Most small business owners will agree that 2009 was a tough year and they look forward to a true economic turn-around in 2010. Regardless of your political leanings, most agree that an important component to the success or failure of the economy in 2010 is government policy and initiatives. So, let’s take a look at the President’s State of the Union from the small business owner’s perspective.
Below are a four of the proposals and initiatives President Obama discussed and what it means for the small business owner.
“I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small business the credit they need to stay afloat.”
Access to credit is vital to the small business owner, during good and bad times. Not only does it help businesses stay afloat during tough times, but it also affords businesses the ability to take advantage of opportunities. A recession and the resulting recovery inevitably comes with it plenty of opportunity. Don’t limit yourself to the local community bank. Diversify your business debt to include long and short term loans, equipment leasing, business cash advances, lines of credit and mortgages. Use each one when appropriate and get some advice when you need to about the best type of financing to use for your project or investment.
“I’m also proposing a new small business tax credit — one that will go to over 1 million small businesses who hire new workers or raise wages.”
Hiring new workers or raising wages will typically happen after revenues begin to increase, which happens after consumer confidence rises and they begin spending money again. Small business owners may not want to hire additional staff just to get the tax credit, unless it makes financial sense. However, the idea of a proposal that increases hiring and wages is news that will hopefully help raise consumer confidence, which in the long run is good for everyone.
“Let’s also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plant and equipment”
The future success of our economy not only depends on the confidence of consumers, but also of small business owners to build the confidence to begin investing again into their business. Proposals like this, if they make it through the legislative process, could help raise the confidence level of this important group.
“We’re launching a national export initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.”
You don’t have to be a big company to take advantage of the world market we live in today. If you aren’t selling your goods and services out of the US yet, check out these resources from Business.gov on Getting started in exporting. You may be surprised to find a new market you didn’t know existed for your product or service.
Is there anything else you heard in the State of the Union that will affect your small business?
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The economy is a giant waterfall and small business finance providers – in many respects – sit at the bottom of that waterfall.
- The confidence of finance companies can’t improve until the confidence of small business owners improves and, in turn, they begin to invest in their businesses.
- The confidence of small business owners, however, can’t improve without their customers buying more goods and services.
- And, consumers don’t buy goods and services until they become confident in the direction of the economy.
So, overall it is good news for everyone that finance companies are beginning to express confidence in the economy.
Everyone is aware of what a difficult year 2009 was for virtually all industries. However, Direct Capital has stayed optimistic through the turmoil by refusing to participate in the recession. Our persistence and performance led to the renewal and addition of three financing facilities in 2009 (something that was unheard of in our industry last year).
While we’d like to take credit for the improvement in the Equipment Leasing & Finance Foundation monthly confidence index (shown below), the real credit belongs to small business owners who are now beginning to display their confidence by buying equipment and investing in their business. As shown below, this activity is boosting the confidence of the equipment finance industry as reflected by the index’s 4th quarter boost. In January, however, the Index flattened out to remain virtually unchanged. 
Looking at the details behind the survey, there are some notable items that suggest reason for optimism in 2010 (their summary is available on the Lease Foundation’s website):
- 42.5% of equipment leasing executives believe conditions will improve through the first four months of 2010, up from 31.1% in December
- In December, approximately 2/3 of respondents believe conditions will remain the same. In January this dropped to 55% with much of that change shifting to a belief that conditions will improve.
- Only 2.5% believe conditions will worsen.
Let us know if your confidence mirrors the survey results discussed here.
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Do you get overwhelmed with the amount of content being created on every topic imaginable? The amount of information on topics important to small business owners alone could make your head spin on a daily basis.
To help shorten your path to the good stuff, below are several sites that regularly publish high quality content geared towards the topics most important to a small business owner (outside of this blog of course!).
In addition to a summary of each resource, at the end of each section is a link to the corresponding Twitter account. Most of the content for each of the resources discussed below is also available on their Twitter feed. To make it easier, Direct Capital has created a Twitter list called Small Biz Resources that will show you the feed from all these sources.
- Business.com – In particular, I find their Answers forum is a great resource to find answers to common small business questions ranging from financing to legal to marketing and everything in between. Also, don’t miss the opportunity to establish yourself as a thought leader in your industry by answering questions for which you are a subject matter expert. Answers.Business.com on Twitter
- Small Business Trends – If you’ve done any small business research online you’ve likely come across the fantastic resource put together by its editor, Anita Campbell. The articles featured by the experts who contribute to the site are always timely, well written and packed with useful information. Small Business Trends on Twitter.
