Small Business and Health

“Bristling at Health Plan to Cover Early Retirees” (“The Work-Up” series, news article, Sept. 9) pegs health care coverage for early retirees as exclusively a labor issue. In fact, this is an issue for all Americans.

Small Business Majority, a national nonprofit, is working for America’s 27 million small businesses and small-business owners.

Today, small businesses provide 75 percent of all net new jobs and employ 52 percent of the private-sector work force. What hurts small businesses hurts America’s economy. Not only are the majority of small-business owners between 55 and 64 years old — a precarious window for personal health care coverage — but they also face skyrocketing health care costs, which is hindering their ability to provide high-quality coverage to their employees.

Our research has shown that an average of 86 percent of small-business owners cite affordability as the reason they do not offer health care to their employees, while an average of 68 percent of small-business owners believe that health care reform is needed to help fix the economy.

The biggest problem facing America’s small businesses and America’s economy is unavailable, unaffordable health care. Emphasis on health care coverage for people between 55 and 64 is not just good for labor, it’s good for the economy.

Vectra Bank's small-business index for Colorado rises

The Vectra Bank Colorado Small Business Index for Colorado climbed to 79.8 in August 2009, up from a revised 78.1 in July, mostly because high unemployment rates have expanded the labor pool for employers.

"The last time Colorado's unemployment reached current levels was the spring of 1987, over 22 years ago. There's no question it's a painful time for the state's labor force," said Jeff Thredgold, Vectra Bank Colorado's corporate economist, in a statement.

"The return to employment strength is going to be a slow process. But positive U.S. economic growth expected this quarter should bode well for Colorado moving forward," Thredgold said.

Colorado's unemployment rate was estimated at 7.8 percent in July, up from 7.6 percent in June. August employment data will be reported on Sept. 18.

The index measures business conditions from the viewpoint of the Colorado small business owner or manager. A higher index number is associated with more favorable business conditions for Colorado's small businesses.

The index uses 100.0 for calendar year 1997 as its base year.

Vectra Bank is a unit of Salt Lake City-based Zions Bancorp.

Source: Bizjournals

Love a local business? Buy a share

HASTINGS-ON-HUDSON, N.Y. (Fortune Small Business) -- John Halko was halfway through renovating an expanded space for Comfort, his mostly organic eatery in Hastings-on-Hudson, N.Y., when the credit crisis hit. His source of funding -- a home-equity line -- ran out, so he applied for a loan at a local bank. He was turned down.

Halko wasn't ready to throw in the dish towel. His solution? The modern equivalent of an old-fashioned barn raising. Instead of soliciting neighbors to lift timbers, he asked them to open their wallets. For every $500 they purchased in "Comfort Dollars," his patrons received a $600 credit toward meals at the restaurant. As the community rallied around Comfort, Halko says, "it gave us hope." He raised $25,000 in six months, and the new, larger space - now called Comfort Lounge -- opened for business in May.

Plenty of entrepreneurs are turning to their communities for support in these tricky times. As the recession wreaks havoc on America's economy, finding the money to launch, expand or even just sustain a small business is often a struggle. In the second quarter of 2009, venture capital funds raised the smallest amount since the third quarter of 2003, according to the National Venture Capital Association in Arlington, Va. Banks continue to pull credit lines and credit cards from many small businesses. Even proprietors who are willing to extract capital from their homes -- often their biggest personal asset - can't always do so, because the declining housing market has left so many homeowners underwater.

But entrepreneurs are resourceful, and as the economic crisis forces them to seek new sources of capital, a growing number appear to be finding money in their own backyards. After all, local customers have a personal incentive to invest in their favorite businesses. And while no one is officially tracking the trend, anecdotal evidence suggests that the practice is growing.

"There are no secure returns out there right now," says David Lavinsky, co-founder of Growthink, a venture investment firm headquartered in Los Angeles. "People are very willing to invest in their local community, especially if there is the possibility of return."

Twitter Strategies for Marketing Your Business

-“Brevity is the soul of wit,” wrote William Shakespeare. And it also appears to be the heart of the microblogging phenomenon, Twitter. Microblogging as a marketing strategy is bound to thrive, and sooner or later you’ll find it’s just smart business to communicate with your customers 140 characters at a time.
“Twitter is a great way to position yourself as an expert and go-to source in a particular field,” says Julio Ojeda-Zapata, author of Twitter Means Business: How Microblogging Can Help or Hurt Your Company. Ojeda-Zapata says people have found jobs, hired staff, promoted books, and been written about by major media outlets by blogging on the popular site. And while most business owners have heard of Twitter, relatively few are taking advantage of its power to promote their businesses.

