Stimulus Relief Extended for SBA Loans
By EMILY MALTBY
The Senate voted this weekend to temporarily extend funding for two popular stimulus provisions that reduced fees and boosted guarantees on Small Business Administration-guaranteed loans.
The provisions, which helped bolster small-business lending over the past year, had run out of funding in late November. With the new extension, included in the Defense Appropriations bill, the government's maximum guarantee on SBA loans is restored to 90%, compared to pre-stimulus levels of 75%. Fees that the agency normally changes banks are also waived.
Small businesses have been left in limbo since the funding ran out," said Mary Landrieu (D-La.), one of the senators who requested the extension, in a statement. "[The legislation] will provide a lifeline to small businesses in need of credit."
The provisions, however, are only extended through February. Lenders and small-business advocacy groups will have to wait on another piece of legislation – the House's Jobs for Main Street Act, which passed in the chamber last week – for the provisions to be extended through next September.
Access to credit, with or without the stimulus provisions, has remained a problem for Main Street businesses. "The conventional credit market will not near normal until sometime in 2011 because the typical small business will walk in with negative trends on his financial statement," said Tony Wilkinson, president of the National Association of Government Guaranteed Lenders in Stillwater, Okla. "But that's why the SBA programs are important, because lenders can say, 'Hey, this is a survivor who will probably make it.'"
The provisions were originally enacted as part of the Recovery Act in February 2009, and have been widely credited with drawing banks back to the small-business lending arena. SBA Administrator Karen Mills called the increased guarantee and reduced fees on SBA loans "a powerful combination" that has already directed $16.5 billion to small-business owners and brought more than 1,200 lenders back to SBA loan programs.
After the SBA announced in mid-November that funding had nearly drained, lenders acted quickly to approve as many loans as possible under the stimulus provisions. In one week, the SBA received a surge of loan applications, forcing the agency to create a waiting list of 1,069 small businesses seeking $530 million in loans. The extension should move all of those businesses out of the queue, says SBA spokeswoman Hayley Matz. "As we get to the end of February, we will implement the queue again as a way of orderly winding down the process."
Next week marks the end of the SBA's first fiscal quarter. Even if the loan volume has increased for the past three months, credit is still not easy to come by, many business owners say. Earlier this month, President Obama publicly addressed how the credit crunch has impacted small businesses and pledged to institute programs, including the extension of the higher guarantees and waived fees, in order to propel lending. He has also outlined a plan to use TARP funds, though details of that program are still pending.
Janet Crenshaw Smith is skeptical that government programs will help her score a loan. Even before the stimulus funding ran out, she was having trouble at the bank.
Her company, Ivy Planning Group LLC, a 19-year-old consulting and training firm in Rockville, Md., had its $750,000 credit line cut off from Wachovia about 12 months ago. Ms. Smith depended on the line when clients failed to pay within 90 days. The bank expanded the line of credit year after year, leading her to believe that the line wasn't in jeopardy.
"I thought that would never happen to me; I thought I was special," Ms. Smith says. "I went nuts when I got the letter." She has had to scrutinize her cash flow since then, particularly after she lost some large Wall Street clients during the worst months of the recession.
Although she now feels ready to hire and launch new training products, she's hindered without the cash. The next stop, she says, is her community bank, although she's doubtful. "Their guidelines may be too tight," she says. "But this is my opportunity to capture market share because many of my competitors are long gone and won't be back."
Thursday, December 31, 2009
Thursday, December 17, 2009
Article: Gas Stations Fume Over Refiners' Sales
The Wall Street Journal
Gas Stations Fume Over Refiners' Sales
Smaller Dealers Complain Big Oil's Practice of Selling Retail Outlets to Third Parties Hurts Business
By RICHARD GIBSON
Big Oil is having trouble with some of its little guys.
Dozens of gas-station dealers are lodging complaints with the major petroleum refiners over changes big producers want to make in the way they do business.
Some oil companies—including ExxonMobil, BP and Royal Dutch Shell—want to stop owning and leasing their own retail outlets, which some of them have said they regard as a low-profit business. They've been selling the properties, often to fuel distributors, who are becoming the dealers' new franchisers.
A spokesman for ExxonMobil, a unit of Exxon Mobil Corp., says such ownership transfers should be "transparent" to its consumers, who will still be "able to purchase gas at Exxon and Mobil-branded stations across the U.S."