- Business.Gov – For new businesses, Business.Gov answers many basic questions like how to register a Doing Business As (DBA) and how to establish an LLC, Corportation or other legal entity. Also very useful is the community forum – similar to the Answers.Business.com forum - which brings together many people answering questions for small business owners. Business.Gov on Twitter.
- LinkedIn - This popular business networking site has lots of great tools. While the discussions section of LinkedIn Groups can be helpful, many of the them have turned into 1-way postings by members pushing their products or service srather than the 2-way discussion they were intended for. For a more useful LinkedIn experience, jump over to LinkedIn Answers and post your question there, answer a question or search their database of already answered questions. LinkedIn on Twitter.
- Small Business Radio Show – Jim Blasingame pulls in some great resources to cover relevant topics for the small business owner and you’ll likely walk away with something valuable from his insightful commentary. He also does regular audio interviews with guests knowledgeable on small business topics who he refers to as Jim’s Brain Trust and also maintains a small business knowledgebase. Jim Blasingame on Twitter.
- The Franchise King Blog – Joel Libava is a franchising expert whose blog provides great information on not only franchising but on small business ownership in general. He has a straight forward and entertaining approach that makes for good reading as well as great advice that you don’t have to work at to pull out. The Franchise King on Twitter.
- NFIB – The National Federation of Independent Business site is great for keeping up on what is happening around small business issues in the political arena, both nationally and on a state by state basis. They also publish helpful general knowledge articles focused on small business topics. Membership in the NFIB is required to access some resources but there is plenty of content available for free. NFIB on Twitter.
Did I miss any? What other resources do you use?
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Is your small business financial house in order?
2010 is upon us. Hopefully by now you’ve prepared your strategy, broken it up into goals for the year and now back into the grind of the day-to-day tasks that help move you towards those goals. Before you get too deep back into the tactical execution of your business tasks, I urge you to make sure your financial house is in order, or you at least have a plan to get there.
2009 was one of the most challenging years for small business owners to access credit. Whether you plan on trying to access credit or not in 2010, you and your business will benefit by taking a few simple steps to make sure you focus on increasing the net worth of your business before December 31, 2010.
- Check your personal credit: A regular check of your personal credit report will help to insure there are no errors or potential issues. Make sure your debts, payment history and personal information are accurate. In the event you need financing, you don’t want a lender to be the one to tell you about a late payment or debt that isn’t really yours.
- Check your business credit: A check of your business credit should include a review of your Dun & Bradstreet file. This will include D & B’s business credit rating, known as a Paydex, along with a listing of owners, industry and other pertinent details. Incorrect information on this report can delay or prevent you from getting financed.
- Check your Secretary of State listing: Depending on your state, these typically need to be renewed every year and most lenders will require it is up to date before extending an offer for financing.
- Update your personal financial statement: Not all types of financing (such as equipment leasing) will require this document. However, it is not just a good document to have on hand if you do need it for financing, filling out a personal financial statement can help to show where you should focus your financial attention in 2010.
- Create your 2010 Financial Statement Now: What do you want the financial picture of your business to look like at the end of 2010? What does your 12/31/10 Balance Sheet look like? What is your net profit? Setting these targets today will bring you closer to making that financial picture a reality. Commit to yourself that every financial decision in 2010 must bring you closer to these goals, or don’t do it.
What other steps have you taken to make sure your financial house is in order?
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We’ve tried to help keep a positive outlook on the economy and the promise it holds for both current and future opportunities. We also tend to be very analytical data junkies around here and are constantly looking at the latest information that will help us and our customers position themselves for the future. So, you can imagine our excitement when the latest employment projections data for the US Bureau of Labor Statistics (BLS) were released!
Looking at the big picture, the future is bright according the the BLS. The total projected employment increase from 2008 – 2018 is 15.3 million, or 10.1%. Compare this to the 10.4 million increase (7.4%) that the US experienced from 1998 – 2008. Good news! However, depending on what industry you are in or sell to, the news isn’t all good. The top 10 industries with the largest projected declines in employment are:
- Department Stores
- Semiconductor and other electronic component manufacturing
- Motor vehicle parts manufacturing
- Postal service
- Printing and related support services
- Cut and sew apparel manufacturing
- Newspaper publishers
- Support activities for mining
- Gasoline stations
- Wired telecommunications carriers
One observations that stands out is that manufacturing sector industries make up 40% of the list.
Those industries expected to gain the most in employment over the next 10 years include:
- Management, scientific and technical consulting services
- Offices of physicians
- Computer systems design and related services
- Other general merchandise stores
- Employment services
- Local government, excluding education and hospitals
- Home health care services
- Services for the elderly and persons with disabilities
- Nursing care facilities
- Full-service restaurants
The big standout on this list is the number of medical related industries (4).
