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Big Companies Are Hiring. What Does It Mean to Your Business?

April 3rd, 2013 ::

By Rieva Lesonsky

Big corporations are beginning to hire again, data from a variety of sources show. What does this trend mean to your small business? Bloomberg Businessweek recently reported that hiring seems to be on a steady upswing. After adding 236,000 workers in February, payrolls may add 216,000 new jobs in March, one expert cited predicts.

While job growth averaged 167,000 jobs per month in the second half of 2012, so far this year it’s reached about 200,000 per month. Another economist Bloomberg cites projects the U.S. will add 2.5 million jobs in 2013, up from 2.2 million last year.

Some other encouraging signs:

  • While the overall U.S. unemployment rate is currently 7.7, it’s steadily decreasing.
  • The number of unemployment claims is dropping, reaching 339,700 a week in the month ended March 16, for the lowest it’s been since February 2008.
  • Temporary-help-services payrolls hit 2.58 million in February, the highest they’ve been since August 2007 and an increase from 1.75 million when the recession officially ended in June 2009.
  • The housing market is finally strengthening, even in areas that were struggling long after the recession officially ended.

There are a range of reasons why companies are hiring, including:

  • Stronger demand for products and services
  • Need to replace employees who were laid off during the recession
  • Easier access to credit and business loans stimulating growth

Meanwhile, a couple factors could hinder the newfound growth:

The government budget cuts brought on by the sequester could lead to federal government layoffs and a drop in payrolls caused by loss of government jobs. Ultimately, cuts could trickle down to reduced demand for services and products from private businesses, hurting those jobs, too.

Businesses could be reluctant to hire if the Affordable Care Act turns out to raise health insurance costs prohibitively.

What does job growth mean for your business?

  • With large and midsized companies starting to ramp up, if you want to compete for qualified employees, now is the time to start thinking about hiring needs.
  • Consider hiring temporary employees if you’re leery of taking on full-time, permanent workers until the ACA’s effect on your business shakes out.
  • While companies of all sizes are having difficulty finding skilled, experienced workers, bigger companies are becoming more open to taking on less-skilled workers and providing on-the-job training. You may need to do the same.

Image by Flickr user bgottsab (Creative Commons)

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Posted in Capital Access, Small Business, small business, Workforce | No Comments »

Web.com Small Business Toolkit: Eileen Fisher Business Grant Program (Grants for Women Entrepreneurs)

April 1st, 2013 ::

Eileen Fisher Business Grant Program

Designer Eileen Fisher started her business with just $350 in her savings account. Now she wants to help other women by inviting women-owned businesses to apply for her ninth annual Business Grant Program for Women Entrepreneurs. The program celebrates top women founders of innovative companies that foster environmental and economic health in their communities. Up to five grants of $12,500 each will be awarded to prospective applicants. Recipients will also attend a two-day conference in New York City, meeting with past beneficiaries and Eileen Fisher teams, in early 2014. Only for-profit businesses or for-profit/nonprofit hybrids (social enterprises) will be considered for this grant. The deadline is May 31, 2013.

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Posted in Capital Access, Entrepreneurs, Raising Capital, Resources, Small Business, small business | No Comments »

Web.com Small Business Toolkit: ProHatch (Crowdfunding)

March 14th, 2013 ::

ProHatch

Interested in crowdfunding to raise capital for your business? Start by educating yourself on this source of startup capital by signing up with ProHatch’s Online Crowdfunding Incubator Program for Small Businesses. The Online Crowdfunding Incubator provides free information and consultation on how to effectively prepare your business to successfully and quickly raise capital through crowdfunding–via social media and other online tools. “Coffee & The Crowd” is an online webinar training program series that gives participants an opportunity to enjoy a free cup of Starbucks coffee, compliments of ProHatch, while being educated on the latest information about crowdfunding and business preparation by both ProHatch and industry experts. Register now; participation takes place this week.

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SBA Proposes Changes to 2 Small Business Loan Programs

March 14th, 2013 ::

By Karen Axelton

Are you seeking financing for your small business? Then you may be happy to know that the SBA is proposing changes to two of its popular small business loans that would result in streamlined paperwork and easier access to capital for small businesses.

“Streamlining and simplifying has been a key focus of our agency over the last few years,” said SBA Administrator Karen Mills. “The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small business owners the financial resources to grow and create jobs.”

