualified insiders) and ~$120 million in market capitalization. Actually, it suggests an interesting compromise I had not seen suggested before: Let the shareholders vote for whether they want a separate opinion on internal controls from the auditors and want to pay for it.

Unfortunately, as it stands now, the efficiencies and slowing of fee increases that have finally been realized in the Sarbanes-Oxly 404 process came as a result of the integration of the opinion on the financial statements with the opinion on the internal controls over financial reporting in Auditing Standard 5. This was a change I disagreed with and I told Chris Cox that. It allows larger companies to have perpetual material weaknesses in internal controls, companies like GM and GE, and yet to continue to receive unqualified opinions on their financial statements. The weaknesses were deemed not material in the grand scheme of things, although we know know how well that assumption turned out for GM and GE.

There's absolutely a higher risk in smaller companies for fraud and malfeasance due to poor or non-existent internal controls, lack of segregation of duties, lack of oversight by an independent auditor, non-arms-length transactions especially in legacy family owned or closely-held companies and general legacy CEO intransigence regarding external interference in "my company." You don't hear as much about frauds in private companies because those frauds are handled quietly, with no transparency or accountability to anyone, even employees, creditors and other stakeholders.

When fraud or accounting manipulation occurs in a public company, no matter how small, the curtain is drawn, and all of the self-serving and selfish actions, if not illegal and unethical actions, of formerly insulated management become SEC, PCAOB and plaintiff's bar potential actions. The stakes are much higher and many smaller company management teams want the benefit of public ownership (additional capital) without the responsibility and accountability to outsiders that comes with it.

Tell that to the employees of Huron Consulting, a public company in Chicago, under $500 million in revenue. Huron is under SEC investigation, threatened by serious shareholder lawsuits, has lost its three top officers, and is weathering excoriation by the very clients they were put on earth to serve. Bad accounting, greedy management and a rush to go public, as well as Andersen-stye hubris put this former high flyer in the dog house. Tell me they should not have, maybe, stayed true to professional services and partnership ideals and kept it small and simple.

Imposing Sarbanes-Oxley on all public companies should not be a cost-benefit decision but a slam-dunk regulatory decision. If a company doesn't want to adopt the standard operating procedures and adequate systems of well-run accountable, transparent companies, then stay private. Caveat emptor will then be understood by your bankers, employees, customers and vendors.

Postscript:

I just received an email from Professor Steve Sutton, KPMG Professor at the Dixon School of Accounting, UCF and Professorial Fellow in Accounting & BIS at the University of Melbourne. He is also editor of the International Journal of Accounting Information Systems. He and two colleagues conducted a study supported by the IIA Research Foundation. They surveyed over 200 Chief Audit Executives. Their research results document through case studies and validated surveys that companies using effective Enterprise Risk Management practices have much less difficulty meeting internal control reporting requirements and that companies with effective Enterprise Risk Management practices have increased levels of organizational flexibility and better supply chain performance.

Professor Sutton: "I find the whole debate on being too onerous for smaller companies to be completely neglectful of public stakeholders."

I agree, Professor. The discussions about SOX exemptions for smaller companies seem to be too often motivated by selfish desires of company management to preserve cash for their own benefit, not about their duty and obligation to preserve the integrity of financial results for public shareholders.

Jen Grisanti: If you Believe it, You can Achieve It

2009-12-09T16:02:53Z

With the year coming to an end, I would like to explore the themes of renewal and clarity. For every writing career that I have helped launch, two things have occurred. First, I could clearly see the writer's talent and was able to use my passion to help others see it as well. Secondly, the writer had a clear vision of his/her own success. In the book, THE ANSWER: Grow Any Business, Achieve Financial Freedom, and Live an Extraordinary Life, John Assaraf & Murray Smith write, "...Events in your business are the reflection of your thoughts, the echo of your own actions and the thinking behind them...You are at cause in your life and in your business." In the New Year, what do you want to achieve the most? Do you have clarity in your goals? Can you let go of the past and pursue your goals with renewed passion?

In the book, Shovel It: Kick Ass Advice To Turn Life's Crap into The Peace and Happiness You Deserve, Debbie Robins writes, "To help create what you want while simultaneously trusting the universe to decide what form it is meant to come in, consider writing what I call a Living Vision..." Debbie explains the "Getting down with the universe" Technique: "Start by having a clear picture in your head of the biggest, boldest, most fulfilling life that you can imagine living. Now, write about who you are and what you're doing in glorious detail. Do not describe how you got there. You are there!"