So what do we do with this information? Everyone has to answer that question for themselves, however, as you the small business owner know there is opportunity in every situation. Look closely at this list and determine how your business can begin to position itself for any trends you see.
What opportunities do you see?
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This time of year for many of us is a time of reflection and to be thankful for everything we have. Sometimes it’s easy to take for granted many of the things we don’t think twice about most of the time - things like our health, a roof over our head, food on the table or presents at the holidays.
One of my favorite things about working at Direct Capital is the support we give to local philanthropic and social services organizations. As you reflect on 2009 and look forward to 2010, take some time to be grateful and consider contributing to organizations that help those less fortunate. Find an organization that you connect with and inspires you.
To help give you some ideas, below is a list of organizations Direct Capital has helped in 2009 along with links to their donation pages:
New Hampshire Make A Wish Foundation
Children’s Literacy Foundation
Are you a non-profit on the New Hampshire seacoast? Contact us to be the beneficiary of our Denim for Donations program.
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Has anyone else noticed that the media has a fixation on where you can’t get financing?
I regularly answer questions on the LinkedIn Answers forum and Business.com’s answers forum and as one might expect there has been a constant stream of questions from business owners asking where to turn for business financing. Being a financing company, we are hyper-aware of the continuing negativity by the mainstream media which continues to focus on “where you can’t get financing”. So, as part of our refusal to participate in the recession we’ve compiled a list of financing options that are still out there (in no particular order).
There are probably more than you think.
Bank loans
Yes, there are banks that still lend money, though you definitely have to search harder to find one and pay extra close attention to the terms. Many banks have limited their liability via more bank-friendly terms to dig themselves out of their unhealthy balance sheets.
Small Business Administration
The SBA has several programs aimed at helping small businesses access capital. There is typically more paper required to get approved for these loans, but the SBA is doing what it can to get capital to businesses that need it.
Equipment lease
This is of course our specialty and we still have competitors who also work to provice businesses with capital to purchase commercial equipment.. With our recent expanded lease capability of $250 million we definitely have money to help out small businesses.
Merchant cash advance
If your business accepts credit cards, chances are you can access capital via an advance on your future credit card sales. This is often a good option if you need cash quickly or your personal credit is not strong.
Short term business loan
To get access to a bank loan these days your personal credit score typically needs to be north of 700. This credit score minimum has increased significantly over the past 2 years. There are a lot of business owners who still have strong cash flow but don’t meet this elusive requirement. Short term loans of 6 – 12 months can accomodate credit scores in the low 600’s. A great option for many businesses.
Factoring
This form of financing has been around for a long, long time and under-utilized in my opinion. Factoring allows you to turn your outstanding invoices into cash today. When business is good, but cash flow is suffering because you are waiting 30 – 90 days for your customers to pay you, check out this option.
Collateral financing
If you have lien-free hard assets that have some value, there are programs available that will provide cash based on the appraised value of that equipment.
Asset liquidation
With the decline in business in the past several years, you may have equipment that is sitting unused. Turn this asset into cash by selling it. Direct Capital can assist through our consignment program or if you choose to do it on your own, increase the attractiveness of your sale by offering financing through eBay.
401k or Retirement Assets
Depending on how your retirement savings have fared over the past several years, this asset may be worth investigating. Check with your tax professional on whether or not this is a viable alternative for your situation.
Home (or other real estate) equity
Try not to laugh at this one! The home values have been crushed for most of us across the country but the market will eventually rebound and equity will again rise. There are (hopefully obvious) risks with putting your home up as collateral for your business so do some serious analysis before going this route.
Your Vendors
Your vendors have a vested interest in seeing you succeed. The more business you do, the more you’ll need to buy from them. Position it correctly as a win-win for you and your vendor and their willingness to help may surprise you.
Credit cards
Most of you are probably all to familiar with this option. If you already have one, it’s quick and easy. But, make sure you investigate the alternatives and read your card agreement carefully before jumping on this one.
Friends and family
Many times this group of people knows how passionate you are about your business venture and that passion can be contagious. Don’t assume your friends and family won’t want to help out.
Help your fellow business owners out – am I missing any? Share your ideas in the comments below.
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What are you doing to get your small business ready for 2010? This is the time of year when we all get serious about our 2010 plans. If you haven’t already done so, get out of the office, leave the shop or get out from behind the counter. This is the time of year to make an intentional effort to spend more time working ON your business rather than in it (though as a business owner you should strive to always be working on it versus in it).
In the spirit of giving this holiday season, I wanted to share a few resources that I believe will help you with your 2010 planning. I’ve organized these resources by business area in case there are some specific topics you need to focus on first.