But many of the small-business dealers who run those stations are worried about their livelihoods. Under the previous business model, refiners often gave dealers allowances and rebates on fuel prices. But when the station is sold to a third party, such as a fuel distributor, the distributor may mark up the price of fuel in order to recoup costs. The station is contractually obligated to sell only their refiner's brand of fuel, so it has no choice but to buy it from the distributor who owns that brand's supply contracts—and is now frequently also his franchiser.
In New Jersey, 20 BP dealers recently went to court to stop the oil giant from ending their long-standing business relationship. As an alternative to third-party purchasers, BP Products North America Inc., a unit of BP PLC, offered to sell the stations to the dealer-operators, but the dealers allege that the company is asking inflated prices. BP said it doesn't comment on pending litigation.
The U.K.-based company has already disposed of more than 550 stations in several states, including Arizona, California, New Jersey and New York.
The individual dealers say they're at a disadvantage in bidding for their stations against distributors and other bigger entities. "There are less headaches" that refiners have in doing business with a distributor willing to buy a bundle of stations rather than dealing with scores of individual buyers, says Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops, an industry group.
A BP spokesman says the company has no preference on whether buyers are single-station dealers or multiunit operators.
Such franchise transfers—which have become a national concern among hundreds of small-business station operators—this past summer led to legislation in New Jersey giving dealers a "first right of refusal" in acquiring their stations from oil companies.
Sal Risalvato, executive director of the New Jersey Gasoline-Convenience-Automotive Association, which lobbied for the legislation, believes that the law deterred Shell Oil Co. from selling about 150 company retail outlets.
A Shell spokeswoman said the company would comply with applicable state and federal laws in transitioning from company-supplied stations.
The ExxonMobil spokesman said that while the company is evaluating its plans there, as yet no dealer-operated sites have been sold in that state.
The price they pay for fuel is among the dealers' chief concerns. Two Chicago-area gas station operators, Robert W. Juckniess and Nrupesh Desai, who bought 17 gas stations from BP in the Chicago-northern Indiana market, recently sued BP, alleging they didn't disclose before they bought the station franchises that BP might transfer their fuel-supply contracts to jobbers, or distributor middlemen, which it subsequently did.
The result, the plaintiffs allege in their federal district-court filing in Chicago, was marked-up fuel prices that made them less competitive and their profit projections unrealistic, forcing them on many days "to lose money on every gallon of gasoline sold at the pump... in order to remain reasonably competitive on the street."
The dealers' attorney, Carmen Caruso of Stahl Cowen Crowley Addis LLC in Chicago, says the lawsuit is "a matter of survival" for the station operators, who committed themselves to 20-year franchises that prevent them from changing brands.
In court papers BP denied all of the allegations but declined further comment.
ExxonMobil was named in another fuel-pricing lawsuit brought in New Jersey earlier this month. It alleges that the refiner deliberately manipulates the prices its New Jersey dealers pay for its gasoline, so as to increase revenues to the detriment of the dealers. The complaint also says that some dealers pay more for gasoline than others, depending on what part of the state they're in.
The Exxon spokesman said in an email that "ExxonMobil sets its wholesale price on a number of factors that are designed to allow our dealers to compete with competitors in their local trade area." As to the lawsuit, the spokesman's email said Exxon doesn't comment on pending litigation other than to say they'll defend themselves "vigorously."
Marc J. Gross, an attorney with Greenbaum, Rowe, Smith & Davis LLP, Roseland, N.J., who filed the lawsuit on behalf of nearly 100 Exxon franchisees-dealers, said such suits present a risk to the small-business people bringing them. Besides taking on a deep-pockets adversary able to carry on court battles for years, "it's like biting the hand that feeds you," he said.
Gas Stations Fume Over Refiners' Sales
Smaller Dealers Complain Big Oil's Practice of Selling Retail Outlets to Third Parties Hurts Business
By RICHARD GIBSON
Big Oil is having trouble with some of its little guys.
Dozens of gas-station dealers are lodging complaints with the major petroleum refiners over changes big producers want to make in the way they do business.
Some oil companies—including ExxonMobil, BP and Royal Dutch Shell—want to stop owning and leasing their own retail outlets, which some of them have said they regard as a low-profit business. They've been selling the properties, often to fuel distributors, who are becoming the dealers' new franchisers.