I remember doing a similar exercise with Career Strategist coach, Deb Colden. The beauty of the exercise lies in the relief you feel after imagining that you have achieved your greatest goal. During Deb's session, she had us write down three of our immediate goals. My goals were 1) Creating a successful seminar career 2) Writing a book proposal and 3) Successfully hosting my first Writers Retreat in Hawaii. Since I didn't have a lot of contacts in Hawaii, I knew the retreat would likely be the most challenging of my goals. However, by doing the exercise, I was able to visualize myself achieving all three goals. After several months of hard work and daily revisualization, I completed all three of my goals. My biggest break with the Hawaii retreat came when the Star Bulletin agreed to do a story on my event. You can do anything you set your mind to doing if you have clarity of goal and visualize your success.

So, how do you create a clear vision? In The Answer, John and Murray write, "Creating a clear business vision is the first step to your success." They created what they refer to as the Five Musts:
You must find something that stirs your soul.
You must become excellent at it.
You must recondition your mind to believe that you can have it and achieve it.
You must understand how to make money at it.
You must take daily action.

For the New Year, I encourage everyone to create a clear vision, pursue it with a renewed passion, no matter what losses have happened along the way, and make that vision a reality. You CAN do it. We each have the potential to create the destiny we choose.

Obama Job Creation Package DETAILS: See The President's Key Proposals

2009-12-09T08:16:43Z

Key elements of the job creation package President Barack Obama outlined Tuesday:

____

Kathryn Wylde: How to Make the President's Jobs Plan Work for New York

2009-12-08T16:50:46Z

MEMORANDUM

TO: New York State Congressional Delegation
FROM: Kathryn S. Wylde
RE: How to make the President's jobs plan work for New York
DATE: December 8, 2009

President Obama today introduced a plan to create jobs and spur economic growth in the United States by aiding small businesses; creating incentives for energy efficient retrofits; investing in infrastructure; and supporting our export industries. House Speaker Nancy Pelosi has proposed paying for job creation with TARP funds. We write to support both the President's plan and Speaker Pelosi's proposal and also to suggest several areas of key importance to New York upon which the delegation might focus as Congress drafts legislation. Please do not hesitate to call upon the Partnership for support as the process unfolds.

Small Business Growth
In addition to the President's proposal to increase Small Business Administration loans, Congress can help small and medium businesses still feeling the effects of the credit crunch by authorizing linked deposits from Treasury to banks at below-market rates. Banks could pass the favorable interest rates on to small and medium businesses that are prepared to expand employment. This type of program would give a boost to New York's banks and reduce unemployment in low-income communities which have been particularly hard hit by the recession.

Infrastructure
The Federal Aviation Administration has signaled its intention to upgrade air traffic control systems with "NextGen" technology but funding is scarce. Nowhere would investment in public infrastructure have a bigger or faster payback than in relief of congestion at the big international airports serving the New York metropolitan region. Our three big airports are the source of most air traffic congestion in the entire country. This congestion costs billions of dollars a year in lost travel time, staffing costs, and excess fuel consumption. Earlier this year the Partnership for New York City found that air traffic congestion costs the New York Metro region $2.6 billion annually. These losses are felt across the board by travelers ($1.7 billion), airlines ($834 million), and shipping companies ($136 million). But it is not just the New York Metro region that takes a hit. Because three-quarters of American flight delays originate in the New York area, these delays - and costs - cascade across the continent. NextGen funding in New York would have economic benefits not just for New York City but for the entire country.

Energy Efficient Retrofits
Commercial buildings in New York City alone emitted more than 11 million metric tons of greenhouse gases in 2008, representing 21% percent of the city's total GHG output. By including commercial buildings in a national retrofitting effort the federal government will get a much bigger bang for its buck than if only available to homeowners.

Increasing Exports
The President also mentioned the need to support America's export industries. A leading export for New York is digital content, but the industry is heavily burdened by theft --reducing the profitability of exports. Other countries are moving to protect their industries that depend upon digital content. In October, France's Supreme Court approved a law to deny Internet access to people who illegally copy movies, music, or other media. Strong protections for intellectual property should be included in the jobs bill as they will accelerate economic recovery, particularly in New York, home to thousands of companies that create and sell this form of media.