General Business Practices
Good to Great – Jim Collins has written several excellent books but I’ve found this one to be his best. Collins takes a very analytical perspective on what separates great companies from the rest.
Think and Grow Rich – A classic by Napolean Hill. Even if you have read this one it is a great one to read this time of year to get in the right planning frame of mind to take some action on your next big idea.
The E-Myth Revisited – This one by Michael Gerber taught me how important it is to work on your business rather than it. Gerber’s company is also active online with great resources on Twitter and their blog.
Sales
Customer Centered Selling – Robert Jolles who was behind the famous Xerox sales training program lays out how to be more successful in sales by identifying where the buyer is in the decision cycle and modifying your approach accordingly.
Caskey Sales Training – Bill Caskey and his team put out all kinds of great free resources on the B2B sales process. Their books, blog and Advanced Selling Podcast will give you a great perspective on how to successfully approach the B2B sale.
Marketing
Chris Brogan – There probably is no one out there who is more giving of well thought out, valuable and relevant information on marketing in today’s economy than Chris. Most of the information Chris makes available is on his blog but he also just published Trust Agents with Julien Smith and also runs the Inbound Marketing Summit (which I attended this fall and is an incredible event).
Free: The Future of a Radical Price – Chris Anderson (who blogs at The Long Tail) does a fantastic job identifying what role “Free” has played in successful marketing initiatives with tons of examples. The conclusions Anderson reaches haven’t convinced everyone that Free is the way to go, but this book will give you a fresh perspective that you should at least consider in your upcoming marketing efforts. Anderson practices what he preaches. You can buy the book on Amazon, or, get the unabridged audio book for free on Audible.com.
Finances
Managing by the Numbers – Most business owners are naturally good at sales, marketing or the specific trade or service their business offers to its customers. Managing the financial side of the business doesn’t always come easy, or it is not approached with a solid system. This book will give you that system. It provides an easy understand methodology for running your business profitably.
The Millionaire Next Door – For small business owners, personal and business finances are often one in the same. This is an older book, but I think it gives a nice perspective on how to handle your personal finances to reach that place of liquidity for which we all strive. Stanley and Danko’s findings and recommendations might surprise you.
www.Section179.info – Whether you are trying to save money on your equipment purchases for 2009, or planning for 2010 purchases, Direct Capital has put together this resource for business owners looking to take advantage of this tax deduction.
Non-Business Favorite
Born to Run – I’m a runner which is why I picked up this book in the first place, but this is a great one for runners and non-runners alike. If you don’t run before reading this one, you likely will be afterwards. It’s a fantastically well told story of the author’s search on how to run injury free. The journey, characters and adventures it takes him through are immensely entertaining!
What other resources do you use at this time of year to do your strategic planning for the following year?
Calculate your Section 179 tax savings
Use our free calculator to find out how much you can save using the Section 179 tax deduction. Don’t miss out on this IRS deduction that could save you thousands.
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Join us for our next webinar presented by Direct Capital:
Beginner’s Guide to Section 179: A step-by-step guide on how to leverage this key tax savings.
Wednesday, December 2nd, 2009
1:00 pm – 2:00 pm EDT
IRS Section 179 is a tax deduction that can save you thousands of dollars on your upcoming equipment purchases. Learn a step by step process to find out how to take leverage this key tax savings before its too late!.
This webinar will cover:
- What you need to do today to leverage IRS Section 179
- How much you can save on equipment purchases by using Section 179
- What the deadlines are to take advantage of this deduction
- Whether or not your equipment purchases are eligible for Section 179
- And much more!
Our presenter will be David Verno, CPA, Leone, McDonnell & Robers, P.A.
David is a 1990 graduate of Thiel College in Greenville, Pennsylvania where he earned his Bachelor of Arts Degree in Accounting. Upon graduation, Dave joined Hill, Barth & King, a large regional firm. He also worked for the international accounting firm, Price Waterhouse prior to relocating to New Hampshire, where he worked as an internal auditor for Timberland, Inc. for two years. While with Timberland, Inc., he obtained the designation of Certified Internal Audio (CIA). Dave joined the firm of Leone, McDonnell & Robers in July 2002, and w as admitted as a shareholder effective July 1, 2008. Dave’s relevant experience includes providing tax and financial services to many closely-held businesses and their owners as well as audit and consulting service to not-for-profit organizations and retirement plans.
Joel Libava is a well known expert on the franchise industry. He’s a contributor to several small business blogs including Small Business Trends, the American Express Open Forum and was just interviewed on FOX Business News on the topic of franchising and financing.
Joel recently asked me to do a guest post on the current state of financing for small business. That post can be read in full on The Franchise King Blog.