The proposed changes affect the 7(a) and 504 loan programs, and include:

Eliminating the Personal Resource Test: Small business borrowers will no longer have to obtain a maximum level of personal finance resources in order to qualify for a 7(a) or 504 loan. This will streamline the loan process by eliminating currently complicated regulations lenders use to determine how much collateral is required.

Revising the Rule on Affiliation: This change will expand access to SBA loans to businesses that, under current rules, wouldn’t qualify as small businesses under SBA’s size standards because they are associated with other companies. It also would streamline 504 loan applications and reduce paperwork requirements for both the 504 and 7(a) loan applications.

Eliminating the Nine-Month Rule for the 504 Loan Program: This change would remove a restriction that requires a business to include in its 504 project only expenses incurred nine months prior to submitting the loan application. The new rule would let businesses include expenses incurred at any time—such as costs for projects that were put on hold for more than nine months due to a natural disaster.

The 504 and 7(a) loan programs are the SBA’s biggest lending programs. The 504 program provides long-term fixed asset financing that small businesses can use to buy or improve land, buildings or equipment. The 7(a) loan program helps eligible small businesses access credit when they have been turned down elsewhere.

For more detailed information on the new proposed rules and their benefits, visit http://www.sba.gov/content/revised-oca-regulations-504-and-7a-loan-program.

Image by Flickr user mrsdkrebs (Creative Commons)

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Angel Capital May Get Easier for Women Business Owners to Find

February 22nd, 2013 ::

By Rieva Lesonsky

Are you a woman business owner seeking angel investor capital? Harvard Business Review recently reported on a growing trend: More women are becoming angel investors. Studies show that women make up just 10-15% of angel investors and venture capitalists.

Why does this matter? Because angel investors tend to put their money where their comfort zone lies—and unfortunately, for most men that still means investing in businesses owned and run by other men.

The good news with the growth of women angels is that the trend works both ways. As more women become angel investors, they too are likely to invest where they feel comfortable—with other women. HBR cites data from the Kauffman Foundation showing that venture capital funds that include women invest in women business owners 70 percent of the time. As women-owned businesses grow, they create the next generation of women who have the potential to become sophisticated angel investors.

If you’re seeking angel capital from women angels, here are some networks to know about:

  • The Pipeline Fellowship program trains women philanthropists to become angel investors and helps connect them with businesses that have a socially or environmentally responsible mission.
  • Astiais a global nonprofit dedicated to building women leaders and accelerating the growth of high-potential women-led startups. The organization trains entrepreneurs and angel investors and helps bring entrepreneurs in search of funding together with investors.
  • Golden Seeds has an angel network of 250 men and women dedicated to investing in women-run companies. The angel network is the fourth largest in the country and was the third most active in terms of deals done in 2011. The Golden Seeds Knowledge Institute trains women to become angel investors and venture capitalists.

All three of the organizations hold events and pitch meetings where entrepreneurs can meet with potential angels to promote their businesses.

What else do you need to know? Although these networks are focused on accelerating the growth of women-owned businesses, they’re also focused on getting good returns for investors. That means your business model, business plan and ROI for the investors will need to be top-notch. Just because you’re a woman doesn’t automatically give you an edge. While there may be a perception that women angels are easier to get money from or will be more sympathetic and less numbers-driven, in reality today’s women angels will be just as tough on you as would any man—so you’d better know your stuff.

Image by Flickr user temari09 (Creative Commons)

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Posted in Capital Access, Raising Capital, Small Business, small business | No Comments »

Web.com Small Business Toolkit: Build Your Business Plan (Business Plan Tool)

January 9th, 2013 ::

SBA’s Build Your Business Plan

If you never got around to writing that business plan, the Small Business Administration now has a tool to make the process a lot easier. Your business plan should outline the route a company intends to take for the next three to five years and includes revenue projections, marketing strategies and more. The SBA’s Business Plan Tool provides the business owner with a step-by-step guide to get started. You can save your plan as a PDF and update it at any time. Then take your plan to a free mentor at one of the SBA’s partners (SCORE or a Small Business Development Center) to get one-on-one advice.

