Save Your Small Business

Have the Big Banks Followed Through with Their Promises?

November 10, 2010 by Katie Sellers Leave a Comment

Many big banks claimed that they would increase credit to small businesses in 2010, but have they really done this so far? Are they really lending more money to small businesses or have they fallen through? Well, it’s a little difficult to tell due to the fact that “small business lending” for most banks usually covers a variety of different things ranging from real estate to credit cards, and there are very few lenders that separate their numbers for small businesses. Big banks were under pressure from the White House last year to increase credit. Some of the nation’s largest lenders, including Wells Fargo, Bank of America, and JPMorgan Chase, made some very big promises about increasing their lending to small business lenders in 2010. Four of the companies that set some concrete goals were asked how they were doing so far with their lending, and here is what they said.

Wells Fargo
According to Wells Fargo spokeswoman Sarah Toffoli, the company gave more than $2.9 billion in new loans to small business owners in the first quarter. The bank said that their goal for 2010 was to lend $16 billion, which is about $3 billion more than they lent in 2009, to companies with less than $20 million in revenue. “Based on the seasonality of business lending and the anticipation of an improved economy, we hope to meet our commitment by the end of 2010,” said Toffoli. John Stumpf, the chairman of Wells Fargo, says that the company plans to increase the new small business lending of $16 billion in the company’s annual report.

JPMorgan Chase
JPMorgan Chase reported in their first quarter earnings release that so far this year they have lent small businesses over $2.1 billion in new loans. They had said that their goal was to give out $10 billion in new credit to companies with revenues under $20 million. Their goal, which was announced November 9th, 2009, is an increase of $4 billion over last year. Spokesman Tom Kelly said that the bank’s first quarter lending to small businesses has increased 31% over the lending from the first quarter of the previous year.

Kelly also said that since November 9th, JPMorgan Chase has hired 235 new small business bankers, and they plan to hire 325 new employees by the end of 2010. Another interesting fact to note is that Chase has lent more than $110 million in “second-look loans” this quarter. Second-look loans are small business loans that are given to borrowers who were initially rejected but asked for Chase to review their loan application again.

Bank of America
In their first quarter Bank of America has loaned $19.4 billion to small and mid-size businesses, those who have less than $50 million in revenue. When taking out the loans to mid-size businesses, the bank has loaned $3.4 billion to small companies, those with less than $20 million in revenue, during their first quarter.

At a meeting with President Obama on December 14th, 2009, the then CEO of Bank of America Kenneth Lewis stated that the bank planned to increase their lending to small and mid-size businesses in 2010 by $5 billion. As of right now the bank has not released how much money they lent to small and mid-size businesses in 2009, so there is really no way to set a number on how much they will be lending in 2010 or on how much progress they have made this quarter towards meeting their goal for 2010. Spokesman Jefferson George said that the bank is currently running those numbers, and they hope that they will be able to make those numbers available soon.

Huntington National Bank
Huntington National Bank is a regional bank for the Midwest that is currently based out of Columbus, Ohio. In February they set a goal to increase their lending to small businesses, businesses with less than $15 million in revenue, by $400 million. Right now the bank says that numbers documenting progress towards their goal of lending $1.2 billion in 2010 are not available. Their spokeswoman LuJean Smith did say though that Huntington has currently hired more than fifty percent of the 150 new employees that they plan on hiring.

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How to make your business more appealing to new and existing workers

May 25, 2010 by admin Leave a Comment

Right now the economy sucks; there is no other way to say it. Yes, the political spin mongers are out there telling us about how rosy it is supposedly getting, but I like that old Mark Twain quote “There are lies, damn lies, and statistics,” (thanks to : Mark Twain. (n.d.). BrainyQuote.com. Retrieved May 25, 2010, from Brainy Quote: http://www.brainyquote.com/quotes/quotes/m/marktwain128372.html)

The thing is that this recession shall pass, and American business will go on-changed but persevering. At that time, American employers will need to concentrate on keeping and attracting new workers. One thing the American employee has learned from this recession is that they work far too much and enjoy far too little off time compared with the rest of the world (who view Americans as people who work themselves to death).
Here is a wonderful article on the issue: http://users.ipfw.edu/ruflethe/american.html

A company that I worked for seven years had a great incentive and they really didn’t realize it: Every year the business shut down for Christmas week (the week between Christmas and New Years). In a company that demanded a lot from its workers it was one thing that kept the standard front line employee from wandering off to other endeavors even though the company was very stingy with raises and was not the gold standard as far as benefits. The entire week was paid for by the employer.

Other ideas are comp time, 37.5 hour work week, summer business hours, and flex time. One thing I did when I lead a sales team was stagger the work week. On Monday morning we were in at 7am and generally worked until 6, but on Friday we came in at 8:30 and left at 3; in fact, if I saw Jr. sales reps or sales assistants in their cubical after 3:30, I officially kicked them out of the bull pen turned out the lights and locked the door. As a manager, HR wondered why “my people” were so loyal-gee it wasn’t that hard. Needless to say if I ever needed to ask for overtime from someone, it was cheerfully accepted, and I avoided asking very often and my sales people knew it.