The irony is that while blatant self-promotion and marketing on Twitter can be a recipe for failure, there are other uses that make it a back-end marketing and public relations bonanza. Here are three Twitter strategies every company should consider.

1. Search and respond: To see what your customers are saying about you, follow the advice of Tim O’Reilly, author of The Twitter Book, and search for your name, your company name, your Twitter name, and your brand or product. A few useful search engines include Twitter Search, TweetGrid, and Monitter.

2. Educate customers and be an expert: Natural Food Exchange in Reading, Massachusetts, is an independent, natural food store featuring the largest gluten-free stock of supplies in the state. Lisa Kalner Williams says the company uses Twitter as a way to distinguish it in the whole/natural food marketplace by tweeting useful information about celiac disease, a condition where a gluten-free diet has produced positive changes in those afflicted. Occasionally the company will do promotional tweets that mention gluten-free products available in the store.

3. Engage in conversations with customers: Of all the misconceptions that business owners have about Twitter, the biggest one is thinking of Twitter in terms of a monologue rather than a dialogue. “Old-school, one-way marketing is at best quaint and at worst annoying in this two-way world of social media,” according to Steve Mulder, director of emerging interactions at Molecular, part of Isobar, a global network of digital marketing companies.

Future Financing For Small Business Clouded, Hurting Recovery

Even as the economy improves, financing may continue to be elusive for small businesses that drive job creation in the U.S.

Battered banks have cut back on loans and lines of credit. While smaller banks and credit unions have jumped in, they don't have the capacity to fully make up the financing needs.

It's unclear how small businesses, which account for half the U.S. economy, will find the funds to invest and propel the fragile recovery.

"We have to figure out how to get to the institutions and avenues small businesses actually use," said William Dennis, senior research fellow at the National Federation of Independent Business Research Foundation.

Despite government efforts to shore up the banking system, credit remains tight. The Federal Deposit Insurance Corp. last week said loans to small firms declined 1.9% in the past year. A Federal Reserve survey showed a third of banks tightened lending to businesses in the three months ended in July.

While the recession depresses demand for funds and hurts credit quality for small businesses, lines of credit are being cut for even solid firms, say advocates.

Meanwhile, community development financial institutions, such as credit unions and microloan funds, are making more loans, and larger ones, this year compared with last, according to a Philadelphia Federal Reserve Bank report on its region.

When it comes to number of loans made under the U.S. Small Business Administration's primary loan program, National Penn Bank and Susquehanna Bank have moved up in the Philadelphia area. They rank seventh and sixth respectively in the nine months ended July, from eighth and 12th during October 2006 through September 2007. In contrast, Bank of America Corp. (BAC) in the same period has gone from ranking fifth in number of loans - 118 - to 29th, with just four loans.

"Now, we're seeing more and more credit-worthy firms that are unable to get conventional financing," said Lynn Ozer, who manages Susquehanna's government guaranteed lending. She's seeing at least double the number of applicants for the SBA program than a year ago. Susquehanna Bancshares (SUSQ), based in Lititz, Pa., has $13.8 billion in assets.

Bank of America spokeswoman Tara Burke said the bank remains committed to small business. It lent more than $8 billion to companies with less than $20 million in annual revenue and modified payment structures for 32,000 small business credit-card customers so far this year, she said.

National Penn Bancshares Inc. (NPBC), based in Boyertown, Pa., with $9.7 billion in assets, didn't return a call for comment.

Groups that help small businesses are encouraging them to try regional banks. Philadelphia's Wharton Small Business Development Center is inviting more regional banks to attend its "meet the lenders" program in November and arranging its first-ever panel discussion with regional bank presidents in December.

But while regional banks didn't delve into the securitized products that bedeviled larger banks, they have exposure to commercial real estate - the next phase of the crisis. The National Association of Realtors recently said the market may only see meaningful recovery in the second half of 2010. Regional banks facing impending losses may cut back on credit even more.

Larger companies have the ability to bypass tight bank credit - they can sell bonds to investors, who lately have shown an insatiable appetite for the attractive assets. But small businesses have no such access. A long, protracted recovery may be the result.
Source: CNN

Domestic trade finance business doing well

PETALING JAYA: Some 80% to 90% of the world’s trade relies on trade finance, and there is little doubt the trade finance market will experience difficult times which will contribute to the global economic malaise.