Manish Mehta: Isn't the Value of Social Media What Business Is All About?

2009-12-08T09:35:01Z

Today's corporate leaders are struggling to figure out how to use social media to further their business strategy. At Dell, we believe this is backwards thinking. Social media isn't a means to further a corporation's strategy, it's a means to help determine it.

The "Mom and Pop" businesses in our neighborhoods have always followed sound and pragmatic business practices, rooted in developing, maintaining and strengthening relationships with customers. The customers and the businesses valued those relationships because "Mom and Pop" offered convenience. They listened to their customers and used their suggestions to improve the business. They provided great service and found ways to thank their clientele. Social media is really nothing more than the simple application of these business practices in a digital form.

So if you are wondering about how to leverage Twitter, Facebook, blogs, forums, and the company Web site to achieve your organization's goals, perhaps you are starting from the wrong point. As with the corner store, if your business uses social media to engage in conversations on a human level, you strengthen your business and allow your strategy -- both corporate and social media -- to evolve based on customer feedback.

At Dell, we have a longer perspective on the social media conundrum than most. We've been an active leader in the space since 2006, with a depth and breadth to our social media presence that has earned top billing among brands using social media to engage stakeholders.

What we've learned is that social media has transformed the large corporation of the millennium into the Mom and Pop shop of the old days. The emergence of social media simply makes it more possible to connect directly with customers every day. Dell's community goes well beyond our own forums -- it now extends to direct contact with more than three million followers worldwide. Even during a historically difficult time for businesses of all stripes, Dell has generated nearly $7 million in global product sales on Twitter.

"Mom and Pop" knew that their business was only as successful as their relationships with customers could make it. That's the value of the direct connection to your customer, and that's how every company can achieve success using social media -- by facilitating the conversation. No strategy necessary.

Stephanie Pierson and Barbara Harrison: Job Titles: What to Do When No One Has a Clue

2009-12-07T09:57:00Z

We may not have jobs, but we have titles!

You can be a Registered Polarity Practitioner. A Professional Proxy Bride. A Principal Human Factors Engineer. You can call yourself an Eventiste, like one celebrity wedding planner. You can choose a title as tantalizing as your specialty: the Professional Name Consultant, the Usability Specialist, the Ritz-Carlton Tanning Butler, the Netrepreneur, the Color Director. And, thank God, there's even a Social Computing Evangelist.

Everyone is an expert. And we can all be doctors -- with or without benefit of medical school. Our lawns have doctors. Our dreams have doctors -- "based on the world's largest database of dreams." Our furniture has doctors. (Dr. Sofa the Furniture Surgeon promises to squeeze the most over-sized items into your home, and probably makes more money than many physicians.)

Sometimes just the title isn't enough. Dr. Hakimi, a Manhattan dentist, introduces himself as the creator of "The Art of Oral Harmony." His website says that "Each patient is my honored guest," making you wonder whether a bill will be presented when your "visit" is over.

As titles for the entitled proliferate, we are in danger of becoming a nation of all chiefs and no Indians. (Or Native Americans, the preferred title.) At the annual GEL Conference, which explores good experiences of all kinds in business, art, technology, and life you can share the experience with a Chief Experience Officer, a Chief Empathy Officer, a Chief Storyteller and a Chief Visionary.

The question remains, while a creative/unusual/incomprehensible title can be a real ice-breaker at networking parties, will it help you get -- or keep -- the job?

SITUATION: You exchange business cards and see that the other person's title is "Director of Whitespace Investigations." Does having a simple title like Editor or Sales Manager shout your age louder than gray hair?

The 20-something perspective: "You can assume a hipster factor in any company with cool job titles, but it can actually interfere with productivity," says a 26-year-old woman in a Boston-based startup. "I'm an 'Implementation Specialist,' which confuses all of my customers. They ask what I do, and I say, 'I'm a project manager.' That always brings a flash of comprehension and a relieved, 'oh, right!'"