A spokesman for ExxonMobil, a unit of Exxon Mobil Corp., says such ownership transfers should be "transparent" to its consumers, who will still be "able to purchase gas at Exxon and Mobil-branded stations across the U.S."
But many of the small-business dealers who run those stations are worried about their livelihoods. Under the previous business model, refiners often gave dealers allowances and rebates on fuel prices. But when the station is sold to a third party, such as a fuel distributor, the distributor may mark up the price of fuel in order to recoup costs. The station is contractually obligated to sell only their refiner's brand of fuel, so it has no choice but to buy it from the distributor who owns that brand's supply contracts—and is now frequently also his franchiser.
In New Jersey, 20 BP dealers recently went to court to stop the oil giant from ending their long-standing business relationship. As an alternative to third-party purchasers, BP Products North America Inc., a unit of BP PLC, offered to sell the stations to the dealer-operators, but the dealers allege that the company is asking inflated prices. BP said it doesn't comment on pending litigation.
The U.K.-based company has already disposed of more than 550 stations in several states, including Arizona, California, New Jersey and New York.
The individual dealers say they're at a disadvantage in bidding for their stations against distributors and other bigger entities. "There are less headaches" that refiners have in doing business with a distributor willing to buy a bundle of stations rather than dealing with scores of individual buyers, says Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops, an industry group.
A BP spokesman says the company has no preference on whether buyers are single-station dealers or multiunit operators.
Such franchise transfers—which have become a national concern among hundreds of small-business station operators—this past summer led to legislation in New Jersey giving dealers a "first right of refusal" in acquiring their stations from oil companies.
Sal Risalvato, executive director of the New Jersey Gasoline-Convenience-Automotive Association, which lobbied for the legislation, believes that the law deterred Shell Oil Co. from selling about 150 company retail outlets.
A Shell spokeswoman said the company would comply with applicable state and federal laws in transitioning from company-supplied stations.
The ExxonMobil spokesman said that while the company is evaluating its plans there, as yet no dealer-operated sites have been sold in that state.
The price they pay for fuel is among the dealers' chief concerns. Two Chicago-area gas station operators, Robert W. Juckniess and Nrupesh Desai, who bought 17 gas stations from BP in the Chicago-northern Indiana market, recently sued BP, alleging they didn't disclose before they bought the station franchises that BP might transfer their fuel-supply contracts to jobbers, or distributor middlemen, which it subsequently did.
The result, the plaintiffs allege in their federal district-court filing in Chicago, was marked-up fuel prices that made them less competitive and their profit projections unrealistic, forcing them on many days "to lose money on every gallon of gasoline sold at the pump... in order to remain reasonably competitive on the street."
The dealers' attorney, Carmen Caruso of Stahl Cowen Crowley Addis LLC in Chicago, says the lawsuit is "a matter of survival" for the station operators, who committed themselves to 20-year franchises that prevent them from changing brands.
In court papers BP denied all of the allegations but declined further comment.
ExxonMobil was named in another fuel-pricing lawsuit brought in New Jersey earlier this month. It alleges that the refiner deliberately manipulates the prices its New Jersey dealers pay for its gasoline, so as to increase revenues to the detriment of the dealers. The complaint also says that some dealers pay more for gasoline than others, depending on what part of the state they're in.
The Exxon spokesman said in an email that "ExxonMobil sets its wholesale price on a number of factors that are designed to allow our dealers to compete with competitors in their local trade area." As to the lawsuit, the spokesman's email said Exxon doesn't comment on pending litigation other than to say they'll defend themselves "vigorously."
Marc J. Gross, an attorney with Greenbaum, Rowe, Smith & Davis LLP, Roseland, N.J., who filed the lawsuit on behalf of nearly 100 Exxon franchisees-dealers, said such suits present a risk to the small-business people bringing them. Besides taking on a deep-pockets adversary able to carry on court battles for years, "it's like biting the hand that feeds you," he said.
Tuesday, December 8, 2009
Restaurant Bartering?
The Wall Street Journal
In Lean Times, Restaurants Barter for Trade Services
By JULIE JARGON
Independent restaurants are turning to an old-fashioned method to fill tables—barter.