Other things I have seen effective were buying the first round after work on Friday night at the local watering hole, giving a hard working but seldom recognized employee the company business card and saying, “take your wife-sweetheart out to dinner and a movie-companies buying (every thing but alcohol).”

Implement these ideas now, and when the big loosening of the economy comes you won’t find your business trying to lock the door’s to keep everyone from leaving. I have seen it from the other side as well, a company who sort of enjoyed being demanding, when the economy loosened they could not effectively conduct business, they did not have enough front line people. Also the growth of job sites like www.glassdoor.com are becoming a very usual part of a person’s job search, and you don’t want your company to be poorly rated here if you want to attract new employees.

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What to look for in hiring a recent college graduate

May 12, 2010 by admin Leave a Comment

At some point, a small to medium businesses may want to hire a recent college graduate, a person that they might be able to fast track into management. This is also a person that you can “mold” and may not have to break any previous habits that they may have acquired from working at other companies. But since the person you’re looking at may have zero or very limited work experiences, you have no track record with which to judge them. Beacause you are going to sink a good deal of time and money into their training, you want to make a wise choice. What do you look for?

One thing some employers look at but for the wrong reasons is grade point average. They use GPA as a way to evaluate intelligence, but grades actually are not a very good indicator of intelligence according to a University of Dayton Survey. What GPA is an excellent indicator of is motivation. People that have high GPA are extremely motivated according to the same University of Dayton survey, so if you are looking for a “can do” type of person, this is a good place to start.

Another thing to look at is involvement in and leadership in groups or teams. Is this person multidimensional and have a wide variety of interests? If this person is eventually going to help lead your businesses, they will have to relate to peers and subordinates. A person with limited people skills might be an excellent employee in the right circumstances, but will make a very poor leader. People involved in groups probably know how to communicate and get things done.

Is the person willing to “pay their dues?” One of the biggest mistakes any organization can make is to put someone with limited work experience in authority over seasoned professionals. At best this can cause resentment, and at its very worst it can cause excellent employees to look for employment elsewhere. When this situation happens in a large group, it is disastrous for your business. Look for a person who is willing to learn your business from the bottom up. If this person is to be “fast tracked,” it should not be well known by front line workers.

Following these tips should help your business in hiring a recent college graduate be a great success!

If you live in Cincinnati Vote no on Issue ONE!

May 4, 2010 by admin Leave a Comment

Yes, yes, it all sounds so good and it cites the old and really true principle that in order to make money you have to spend money-all correct! But one interesting and disturbing fact remains-south west Ohio particularly the Cincinnati area lags very far behind in awards for this program. Don’t believe me? Take a look at this publication issued by the state of Ohio:

http://ohiothirdfrontier.com/Documents/RecentPublications/Third_Frontier_Annual_Report2009.pdf

Let me direct your attention to page 22 where the distribution by county is laid out in pie chart form. The Cincinnati area is woefully under represented in this important area. Frankly we should all get on the phone with our local state representative and he or she needs a good chewing out session. Aren’t these people supposed to work in our best interests? Frankly from these results it seems that either they are lazy or inept-neither is acceptable for a public servant!

Here is where you can contact your state representative to register your angst:

http://www.house.state.oh.us/index.php?option=com_displaymembers

I emailed mine today letting him know I am demanding a few more wins in this area or I will work to find someone who can bring back some dollars to our area, I implore you to do the same.

As for Issue 1, I can’t vote for it because of the funding inequity by county, and the simple fact that it addresses nothing for millions of Ohioans from ages 25-65 who remain unemployed or underemployed.

As for the driving point of this blog, I think we all need to make some chamber of commerce meetings and town hall events as small business people. The state swears up and down that taxes will not increase, and I am sure we all believe that one, right?

As for me, I can say with a lot of heart –Show me some money!!!

Sales Tax exemption certificates: Yes, you must keep track of it!

April 26, 2010 by admin Leave a Comment

Sales Tax exemption certificates: Yes, you must keep track of it!

In my business career I have seen this happen three times: Once I was a credit manger, once as a major account sales rep, and once as a financial consultant, companies that sold products out of state and did not keep exacting records of sales tax exemption certificates. In two of the three cases, the result was devastating for the business. The state sales tax commission team audited the business and heavy fines were imposed along with sales tax in arrearage including hefty late fees. Then it seemed all the neighboring states-through some miracle of unhappy coincidence sent their sales tax audit teams in as well (although they swore they never tipped off the other states, yeah right!). It was a major contributing cause for two of the three businesses to end operations!