The Senior Perspective: "These days non-traditional job titles are so common they are becoming -- perish the thought -- traditional," says Nancy Graham, editor of AARP The Magazine. "Chief Risk Officers and VPs of Emerging Media are everywhere. The rush to sound younger and hipper has the potential for a new game show: 'What's My Title?' Chief Wisdom Officer? (for the CEO) Customer Experience Agent? (Flight Attendant) Manager of Futuring and Innovation Based Strategies? Who knows, but the American Cancer Society reportedly has one. The question is: Do these titles make companies and their employees seem more youthful and with it, or just desperate to be cool? The answer: Probably a little bit of both. Yes, Freelance Writer sounds more dated than Virtual World Bureau Chief, but at least people know what the heck you do, which means you are more likely to get hired. Employers reading resumes know what's legitimate and what's not -- which means you are more likely to be earning money. In a job market that is harsh on young and old alike, it doesn't get any cooler than that."

SITUATION: Should you expand the title on your business cards (Writer/Editor/Copywriter/Marketing Guru) to expand your employment options?

"Personally, I think it's a huge mistake," says Vicky Oliver, career development expert and author of 301 Smart Answers to Tough Interview Questions and Bad Bosses, Crazy Coworkers & Other Office Idiots. "It screams 'jack of all trades, master of none' and raises doubts about the person's ability to follow through. Having schizophrenic business cards can't be smart unless your name happens to be Sybil. And as for whether or not traditional titles shout one's age louder than gray hair, put it this way: the newfangled, multi-tasking, multi-titled, schizophrenic business cards shout purple hair, and purple is NOT the new blonde."

SITUATION: You're at a party where a grandmotherly woman introduces herself as a Radical Feminist Separatist Lesbian, and another guest declines the duck mousse pate, explaining she's an Aspiring Vegan. Is it enough for you to say, "Hi, I'm Pam. I sell lamps?"

"It's a store. I'm the owner. Simple objects and useful design speak for themselves. Why can't people do the same?" asks Alta Tingle, founder and owner of The Gardener in Berkeley, California, a hugely successful store which has gotten rave reviews in every leading shelter magazine.

Linda R. Monk, J.D.: The Credit Card as Company Store: How Congress Let It Happen

2009-12-04T14:24:10Z

The curse of working people in the days before strong unions was the company store. In mining towns and manufacturing villages, the employer often owned the only source of foodstuffs and daily necessities, charging exorbitant prices. Thus the employer made huge profits at the expense of his already underpaid workers. They had to work harder at lower wages just to spiral into deeper debt. Sound familiar?

A popular song by Tennessee Ernie Ford during the 1950s expressed this dilemma:

You load sixteen tons, and what do ya get?/
Another day older and deeper in debt./
St. Peter don't ya call me, 'cause I can't go/
I owe my soul to the company store.

Now America's shrinking middle class suffers the same injustice, and today's company store is the credit card. At a time of record unemployment and foreclosures, the banks that issue credit cards are making a bonanza in hidden fees and jacked-up interest rates on those who are late or miss payments.

These banks charge rates of 30 percent and more when the cost of credit to them is virtually nothing, courtesy of the Federal Reserve. Yet the bill to regulate credit cards, passed by Congress and signed by President Obama in May, limits only the rate of increase, not the total interest charged. That's why many credit card companies are raising rates now, before the new law takes effect.

On top of that, the consumer bubble fueled by aggressive marketing of credit cards helped drive the housing crisis. Americans refinanced their houses to pay off consumer debt, and when housing values fell they were under water on their mortgages. This giant sucking sound caused more foreclosures, which caused housing values to fall even lower. The PBS show Frontline recently aired an episode entitled "The Card Game" that documented this devastating attack on the American consumer:

All this is brought to you by the same "too big to fail" banking system that gouges the American taxpayer to pay off Wall Street's gambling bets. The consumer is getting it at both ends by a Congress too timid to take on the banking industry. But the same forces that didn't want Congress to regulate derivatives also don't want Congress to regulate interest rates on credit cards.

There used to be laws in America against usury, the practice of gouging a debtor with outrageous interest rates all for the sin of being poor. There can be again, if we demand it.

No Easy Jumpstart To Get Small Business Hiring Again

2009-12-03T10:00:00Z

As 130 business, labor and thought leaders converge on the White House today to discuss ways to create more jobs, the nation's main engine for job creation -- small businesses -- is stalled out.