 

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Make a (Business) Plan for the New Year

December 27th, 2012 ::

By Maria Valdez Haubrich

As 2012 draws to a close, how are you going to make sure 2013 is an even better year for your small business? One way is to pull your business plan out of the drawer (or up from your laptop) and take a look at it.

Many of us write a business plan when we first start our business, then put it away and never look at it again. Or perhaps you started your business without writing a formal plan, and it caught on so fast you didn’t need one (or so you thought). Unfortunately, without a “compass” for your business, you may find yourself ending up other than where you planned.

While in the past writing a business plan was a dreaded task, it’s become a lot easier with the advent of easy-to-use business plan software. (Check out MasterPlans, one of this site’s partners, for starters.) If you’ve never written a plan for your business, plugging your business’s information into these tools will give you a feeling of accomplishment and whet your appetite to actually complete your plan.

If you have written a business plan in the past, pull it out and go through each of the sections:

  • Company Description: Is this still accurate as to your form of business? Update your company history and any other information. If your business model has changed, spell out how and why.
  • Product or Service: Is the description of what you sell and the benefits to the customer still current?
  • Market Analysis: If your market, competition and target customers have changed, which they undoubtedly have, you’ll need to do some new market research and update this section.
  • Strategy and Implementation: Again, make sure your business strategy and the steps you will take to implement it is accurate and detailed, including dates, budgets and responsibilities of the management.
  • Management Team: Update this section as needed to reflect current roles, responsibilities, skills and accomplishments. Your team probably has a lot more under your belts than when you started your business.
  • Financial Analysis: Make sure financial statements are current and accurate.

Last, but not least, go through your Executive Summary and make sure it clearly reflects your business’s current position and future goals.

Still can’t bear to do your own plan? Get help from MasterPlans, one of this site’s partners, to have your plan professionally written or updated.

With your new plan in hand, you’ll have a useful guidebook to get you through 2013 in a more profitable fashion.

Image by Flickr user Calsidyrose (Creative Commons)

 

 

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Small Business Optimism Takes a Nosedive Post-Election

December 13th, 2012 ::

By Maria Valdez Haubrich

The recent presidential election seems to have put small business owners into a tailspin—at least, it has if the latest Wells Fargo/Gallup Small Business Index is any indication. In November (post-election), the Index dropped to -11, down from 17 in July. Entrepreneurs have not been this pessimistic about their businesses since July 2010.

The Index measures small business owners’ current feelings about their businesses, including financial status, ease of getting capital and credit, sales, cash flow, number of jobs. In the first two quarters of the year, small business owners were becoming increasingly optimistic, and the Index hit a high of 23 in May. (For comparison, before the Great Recession hit in 2008, the Index was almost always above 100.)

In November, small business owners’ future expectations for their financial situation, cash flow, capital spending and hiring during the next 12 months all worsened significantly, Gallup says. Specifically:

  • One in five small business owners (21 percent) believe the number of jobs at their company will decrease over the next 12 months. That’s the highest percentage Gallup has measured since the Index began in 2003.
  • One in three (34%) predict their company’s capital spending will decrease over the next 12 months — the highest percentage since July 2010.
  • Some 30 percent of small business owners expect “poor” cash flow during the next 12 months — the highest Gallup has measured to date.
  • Some 28 percent expect to be in a “poor” financial position 12 months from now — the highest Gallup has measured to date.

While future expectations were primarily responsible for the overall drop in the Index, the small business owners’ assessments of their current operating conditions also declined in November, falling 9 points to -10.

The results suggest small business owners, who were previously fairly neutral about current operating conditions, have become pessimistic not only about the future but the present as well.

“As entrepreneurs, small-business owners tend to be optimistic by nature, and relatively more optimistic about the future than the present,” Gallup’s results note. Will the small business owners’ outlook lead to a weakened economy going forward? If small business owners live up to their plans to cut capital spending and reduce the number of jobs at their companies, it could do so.

How do you feel about the results? Do they jibe with your outlook?

Image by Flickr user M Hildingh (Creative Commons)

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Small Businesses’ Credit Profiles Are Improving. Is Yours?

November 20th, 2012 ::

By Karen Axelton

Ask any small business owner who’s been trying to borrow expansion capital, obtain working capital or simply get a line of credit from a lender, and they’ll tell you it’s become far more difficult since the recession hit. However, a new study by Direct Capital Corporation suggests that the tough times may have actually had a beneficial effect on small business owners in one way: Since the recession hit in 2008 and during the past few years of recovery, small business owners’ average credit profile actually improved in 45 out of 50 U.S. states.