As they struggle to keep customers and pay the monthly bills, restaurants are swapping food for services like oven-hood cleaning and pest control.
Bartering helps restaurants fill seats, reassuring prospective customers who might be turned off by the sight of a vacant eatery. It also attracts new customers when tradespeople bring friends along, reduces some costs, and helps retain employees who can't scoop tips off empty tables.
It's hardly a permanent fix for ailing restaurants, which still need cash to cover such expenses as rent, mortgages, taxes and utilities. But bartering is an especially useful tool for independent restaurants that, unlike some chains, lack access to corporate credit lines or cash.
Many restaurants are using barter exchanges that track and manage the transactions, which count as taxable income and must be recorded for tax purposes. Rather than traditional bartering, in which services are swapped directly between vendors, most barter exchanges use a "round robin" approach that offers flexibility for both restaurants and service people. For example, a plumber uses trade credits accumulated at an exchange to pay for a restaurant meal. The restaurant owner can use the credits spent by the plumber to "purchase" a variety of services offered by appliance repairmen, electricians and other exchange clients. The exchange acts as a bank, keeping track of credits and collecting fees on each transaction.
Tony Romano, owner of Marcello's Pasta Grill in Tempe, Ariz., where business is off 40% from three years ago, joined the Arizona Trade Exchange in October. Since joining the exchange, he says he's been averaging $2,000 per week in trade credits from tradespeople, which has allowed him to pay for almost all of his monthly expenses—from laundry to fire-extinguisher maintenance—without writing a check.
Although the restaurant doesn't receive cash for the food, the tradespeople usually tip well, Mr. Romano says, which keeps his wait staff happy.
He says his traffic has increased 10% in the last month. New exchange clients also have led to catering jobs. "A lot of small businesses can't afford to take their employees out for a Christmas party, but they can barter it," he says. "I've booked two lawyers' offices and three dentists' holiday parties."
Independent restaurants have fared slightly better in the last year than chain restaurants, though it's hard to say how much bartering has helped. Same-store sales at independent restaurants declined 9% for the year ended Sept. 30, while same-store sales at chains declined 9.7% during that time, according to restaurant consulting firm Technomic Inc.
Rob Miller, president of the Arizona Trade Exchange, says he now has more than 30 restaurants involved in his exchange, up 20% from a year ago. The exchange charges a one-time $495 membership fee as well as a $12.50 monthly fee, and takes a 12% cut of each transaction from the person making the trade purchase.
Ric Zampatti, chief executive of The Barter Company, an Atlanta-based trade exchange with clients in South Carolina, Florida and Georgia, says his business is up 10% in the last year, due partly to signing up 35 new restaurants.
Tradespeople also appear to be spending more when they go out to eat. A trade credit is worth a dollar; Mr. Miller says he used to see tradespeople buy restaurant credits in batches of 100 or 200; lately, he says people are buying restaurant trade credits worth $300 to $500 at a time.
Cody Smith, owner of Dynamic Pest Control in Mesa, Ariz., has been cashing in his trade credits at restaurants more frequently in the past six months. "It's a great way to take the family out, enjoy a meal and walk away with very little cash out of your pocket."
Trading his pest control services for restaurant meals and other services has brought in new clients and boosted his sales by 15% in the last year, due partly to new cash-paying clients who aren't part of the exchange, Mr. Smith says.
Atlanta restaurateur Nancy Castellucci recently opened a fourth eatery called the Iberian Pig in an historic building that needed to be brought up to code. She used barter credits to cover 60% of the refurbishment costs.
"We would have had to go to the bank otherwise and we didn't want to go to the bank. When you have barter dollars, it's a much cheaper way to borrow money because you're not actually borrowing money, you're borrowing goods and services and not paying interest."
Mr. Zampatti of the Atlanta exchange says he's seeing restaurants increasingly use barter for routine maintenance costs. "In the past, restaurant owners would use barter to upgrade their lifestyle, like to go on vacation or buy jewelry, but because of the economy, now they're using it to pay for their business expenses."
In Lean Times, Restaurants Barter for Trade Services
By JULIE JARGON
Independent restaurants are turning to an old-fashioned method to fill tables—barter.
As they struggle to keep customers and pay the monthly bills, restaurants are swapping food for services like oven-hood cleaning and pest control.