Suffering from a lack of available credit, low demand for goods and an uncertain economic environment, small businesses are hurting even more so than larger firms.

A variety of proposals to help small business are floating around Washington. They include funneling unspent TARP funds into banks on condition they lend the money to small businesses; pushing the Small Business Administration, a federal agency, to increase its lending and guarantee more loans; and using other TARP money to provide cheap financing for investors to buy securitized small business loans.

One proposal championed by Sen. Mark Warner (D-Va.) and endorsed by 32 other senators calls for up to $40 billion in unspent TARP funds to be channeled into smaller banks, only to be used for small business loans -- a "use it or lose it" source of funds. The Obama administration supports elements of the plan, which doesn't require congressional action, but hasn't made any public steps toward actually implementing it.

But pushing banks to lend more in an uncertain economy to perhaps non-credit-worthy borrowers may not really solve the problem.

"Community banks aren't lending more not because they don't have the money; they're not lending more because they don't see good lending prospects out there," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "I don't think the issue here is one of bank lending. You have a falloff in lending as you always have during a downturn because there aren't any good lending opportunities."

He says the reason behind the lack of available credit is due to plummeting real estate values in the commercial and residential markets, as well as significantly decreased consumption. Simply put, consumers aren't spending as much so businesses don't have much reason to grow.

"I really think the lending [issue] is sort of barking up the wrong tree," Baker said. "I don't know what force-feeding banks money is going to do. As much as we might want to give more money to them I don't think they'll have anything to do with it if we did."

The two leading small-business advocacy organizations - the National Federation of Independent Business (NFIB) and the National Small Business Association (NSBA) - have differing views. The NSBA points to the lack of credit as one of its top priorities. But in a report released last month based on survey data, the NFIB noted that while its members were having difficulty getting loans, it was far from a top priority. "Too many [business] owners have no reason to borrow," the authors wrote. "The biggest problem was a dearth of customers."

Some small businesses are clamoring for more credit, but others are reluctant to take on more debt, particularly considering the uncertainty of the economy. As Mark Zandi, chief economist with Moody's Economy.com, put it Wednesday in a meeting with lawmakers on Capitol Hill: "The odds that the economy will backtrack into recession remain uncomfortably high."

Tim Duy, a former Treasury Department economist now at the University of Oregon who runs a popular blog chronicling the Federal Reserve, says that banks have plenty of cash to lend.

"I would start with this question: are banks really having that much trouble getting cash right now? Deposits are up, so it's not as if there's no cash for banks to lend. And it's not as if the cost of funds is very high right now," Duy said.

Indeed, domestic deposits at banks are up $331 billion since last year, an increase of about five percent. And the federal funds rate -- the Federal Reserve's interest-rate target for overnight loans between banks -- is at record lows, averaging 0.12 percent in October. The lower the rate, theoretically the more incentive exists for banks to borrow and invest (like in loans to small businesses). Two years ago the rate was 4.76 percent.

In addition, as of October banks were holding nearly $1 trillion in excess reserves, according to the most recent federal banking data. That figure is in excess of what's mandated by government regulators. By contrast, in the decade before the financial crisis blew up in September 2008, the nation's banks held an average of $1.7 billion in excess reserves.

Nevertheless, lending continues to decrease. Commercial and industrial loans have dropped 16 percent since last year, according to the Federal Reserve. Loans through credit cards -- which many small businesses use to finance their operations -- have fallen nearly five percent since last year, according to the Federal Deposit Insurance Corporation. And unused lines of credit, such as a credit card line or loans secured by commercial real estate -- two other popular forms of financing for small businesses -- are down a whopping 22 percent since this time last year.

Economists Baker and Duy say the demand for loans isn't really there. Survey data from the Federal Reserve backs them up. In the third quarter, nine percent of banks reported "moderately stronger" demand for commercial and industrial loans from smaller firms (defined as having less than $50 million in annual sales) compared to the second quarter. But nearly 45 percent of banks reported "moderately weaker" demand.

In the previous quarter, three out of five banks reported weaker demand from smaller firms for these loans; in the year's first quarter, two-thirds of banks reported lower demand.