Direct Capital Corporation, a nationwide lender to small businesses, reviewed credit data for over 23,000 small businesses nationwide during the past 12 years. Where do small business owners have the strongest average credit profile? Nebraska topped the list, followed by Alaska, South Dakota, Indiana and Oklahoma.

The states where small businesses’ average credit profiles have declined in the past four years are Washington, DC (which had the lowest average credit profile), followed by Rhode Island, New Mexico, Montana and Texas.

Direct Capital Vice President of Marketing Stephen Lankler says one reason for the surprising change is that business owners have a heightened awareness of how important it is to keep their credit score high. “Business owners today are much more aware of how important it is to maintain a strong credit profile,” he said. “That was not the case five to seven years ago when it was much easier for a business to access credit.”

Lankler says growth in the number of products that give businesses on-demand access to their credit profiles has also contributed to the higher credit scores. “As a result of the financial crisis, major lenders – including banks – have become much more restrictive in extending credit to business owners,” Lankler said. “In response, business owners have become more vigilant in maintaining strong credit profiles and a flood of products have been introduced to help them do so.”

What are some ways you can keep your business’s credit score high?

  • Pay your bills on time and if you cannot, talk to the vendor to work out a payment plan.
  • Monitor your business’s credit report to note any errors and take steps to correct them.
  • Don’t mix personal and business funds. Use business, not personal, accounts for business purchases.
  • Use business credit cards carefully, being sure not to overutilize credit. Ideally, pay off your balance in full each month, but if you can’t, keep your balance under 30 percent of your available credit.
  • Even if you never plan to use it, make sure you keep enough available credit (through business credit cards and other options) to get you through an emergency if need be.

Image by Flickr user ThirdLegReviews (Creative Commons)

 

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Posted in Capital Access, Raising Capital, Small Business, small business | 3 Comments »

Bad News for Small Business: VC Investments Decline

November 15th, 2012 ::

By Maria Valdez Haubrich

Recently, we posted here about the growth in angel capital investments. Now, there’s some not-so-good news for small businesses about venture capital. The most recent MoneyTree survey from PricewaterhouseCoopers and the National Venture Capital Association reports that in the third quarter of 2012, VC investments shrunk both in terms of overall dollars (down by 11 percent from the second quarter of 2012) and in terms of deal volume (down by 5 percent from the second quarter of 2012).

VC dollars and deals also declined year over year. What’s behind the shrinkage? PWC and the NCVA say that venture capitalists are exhibiting extreme caution with the capital they have available. Instead of making new investments, they’re focusing on the companies that are already in their portfolios. Compounding the problem, there are fewer new venture funds, which is cutting into the amount of capital that can be invested.

Of course, the bad news may not affect you if your small business is in an industry that finds it easier than average to attract venture capital. Here’s a closer look:

  • As of Q3 2012, software companies were still the most popular type of VC investment, accounting for $2.1 billion invested in 304 deals. (That’s still a 12 percent drop from Q2 2012, however).
  • Life sciences (which includes biotechnology and medical devices) investing increased in terms of dollars but declined in deal volume compared to Q2 2012.
  • Internet-specific investing (companies whose business model depends on the Internet, regardless of industry) declined by 12 percent in dollars and 8 percent in deal volume compared to Q2 2012.
  • The clean technology sector (alternative energy, pollution and recycling, power supplies and conservation) had a 20 percent decrease in dollars but a 2 percent increase in deal volume.
  • Financial services, healthcare services, business products and services, and retailing businesses saw increasing dollar amounts invested in Q3 compared to Q2.
  • In contrast, companies in the media and entertainment, semiconductors, telecommunications and IT services sectors all saw a decline.
  • Companies in the software, media and entertainment, and IT services industries received the most first-time rounds in Q3 2012.

Your industry isn’t the only thing that matters when you’re looking for VC investments. Where your business is located matters more than you might want to think. Over half (58 percent) of VC funding in Q3 2012 went to businesses in California, Massachusetts and New York.

Image by Flickr user Horia Varlan (Creative Commons)

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