Bartering helps restaurants fill seats, reassuring prospective customers who might be turned off by the sight of a vacant eatery. It also attracts new customers when tradespeople bring friends along, reduces some costs, and helps retain employees who can't scoop tips off empty tables.
It's hardly a permanent fix for ailing restaurants, which still need cash to cover such expenses as rent, mortgages, taxes and utilities. But bartering is an especially useful tool for independent restaurants that, unlike some chains, lack access to corporate credit lines or cash.
Many restaurants are using barter exchanges that track and manage the transactions, which count as taxable income and must be recorded for tax purposes. Rather than traditional bartering, in which services are swapped directly between vendors, most barter exchanges use a "round robin" approach that offers flexibility for both restaurants and service people. For example, a plumber uses trade credits accumulated at an exchange to pay for a restaurant meal. The restaurant owner can use the credits spent by the plumber to "purchase" a variety of services offered by appliance repairmen, electricians and other exchange clients. The exchange acts as a bank, keeping track of credits and collecting fees on each transaction.
Tony Romano, owner of Marcello's Pasta Grill in Tempe, Ariz., where business is off 40% from three years ago, joined the Arizona Trade Exchange in October. Since joining the exchange, he says he's been averaging $2,000 per week in trade credits from tradespeople, which has allowed him to pay for almost all of his monthly expenses—from laundry to fire-extinguisher maintenance—without writing a check.
Although the restaurant doesn't receive cash for the food, the tradespeople usually tip well, Mr. Romano says, which keeps his wait staff happy.
He says his traffic has increased 10% in the last month. New exchange clients also have led to catering jobs. "A lot of small businesses can't afford to take their employees out for a Christmas party, but they can barter it," he says. "I've booked two lawyers' offices and three dentists' holiday parties."
Independent restaurants have fared slightly better in the last year than chain restaurants, though it's hard to say how much bartering has helped. Same-store sales at independent restaurants declined 9% for the year ended Sept. 30, while same-store sales at chains declined 9.7% during that time, according to restaurant consulting firm Technomic Inc.
Rob Miller, president of the Arizona Trade Exchange, says he now has more than 30 restaurants involved in his exchange, up 20% from a year ago. The exchange charges a one-time $495 membership fee as well as a $12.50 monthly fee, and takes a 12% cut of each transaction from the person making the trade purchase.
Ric Zampatti, chief executive of The Barter Company, an Atlanta-based trade exchange with clients in South Carolina, Florida and Georgia, says his business is up 10% in the last year, due partly to signing up 35 new restaurants.
Tradespeople also appear to be spending more when they go out to eat. A trade credit is worth a dollar; Mr. Miller says he used to see tradespeople buy restaurant credits in batches of 100 or 200; lately, he says people are buying restaurant trade credits worth $300 to $500 at a time.
Cody Smith, owner of Dynamic Pest Control in Mesa, Ariz., has been cashing in his trade credits at restaurants more frequently in the past six months. "It's a great way to take the family out, enjoy a meal and walk away with very little cash out of your pocket."
Trading his pest control services for restaurant meals and other services has brought in new clients and boosted his sales by 15% in the last year, due partly to new cash-paying clients who aren't part of the exchange, Mr. Smith says.
Atlanta restaurateur Nancy Castellucci recently opened a fourth eatery called the Iberian Pig in an historic building that needed to be brought up to code. She used barter credits to cover 60% of the refurbishment costs.
"We would have had to go to the bank otherwise and we didn't want to go to the bank. When you have barter dollars, it's a much cheaper way to borrow money because you're not actually borrowing money, you're borrowing goods and services and not paying interest."
Mr. Zampatti of the Atlanta exchange says he's seeing restaurants increasingly use barter for routine maintenance costs. "In the past, restaurant owners would use barter to upgrade their lifestyle, like to go on vacation or buy jewelry, but because of the economy, now they're using it to pay for their business expenses."
Friday, December 4, 2009
Money Saving Secrets
Entrepreneurs' Best Money-Saving Secrets
By CHARLOTTE JENSEN, AOL SMALL BUSINESS
Even before belt-tightening became de rigueur, entrepreneurs were building businesses while quietly finding ways to cut costs. So who better to ask in a recession for their smartest, savviest cost-cutting tips? Here are 17 creative, easy and unexpected ways entrepreneurs are slashing hundreds -- and sometimes even thousands -- of dollars from their budgets.