However, the trade finance business in Malaysia is still doing well.
Chuang Boon Kheng ... ‘We believe our country’s exporters are unlikely to suffer any trade finance shortage.’

According to Harm Bots, Royal Bank of Scotland Bhd’s senior vice-president, country head, global transaction services, the bank has been expanding its trade finance business.

“There is a greater need for companies to open trade lines. We have been expanding our corporate business. On the other hand, the risk profile of most companies has increased,” he told StarBizWeek.

He said access to trade and supply chain financing had become more challenging with the onset of the credit crisis, especially in the emerging markets of Asia, due to a tighter credit environment.

“While it is tougher for banks to give out financing these days, big companies are also taking the cue and spreading their wings to work with a panel of banks,” he said.

Bots said the World Trade Organisation had estimated that there was a trade financing gap of US$49bil globally, “which means there is a shortfall of funds that are required but not available from banks.”

“Right now financing from banks is not as readily available. The pool of liquidity is smaller,” he said, adding that the pricing of trade finance instruments had also risen, reflecting higher funding costs, increased capital constraints and greater counter-party risks.

He said the types of trade finance products in demand had also changed as a result of the changing financial and business landscape.

“We are seeing a shift from open account trading, which was popular when the risk of trading account defaulting was considered small, to documentary trading using conventional trade finance products – such as letters of credit, bills of exchange and guarantees – to mitigate risk.

“Open account trading represents about 70% of the market and will always play a key part but, in the short term, letters of credit are becoming an increasingly popular way to mitigate risk,” he said.

In an atmosphere of constant uncertainty and volatility there was a growing need for financial service providers to take account of the end-to-end trade cycle to keep trade flowing, he added.

The International Chamber of Commerce had observed, based on global surveys, that about 70% of documents presented under letters of credit were discrepant on first presentation, he said.

“This is consistent with our own experience in Asia and Europe where we found about 70% to 80% of the documents being discrepant,” Bots said.

In this challenging, risky environment, it was crucial to manage risk and documentation, he said. “It is crucial for exporters to understand how to conduct trade and ensure that when you ship to stressed markets you get your money back.”

ABN Amro Bank N.V. executive director, regional head, business development Abraham Chacko said it was prevalent in volatile markets for suppliers to weasel out of their contract by looking for loopholes in documentation.

He said the UCP 600 was a set of rules used globally in documentary trade and detailed knowledge of this subject was key for exporters to manage risk and working capital efficiency.

“The UCP remains the most successful set of private rules for trade ever developed,” he said.

OCBC Bank (M) Bhd head of global trade finance Chuang Boon Kheng said the general exports demand continued to be weak but the bank was seeing early signs of improvement as seen in the trends of export letters of credit flows at the end of the second quarter.

“Given the resilience of the domestic banking system and existing trading relationships, we believe our country’s exporters are unlikely to suffer any trade finance shortage induced by the ongoing crisis,” she said.

The current financial crisis had had a visible impact on several fronts, such as the overall decrease in transaction value and volume, she said, but the capacity of banks to provide trade finance continued to be strong, as often reiterated by Bank Negara.

She said based on the bank’s experience, about 50% of letter of credit document submissions tended to be discrepant and this could have an impact on discrepant bills, including delays in payment, which may result in loss of interest, withholding of payment and exploitation of the discrepancies in an attempt to avoid payment or obtain discounts in the event of falling prices on the world market or currency fluctuations.

HSBC Bank Malaysia Bhd director trade and supply chain Lawrence Yong said the bank’s trade finance business was faring well, mainly due to its ability to leverage on the group’s strength in both import and export trade financing.

“Additionally, there is an increasing focus on more value-added transactions, especially in cross-border trade financing,” he said.

In such challenging times, there is increasing demand for risk mitigation products. HSBC has the strength and expertise in designing financial structures to cover all parties involved in the supply chain.

Yong said based on prevailing statistics, on a general basis for the banking industry worldwide, the percentage of documentary mistakes/discrepancies could be quite high.

“Discrepant documents in trade transactions can delay/affect the collection of payments. It is, therefore, important that the documents are compliant and free from mistakes,” he said.
Source: TheStar

Starting a Business : is my Plan B

CALL them accidental entrepreneurs, unintended entrepreneurs or forced entrepreneurs. A year and a half into the Great Recession, with the jobless rate hovering near double digits, corporate refugees like Lisa Marie Grillos of San Francisco are trying to fend for themselves.