"It's hard to force banks to make loans they don't want to make," said Allen N. Berger, a former senior economist at the Federal Reserve, now at the University of South Carolina. Berger has published several research papers on bank lending, credit availability and small businesses. "Business conditions are riskier...not a lot of small businesses are in good enough shape to get loans. It makes sense for banks to be rejecting loan applications," he said.

The Independent Community Bankers of America (ICBA), the country's leading small-bank advocacy group, supports increasing loans to small businesses, says Paul Merski, the group's senior vice president and chief economist. "Small businesses don't do well if community banks aren't doing well, and vice-versa," he says.

But Merski traces much of the problem to the broader economic conditions. After all, when unemployment is at 10 percent and consumption and income are down, the viability of many small businesses comes into question.

Merski adds that bank lending is based on collateral and with about 45 percent of all small business loans backed up by real estate collateral -- and with real estate prices down by roughly a third from their peak -- smaller firms have been disproportionately affected.

Bank regulators are forcing banks to reduce the risks to their balance sheets, he said. "Unless you have bank regulators ratchet back the pressure they're putting on banks, it's not going to be easy to make those loans."

Zandi said federal money instead should be used to bolster the securitization market for small business loans, partly because it's not clear that the banks would want the TARP money if there are too many strings attached. That would reduce the risk posed by individual loans.

Christina Romer, chairwoman of the White House Council of Economic Advisers, remains hopeful, writing in an opinion piece regarding job creation in Wednesday's Wall Street Journal that "a moderate and targeted investment by the government" in the form of "measures to restore the flow of credit for small businesses and targeted tax cuts... might be leveraged into significant employment gains and purchasing power by small businesses."

But thus far, none of the major proposals to boost small business lending calls for more than $50 billion. Merski says they would only make an impact "at the margin." James K. Galbraith, an economist at the University of Texas at Austin who's called for a second stimulus package, agrees.

"Although I would give all of these efforts points for trying, I would say that they're at best functional as part of a much larger effort to turn the macroeconomic environment around. The situation calls for something much larger."

Bonuses At Small Companies Make A Comeback

2009-12-02T15:48:37Z

NEW YORK — Bonuses are starting to reappear at small companies as business shows signs of picking up.

Many companies had to eliminate employee bonuses last year as cash flow dwindled and banks began cutting or even shutting down credit lines. A yearend payout was also unthinkable at companies that were laying off staffers or slashing their costs so they wouldn't have to let anyone go.

Jerry Chautin: Volunteers will create One Million New Businesses

2009-12-02T10:36:15Z

Ken Yancey will cause the creation of one million new businesses within the next seven years if he gets his way. He is the chief executive officer of SCORE, an all-volunteer, nonprofit resource partner of the U.S. Small Business Administration. Yancey has been presenting his strategic plan with evangelistic zeal at SCORE’s 370 chapters nationwide.

The plan is bold. It is audacious; and it is a new way for the 11,200 SCORE members nationwide to interact with their communities, their spheres of influence, and their clients. The goal is to catalyze new business formation that in turn will bolster our nation’s workforce. That’s because pundits agree that small business creation begets the most jobs.

"Let me tell you what you can expect," Yancey said to the 100 volunteer mentors that came to hear his presentation at the SCORE Atlanta Chapter. SCORE has to double its number of volunteers, he told the attendees. The openings will be suitable for talented men and women with corporate or small-business experience. They must be willing to learn how to offer free mentoring, coaching and advice to start-up and fledgling businesses.

Some volunteers will be retired, while others will be currently employed or in business. But the common denominator is that they will be passionate about creating new jobs and helping their clients launch new businesses successfully. Some volunteers call it "giving back to the community." Others find that helping their clients win is as exhilarating as closing big deals.

In one instance, Union City, Ga.-based veterinarian Hannah Guishard transitioned from employment to becoming her own boss. "I was working at an animal hospital for someone who was not a veterinarian," Guishard says. "It didn’t make any sense not to be doing this for myself."

So Guishard contacted SCORE Atlanta and met with volunteer Ray Silva. He coached her through the process of opening her own clinic. Since starting Union City Veterinary Center and Emergency Clinic in 2000, the practice outpaced their most optimistic projections. "I was on cloud nine. I felt so good about myself and what I had done," Guishard says.

SCORE’s CEO Yancey says that SCORE’s clients are five to six times more likely to start their businesses than by going it alone.