1. When business travel is a must, optimize it. "Drive where possible, use travel as an opportunity to pack in as many meetings as possible, buy your hotels on Priceline, use last-minute flight discounts or take connectors to lower airfare."
-- Aynsley Deluce, partner, Parkingspots.com
2. Examine your balance sheet carefully. "By carefully looking beyond the totals to the details, we cut out $30,000 of expenses without any pain. We cut $10,000 in unnecessary bank fees, $1,800 in paper cups and plates, and $350 in credit card annual fees."
-- Julie Sue Auslander, president, cSubs
3. Think ahead. "We conduct a weekly shipping supplies inventory checklist to track usage. That lets us place larger shipping supply orders about every six to eight weeks, and we save about $1,000/year in freight costs compared to when we placed orders every two to four weeks."
-- Eric Mindel, director, PeppyParents.com Inc.
4. Question everything. "Never, ever be afraid to get four to five different opinions, estimates, thoughts, etc. In my business, I learned a long time ago no price is the final price, so when searching for products or suppliers, I have always asked, 'Can you do better on the price?' I've saved thousands of dollars across the board just by asking."
-- Christian Beebe, owner/founder, Worldwide Graphics & Sign Co.
5. Put an end to unnecessary upgrades. "Technolust can be very expensive--speaking from experience. As long as our existing technology equipment is adequate, we make do. This is a recent change for Geektime and has saved us over $20,000 annually for the last two years."
-- Alexander E. Fowler, president and senior consultant, Geektime Design Studios
6. Give e-learning a try. "For a couple hundred bucks, or sometimes no money at all, we can get schooled on new techniques without leaving our desks for professional development. We saved thousands last year."
-- Colleen Troy, owner, Touchpoint Communications
7. Team up for big savings. "We have substantially cut down on our overhead costs by office sharing with a structural engineering firm that has, like everyone else, had to cut down on staff. It is a win-win for both of us. We get the benefits of a large, fully functioning office, and they get income. We are also co-marketing on several projects since our firms' work is synergistic."
-- Virginia McAllister, principal, Iron Horse Architects
8. Get your green on. "Reduce paper consumption -- it is both green and economical. By changing what we print, we were able to reduce our consumption of paper by 90 percent. That translated to several hundreds dollars a year."
-- Orit Pennington, owner/CFO, TPGTEX Label Solutions Inc.
9. Give new life to items you would otherwise discard. "We save money by using pre-used boxes, newspapers and other scraps for all our packaging."
-- Adrien Edwards, co-founder, TheNakedHippie
10. Hire a college intern. "They will work for experience, are excited to be a part of a startup and will provide insight into their demographic. Give them the opportunity to own their work and see how quickly your company will grow as a result and for nothing more than time, appreciation and a killer recommendation."
-- Colleen Leader, owner, Loose Thread Stitchers
11. Shop around to secure the best deals. "I have begun to use different sites for any travel we do. For example, in the past I might call Avis directly to rent a car. Nowadays I go on RentACarNow.com, which is a marketplace of all vendors, and compare rates. This way I find the cheapest rate for my travel. I also use Hotels.com for hotel booking. It's incredible how much I have saved -- over 40 percent on my travel budget for the year. No longer can we rely on one vendor."
-- Robert Tuchman, founder, TSE Sports & Entertainment
12. Try an alternative compensation structure. "Hire commission-only sales reps and consider giving a sizable commission -- [it's] still cheaper than paying a salary."
-- Bradi Nathan, co-founder, MyWorkButterfly.com
13. Volunteer. "In addition to helping a great cause and gaining a personal sense of fulfillment, you often have the opportunity to meet/network with people who may have an important impact on your business -- including successful business leaders, angel investors, political leaders and members of the media -- that you would likely not have had access to in any other venue, regardless of how much you spend on marketing and PR."
-- Sarah M. Place, CEO, Place Trade Financial
14. Find cheaper ways to network. "A luncheon can easily cost $30 to $45, but you might get away with $5 to $10 to attend a happy hour. You can meet just as many people, if not more, when attending a cheaper event."