Along with her brother Hernan Barangan, Mrs. Grillos started Hambone Designs, after her full-time contract position with Williams-Sonoma as a production manager wasn’t renewed in January. The new company makes bicycle bags that hold things like keys, wallets and cellphones.

“You have the time — why not focus your energy on something, rather than just trolling Craigslist and sitting and watching TV?” Mrs. Grillos says. “It’s really taking matters in my own hands.”

Mrs. Grillos, 34, built a Web site called hambonedesigns.com, opened a virtual shop on Etsy.com, an online marketplace, and hit San Francisco street fairs. So far, between the online marketing and the street fairs, she and her brother have sold 70 bags, which retail for $20 to $40. Each sale results in a profit.

“We have been talking about mass producing, but we’re not there yet,” Mrs. Grillos says. “It is a whole other thing, approaching stores and having the inventory.”

To help make ends meet, Mrs. Grillos also does textile design and photography projects, and it helps that her husband has a full-time job.

Others among the unemployed are taking the entrepreneurial route. The most recent Index of Entrepreneurial Activity by the Kauffman Foundation showed a slight uptick of new businesses in 2008 — a full recessionary year — over 2007. An average of 320 Americans out of 100,000 formed a business each month, Kauffman said. What’s more, it found, the patterns “provide some early evidence that ‘necessity’ entrepreneurship is increasing and ‘opportunity’ entrepreneurship is decreasing.”

Accidental or by design, entrepreneurship is on the rise again this year. LegalZoom, the online legal document service, says the number of new businesses it helped to form was up 10 percent in the first half of the year, compared with the period a year earlier.

“We were surprised,” says Brian Liu, co-founder and chairman of LegalZoom. “We expected there to be a drastic downtick.”

LegalZoom’s top five areas of incorporation, he says, are real estate, consulting, Internet (including electronic commerce), retail, and construction and contractors.

To be sure, a vast majority of corporate workers who have been laid off since December 2007 have sought another corporate job. After all, starting a business in the worst downturn in decades seems especially risky. Only two-thirds of new small businesses survive at least two years, according to the Small Business Administration. That survival rate falls to 44 percent at four years, and to 31 percent at seven.

The silver lining may be that the survival rate is about the same in expansions and recessions, says Dane Stangler, senior analyst at Kauffman.

WHILE the Internet has made the formation process quick and inexpensive — papers can be filed with LegalZoom, for example, for $149 in addition to state filing fees — the costs of owning a business add up quickly. There are state and local taxes and fees, insurance, salaries and contract pay, overhead, inventory and the like. And these days, lenders are none too generous when it comes to forking over money to new businesses.

These factors, combined with the lack of a steady paycheck, often-inadequate health insurance and the sheer emotional stress of being unemployed, may prevent many people from setting out on their own.

But research on what is known as post-traumatic growth has found that some people become more resilient when faced with adversity, says Shawn Achor, a Harvard researcher. Creativity surges, he says, as they adapt to a new situation.

“Their brain is actually learning at a faster pace than when they are not challenged,” Mr. Achor says. “As a result of this, some individuals, the accidental entrepreneurs, they are the ones who in the midst of crisis actually respond with growth.”

In a report this summer on innovation, Ernst & Young wrote, “Experience shows that entrepreneurs should not give up on start-ups in a down economy.”

Many companies with billion-dollar market capitalizations were started during a recession, the report said, including Starbucks, Intuit and PetSmart.

Research from Kauffman in June found that more than half of the companies on the Fortune 500 list in 2009 and nearly half of the companies on the Inc. magazine 2008 list were founded during a recession or bear market.

Lynn Zuckerman Gray, 60, hopes to be one of the success stories of this recession. She lost her job at Lehman Brothers almost a year ago, when the firm collapsed. A former chief administrative officer of its global real estate group, she found herself competing with a rising number of job seekers for a dwindling pool of jobs.

Ms. Gray ended up participating in a New York City program, offered in conjunction with the Kauffman Foundation, called FastTrac NewVenture. The program, for employees displaced by the financial crisis, sent Ms. Gray in a direction she never thought she would go: starting an on-campus recruiting company called Campus Scout.

“I guess I had an entrepreneur simmering inside me because I’ve always been very creative,” she says.

The cost has been hundreds of dollars here and there, she says. Still, the reality of her financial situation is daunting. Her severance pay from Lehman ended this month, and she is now eating into her savings. So far, her new venture, Campus Scout, is in start-up mode and does not have any clients.

She says she is going to try to get part-time work, teach university classes and do some freelance writing to generate cash flow so she can keep her business going for at least two years.
Source: NYTIMES