The new strategic plan calls for an intake procedure to evaluate each client’s needs and customize a plan. That may mean attending a series of free and inexpensive workshops and being assigned counselors with the appropriate skills. Sometimes it entails face-to-face business counseling, phone coaching or case-specific online advice from volunteers nationwide.

SCORE Atlanta’s chair, Jeff Mesquita says, "As Ken (Yancey) pointed out, in two years from now one might not recognize our organization." Mesquita added that the "change" will help SCORE and its clients achieve goals beyond their expectations. "I will be calling on each (SCORE volunteer) in the near future to do something to get us to the next level of success." He explained that SCORE measures its success by the number of business clients it helps and their satisfaction.

For example, Alana Kelly visited the downtown Atlanta, Ga. SCORE office when she decided to open a flower shop and met with counselor Bill Atkinson. "Bill rattled off a list of questions that I couldn’t answer," she says. "Then he just smiled and said that it looks like you’ve got some homework to do."

Atkinson guided Kelly through the critical research needed to launch, Gitche Yah Yah Florist in 2006. "I couldn’t help but feel proud when these ‘tough’ counselors gave my business plan good reviews," Kelly says. "Without them, I’m not sure I would’ve followed through on this business," she says.

With job-creation and insecurity looming large on the minds of America’s unemployed, its underemployed and those that would rather be their own bosses, SCORE’s initiative to create one million new businesses will be part of the solution.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national "Journalist of the Year" award winner. He is a former entrepreneur, commercial mortgage banker and business lender.

Dem Senator Hits White House For Dragging Feet On Small Business Lending

2009-12-01T13:18:28Z

Sen. Mark Warner (D-Va.) expressed frustration Tuesday with how slowly the Obama administration is helping small businesses crunched by the financial crisis.

Over the last month, Warner has been rounding up support for using unspent bailout funds to create a lending program that would go toward small businesses. The feds would kick in $40 billion and banks would kick in $10 billion. The program wouldn't require congressional approval since the funds have already been appropriated. But the administration is taking its time.

"I've had a dozen-plus conversations and they are 'working on it,'" Warner said when asked by HuffPost where the White House stood on his proposal, which has the backing of a significant number of senators. "I'd like to see a little more prompt action, because this doesn't require congressional action."

While the administration waits, credit is tight. "Small businesses are at the end of their rope. They've been holding on for the last year. I see retailers right now who aren't hiring for the holiday season because their credit lines have been pulled," Warner said.

Warner, a conservative Democrat from Virginia, said that the program would work mostly through community banks and would involve sharing both the profits and the losses, though the specific makeup is still being negotiated.

What's significant is that the banks would actually be required to lend the money they get from taxpayers, rather than simply sit on it.

"Too often the banks take the TARP funds and shore up their balance sheets. This would be a use-it-or-lose-it pool," he said. "It doesn't add a dollar to the deficit. These are funds that meet the purpose of TARP and could be a dramatic jumpstart to small business lending."

Warner said that he is working with the administration to craft the program so that banks that participatewould not be subject to the restrictions on compensation and other activity that come along with bailout funds.

"Banks don't want to touch [TARP funds] because of the restrictions, so you might need a special purpose vehicle as an intermediary," he said.

Spokespersons for the White House and Treasury didn't immediately respond to a request for comment.

Cupcake Shop Fad Appeals To Many Entrepreneurs Across The Country

2009-11-25T16:56:51Z

There is no Cupcake Manufacturers Association keeping count, but anecdotal evidence indicates that stand-alone cupcake shops have been spreading not just in the acknowledged cupcake meccas of New York and Los Angeles but also in Boston, Denver, Austin, Tex., and lots of smaller places. Nationwide, cupcake sales, according to the market research firm, Mintel, are projected to rise another 20 percent over the next five years at a time when other baked goods are expected to grow in the single digits.

Goldman Sachs Small Business Program Details: Interview With Dina Powell

2009-11-25T11:27:37Z

The person who will be responsible for running the [Goldman Sachs] initiative day-to-day is Dina Powell, a former State Department official in the Bush administration who worked with Karen Hughes on education and cultural issues. Powell joined Goldman Sachs in 2007, as the global head of corporate engagement..Powell outlined the bank's plans in an interview with Inc.com editor Mike Hofman.