-- Ansley Meredith, owner, ENERGIZED Media Relations
15. Create buzz (for free) with social media. "We have developed a loyal following on Twitter and Facebook and have seen traffic to our website continue to grow. We've learned that directly connecting with people in their preferred mode of social communication not only enhances our valuable customer relationships, it doesn't cost a penny."
-- Jeff Avallon, co-founder, IdeaPaint
16. When possible, work virtually. "Maintaining a home office eliminates the costs associated with having office space."
-- Adil Lalani, founder and CTO, TwitVid
17. Keep employees happy (read: prevent turnover). "The costs [associated with] being a person short, running ads, time spent interviewing and the downtime while someone gets trained are huge. And then there are the indirect costs -- a dip in client confidence, burned-out staff because they're picking up the extra load and potential loss of clients. It all adds up to a huge number--a number most small businesses cannot afford to pay." -- Drew McLellan, president, McLellan Marketing Group
By CHARLOTTE JENSEN, AOL SMALL BUSINESS
Even before belt-tightening became de rigueur, entrepreneurs were building businesses while quietly finding ways to cut costs. So who better to ask in a recession for their smartest, savviest cost-cutting tips? Here are 17 creative, easy and unexpected ways entrepreneurs are slashing hundreds -- and sometimes even thousands -- of dollars from their budgets.
1. When business travel is a must, optimize it. "Drive where possible, use travel as an opportunity to pack in as many meetings as possible, buy your hotels on Priceline, use last-minute flight discounts or take connectors to lower airfare."
-- Aynsley Deluce, partner, Parkingspots.com
2. Examine your balance sheet carefully. "By carefully looking beyond the totals to the details, we cut out $30,000 of expenses without any pain. We cut $10,000 in unnecessary bank fees, $1,800 in paper cups and plates, and $350 in credit card annual fees."
-- Julie Sue Auslander, president, cSubs
3. Think ahead. "We conduct a weekly shipping supplies inventory checklist to track usage. That lets us place larger shipping supply orders about every six to eight weeks, and we save about $1,000/year in freight costs compared to when we placed orders every two to four weeks."
-- Eric Mindel, director, PeppyParents.com Inc.
4. Question everything. "Never, ever be afraid to get four to five different opinions, estimates, thoughts, etc. In my business, I learned a long time ago no price is the final price, so when searching for products or suppliers, I have always asked, 'Can you do better on the price?' I've saved thousands of dollars across the board just by asking."
-- Christian Beebe, owner/founder, Worldwide Graphics & Sign Co.
5. Put an end to unnecessary upgrades. "Technolust can be very expensive--speaking from experience. As long as our existing technology equipment is adequate, we make do. This is a recent change for Geektime and has saved us over $20,000 annually for the last two years."
-- Alexander E. Fowler, president and senior consultant, Geektime Design Studios
6. Give e-learning a try. "For a couple hundred bucks, or sometimes no money at all, we can get schooled on new techniques without leaving our desks for professional development. We saved thousands last year."
-- Colleen Troy, owner, Touchpoint Communications
7. Team up for big savings. "We have substantially cut down on our overhead costs by office sharing with a structural engineering firm that has, like everyone else, had to cut down on staff. It is a win-win for both of us. We get the benefits of a large, fully functioning office, and they get income. We are also co-marketing on several projects since our firms' work is synergistic."
-- Virginia McAllister, principal, Iron Horse Architects
8. Get your green on. "Reduce paper consumption -- it is both green and economical. By changing what we print, we were able to reduce our consumption of paper by 90 percent. That translated to several hundreds dollars a year."
-- Orit Pennington, owner/CFO, TPGTEX Label Solutions Inc.
9. Give new life to items you would otherwise discard. "We save money by using pre-used boxes, newspapers and other scraps for all our packaging."
-- Adrien Edwards, co-founder, TheNakedHippie
10. Hire a college intern. "They will work for experience, are excited to be a part of a startup and will provide insight into their demographic. Give them the opportunity to own their work and see how quickly your company will grow as a result and for nothing more than time, appreciation and a killer recommendation."
-- Colleen Leader, owner, Loose Thread Stitchers
11. Shop around to secure the best deals. "I have begun to use different sites for any travel we do. For example, in the past I might call Avis directly to rent a car. Nowadays I go on RentACarNow.com, which is a marketplace of all vendors, and compare rates. This way I find the cheapest rate for my travel. I also use Hotels.com for hotel booking. It's incredible how much I have saved -- over 40 percent on my travel budget for the year. No longer can we rely on one vendor."