So what to do? If yours is a new business, include a sales tax exemption certificate with every new account package which should include a signed credit application and a request for a freight guide. If you are the owner of a small business make this part of your day before your employees start working! I have found sending the new account package works best if you send this to your customer’s controller. This is generally a very visible person of director level who will know where to route this very important paper work. Also, if the controller has any questions about your businesses policies and practices, he or she will generally call or have an appropriate person call to “iron out” any details. Send these out by mail since most will require a signature and request that the packet returned complete (so you only have to handle it once). For the record, I am a huge fan of “if you touch it, you scan it” (if it comes to you in paper form). Many of these tax certificates will come to you via email-save them to a CD and store a copy off site. The same holds true for the certificates that are mailed or faxed, scan them then save them to a CD, and store a copy of the CD off site. Keep a log of every packet that your business sends out (an Excel worksheet should be sufficient), and check them off as they return. Later as your business grows you may delegate this to a trusted employee like an office manager and later the company controller.

Following this simple practice of keeping sales tax information up to date can keep you company in good standing with the state and prevent costly and heartbreaking audits for your small or new business.

So You Think You Need a Business Angel? Not So Fast

March 18, 2010 by admin Leave a Comment

Many companies who are just starting out need start up capital (some people called it seed money). Unless you have rich (and patient) relatives this can be a very difficult commodity to acquire. So too, going to a bank and getting a small business loan is a pretty daunting task and some business (restaurants and construction companies) are not very appealing to bankers in general; restaurants because the failure rate is so very high, and the construction business because of all the intricate workings of the business. What many beginning owners tend to look for is either a Venture Capital company or a Business Angel. Before you start your search (it might even be rightly termed a quest) here are some things to consider.

Venture Capital companies tend to look for “hot” industries or industries that have very high payback potential. In the past few years industries like Bio-Med, Medical Robotics, and the like have been very popular. Most Venture Capital companies avoid investing in stage one or the seed money stage. From their long experience, they’ve seen can’t miss products, miss. In fact in some cases they have watched the product fail miserably, and they lost their investment. Another thing very important to venture capital companies is their exit strategy. A VC companies business is much like a bank, loaning money (and over sight) for a project, but while they are willing to give a promising business a leg up financially, they are not wanting to own that business long term-usually they like to be involved for 3-5 years and then be bought out by the owner. This is called the exit strategy, and every Venture Capital company has one and a general time table target for payback.

A business angel can vary; many business angels these days have an association (and a front man) to screen potential businesses. Like a Venture Capital company, they provide funding and over site, but might be willing to be a long term partner of your business, or be willing to buy the business from you at a certain stage. As the entrepreneur, you must fully research the particular business angel and decide if this is a long term partnership that you are going to be compatible and consistent with you long term goals. Make sure you have a trusted lawyer read the contract!

Cost Cutting Tips for Small Business in Today’s Economy

October 29, 2008 by admin Leave a Comment

Are you brainstorming on how to cut costs to ensure that your small business can survive and even thrive in these economically challenged times? With Wall Street, bail outs and gas prices it can be scarier than the ghouls on Halloween just to turn on the news. Here are some ideas to consider while you are brainstorming.

The Little Things – Adjust the temperature when no one will be in the office, invest in water filters instead of bottled water, use energy efficient light bulbs, save energy by trading in the big CRT monitors for flat screens or take energy saving a step further and trade you desktops for laptops.

Operations – Embracing the Internet can save you ink, paper, stamps and time. Emails are a free instant way to send documents, flyers, bills and with electronic signatures you can practically throw your stamp machine out the door.

Many bill pay options are available through your bank which will eliminate buying checks and also the late charges when snail mail doesn’t get your payment there on time

Investing in a scanner will allow you to scan documents to send via fax on the web. A fax service like Fax Zero is very cost effective offering faxes for free if you allow them to tack on an advertisement.

Communications and Travel can be very expensive. Cell phone service can run very high in roaming charges and long distance and so can traditional land lines, especially if you have more than one line. Digital phones can be a good alternative because many digital phone services have bundle options.

Traveling is expensive regardless of the means with gas prices are so high. Net Meeting might be an option at a fraction of the cost that can save time and money. Many of today’s laptops come with a built in camera so there is no extra equipment to buy and there are many options if you do your homework

Employees and Office Space – Embracing telecommuting can save you money from many directions. Less people means less office space and less energy needed for that space. This will make your employees happy because they will save in gas and wear and tear on their car. It also means less equipment to buy for training sessions because with the option of computer rental you can simply rent computers with the software installed so that you can spend your valuable time on training your employees instead of buying and setting up computers and software and not to mention the hours of do it yourself technical support.

If you really want to offer insurance to your employees try teaming up with other small businesses in a co-op purchasing plan. This is not only good for insurance but buying in bulk and other purchasing opportunities. Besides… it is just good networking.

These are just a few things you can do to cut costs and help your small business thrive in troubled times. Not only will you be saving your business but you will be doing your part to save the environment by saving in paper, energy, gas, chemicals. Telecommuters will be more likely to eat lunch at home which is not only healthier but cuts on trash and waste. Little things like these can change a lot.

Do you have ideas to share in saving money for small businesses? Please feel free to share them by leaving a comment.