Government

Our friend from the government is here to help us-now we’re in trouble!

May 21, 2010 by admin Leave a Comment

Our friend from the government is here to help us-now we’re in trouble! Washington weighs in on consumer protection-but missed the real boat

Yep, it’s an overly long title, and an extremely serious topic. The president and congress are now taking steps to protect us (God help us) from the “Big Banks.” Well it was about damn time! Let me clue you in, the mortgage –housing problem is only half the problem, the proverbial other shoe is unsecured credit card debt, let me cite you a few statistics: (thanks to www.creditcards.com).

• Average credit card debt per household with credit card debt: $15,788*
• Total credit cards in circulation in U.S: 576.4 million, as of yearend 2009 (Source: Nilson Report, February 2010)
• Total debit cards in circulation in U.S: 507 million, as of yearend 2009 (Source: Nilson Report, February 2010)
• Average number of credit cards held by cardholders: 3.5, as of yearend 2008 (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)
• Average APR on new credit card offer: 14.10 percent (Source: CreditCards.com Weekly Rate Report, May 2010.)
• Average APR on credit card with a balance on it: 14.67 percent, as of February, 2010 (Source: Federal Reserve’s G.19 report on consumer credit, May 2010)
• Total U.S. revolving debt (98 percent of which is made up of credit card debt): $852.6 billion, as of March 2010 (Source: Federal Reserve’s G.19 report on consumer credit, March 2010)
• Total U.S. consumer debt: $2.45 trillion, as of March 2010 (Source: Federal Reserve’s G.19 report on consumer credit, May 2010)
• U.S. credit card 60-day delinquency rate: 4.27 percent. (Source: Fitch Ratings, April 2010)
• U.S. credit card default rate: 13.01 percent. (Source: Fitch Ratings, April 2010)
Total bankruptcy filings in 2009 reached 1.4 million in 2009, up from 1.09 million in 2008. The vast majority were personal bankruptcies — Chapter 7 and Chapter 13. Business bankruptcies made up 6 percent of all filings. (Source: AACER, the American Bankruptcy Institute, January 2010)
Clearly the American Consumer is in trouble, but why?
Americans at least the vast majority of Americans are decent hard working extremely giving people, just take a look at charitable giving, the world has never seen, nor will it ever see again, a people so enormously generous. According to the National Philantropic Institute 89% of American households give. (Thanks to http://www.nptrust.org/). This is part of the American psyche hardworking and giving, so it is extremely unlikely if you buy off on my presupposition of the American psyche, that Americans would be ducking their obligations. The reason is that Americans are not able to pay.
This brings me back to primary theme of this blog, small to medium business, entrepreneurship, and jobs. What America and Americans needs are jobs and they are not going to be provided by big business or labor unions. What is needed is a leg up for the small to medium businesses of America not another regulatory commission for greedy bankers. The main idea is that Americans should not need credit cards in the first place and if there were enough decent paying jobs, the need for credit cards and it’s new regulatory commission would be moot.

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So What Does Obama Care Mean for Small Business?

March 24, 2010 by admin Leave a Comment

Be careful little hands what you do!

Congress last night enacted President Obama’s sweeping healthcare plan, but like many things congress didn’t consider all the details. The idea was to assist small business and individual Americans in purchasing healthcare, what it will end up doing is slow and reduce hiring in the future.

The president’s plan is number driven: business from x amount of employees to y amount of employees pay z much toward healthcare, or if they do not, they are fined w amount. This was a fair idea if American company’s personnel strategy was still to hire employees, but frankly, they missed the boat. Instead of hiring marginal employees, companies will either do without the marginal hire or use temps and/or contractors to do the job. Furthermore, with all of the job quota entanglements (and they still are out there), a business owner will have to consider if he or she is going to break a certain healthcare number threshold. Business owners are going to pay very close attention especially if they are near the 50 employee point and this creates a very discomforting scenario.

Suppose a business is at 49 employees and it needs to hire a transportation manager. Looking through the list of employees, there is the transportation secretary who has been a very good employee, but is a secretary. What should the business owner do? Well, the smart thing (but brutal thing) to do is fire/layoff/RIF the secretary and hire the transportation manger; addition by subtraction is going to be rampant! Who will get hurt? The people the president was most trying to help, average hard working Americans! Of course, the secretary might be advised that she can “contract” her old job back with xyz temporary service. What a crock! Of course, xyz temporary service will also have to consider the numbers game, but that leads to some brutal consequences as well. How long can you be a contractor/temp before you are automatically switched out (again to duck the numbers game)?

Also, just how hard is it to start a company as a separate legal entity? A business owner can start an LLC in about 2 days, and a small corporation, like a chapter S, does not take much longer. Remember each of these legal business entities are totally separate “persons.” Therefore the employee counter starts all over again. So too, cost center accounting has been around for years, and each department bills other departments for the work it does. For example, customer service bills sales for processing its orders. How hard would it be to create separate companies, each one under 10 or 25 employees?

Lastly, some companies are just not going to go through the aggravation of the numbers game, and will move some parts of their company off shore. More jobs lost for more Americans, I seem to be recalling which road that it is that’s paved with good intentions…

SMBs are Hiring

March 7, 2010 by Sarah Leave a Comment

New data suggests the smallest businesses in the country are beginning to add new jobs and some experts say that’s a great sign for bigger companies. This info comes despite a March 5th report from the Labor Department that suggests the United States is still losing jobs.

Intuit released some information on March 1st that suggests companies with less than 20 employees have been adding new jobs since June 2009. That’s based on the 50,000 customers using their online payroll service. Also, after two years of decline, the average paycheck amount for someone working for a company of less than 100 employees is beginning to stabilize over the last three months, and in some cases, is increasing. This includes data from salary, hourly, and contract workers. That information came out on March 3rd from a company called SurePayroll.

The numbers look like this: since June, employment at small businesses as been growing at 1.1% annual rate. With that information, Intuit suggests 150,000 jobs have been created by companies with fewer than 20 employees since June. That includes 40,000 last month alone. Granted that’s a long way from re-employing the 8.4 million who have lost jobs since December 2007, but it’s still a start and it’s left some people pretty hopeful.

Brian Headd, an economist at the Small Business Administration says this is a potentially good sign. He says that in 2002, recovery began when small businesses began hiring before larger companies did and in some cases when larger companies were still losing jobs. According to census data from 2006, companies of 20 or less employees make up 89% of all businesses and 18% of the private workforce.

Meanwhile, Congress is working on a number of different bills in an effort to put people back to work and one way they’re trying to do that is tax incentives. Last week, the House passed a bill that gives employers who hire people who have been out of work for two months a year free from paying the Social Security payroll tax. John Bishop of Cornell University has proposed a hiring tax credit that he says could will encourage about two million jobs in the next year. But a lot small businesses don’t wait on the government to pass bills before they hire and don’t sit around, waiting for incentives.

For example, Michael McKean, the CEO of the Knowland Group in McLean, VA told Business Week he has already hired ten people this year and hopes to hire about six more. The company makes sales, marketing, and lead generation products to help hotels attract conferences and events. He says he believes the industry is due to pick up soon and knows he can increase his credit line

Official data from the Labor Department about hiring won’t be available for several months, but if history is any indication, this data is good news. Companies with less than 500 employees have made up 64% of new jobs created between 1993 and 2008 and it looks like that trend will continue.