-- Robert Tuchman, founder, TSE Sports & Entertainment
12. Try an alternative compensation structure. "Hire commission-only sales reps and consider giving a sizable commission -- [it's] still cheaper than paying a salary."
-- Bradi Nathan, co-founder, MyWorkButterfly.com
13. Volunteer. "In addition to helping a great cause and gaining a personal sense of fulfillment, you often have the opportunity to meet/network with people who may have an important impact on your business -- including successful business leaders, angel investors, political leaders and members of the media -- that you would likely not have had access to in any other venue, regardless of how much you spend on marketing and PR."
-- Sarah M. Place, CEO, Place Trade Financial
14. Find cheaper ways to network. "A luncheon can easily cost $30 to $45, but you might get away with $5 to $10 to attend a happy hour. You can meet just as many people, if not more, when attending a cheaper event."
-- Ansley Meredith, owner, ENERGIZED Media Relations
15. Create buzz (for free) with social media. "We have developed a loyal following on Twitter and Facebook and have seen traffic to our website continue to grow. We've learned that directly connecting with people in their preferred mode of social communication not only enhances our valuable customer relationships, it doesn't cost a penny."
-- Jeff Avallon, co-founder, IdeaPaint
16. When possible, work virtually. "Maintaining a home office eliminates the costs associated with having office space."
-- Adil Lalani, founder and CTO, TwitVid
17. Keep employees happy (read: prevent turnover). "The costs [associated with] being a person short, running ads, time spent interviewing and the downtime while someone gets trained are huge. And then there are the indirect costs -- a dip in client confidence, burned-out staff because they're picking up the extra load and potential loss of clients. It all adds up to a huge number--a number most small businesses cannot afford to pay." -- Drew McLellan, president, McLellan Marketing Group
Thursday, December 3, 2009
Article: For SBA Loans, Stimulus Well Runs Dry
The Wall Street Journal
http://www.wsj.com/
For SBA Loans, Stimulus Well Runs Dry
By EMILY MALTBY
Two popular stimulus provisions that drew hundreds of banks back to the small-business lending arena ran out of funding Monday, setting the stage for a potential new credit squeeze for business owners.
The two provisions, passed as part of the Recovery Act, raised the maximum guarantee on Small Business Administration loans to 90% from 75%, and temporarily reduced or eliminated fees associated with the loans. The measures are widely credited with getting millions of dollars into the hands of small-business owners and making it more attractive for banks to lend during the downturn.
The SBA had anticipated that funding for the provisions, totaling $375 million, would run dry ahead of the provisions' scheduled 2010 expiration dates. Last week, the agency alerted lenders that, as of Monday, the guarantee would be lowered to pre-stimulus levels and the fees would be reinstated, according to SBA spokesman Jonathan Swain.
That created a mini-rush, prompting lenders to issue – over the course of the last week – more than $1 billion in SBA loans, he said. That amount exceeds monthly lending volumes in each of the first six months of the government's fiscal year. As of Monday's cut-off date, there were 282 applications still pending for stimulus loans, totaling $128.7 million. Those applications will be put on a waiting list, and will move forward if borrowers and lenders cancel previously approved loans, he said.
Meanwhile, lending experts anticipate a drop in SBA loan volume unless Congress moves quickly to allocate more funds to renew the stimulus provisions. Last month, the House voted to continue the measures until September 2011, although the legislation has not moved forward in the Senate.
"We absolutely need to extend it, as it has been the driver of loan volume," says Tony Wilkinson, president of the National Association of Government Guaranteed Lenders in Stillwater, Okla. "It is proven, it has worked, and we have gotten credit in hands of small businesses. If it's not extended, we fully expect to see a substantial decline in loan volume."
The SBA has pushed Congress for an extension of the stimulus provisions, and as a first goal wants them to remain in place until mid-February. That was when the 90% guarantee was originally slated to expire, had funding been sufficient. The lower fees were scheduled to expire next September.
"We have been having positive discussions with folks on the Hill and in the administration," Mr. Swain said. "We're hopeful they will understand that these programs are effective."
In a forum on small business lending last week, lenders, government administrators, and business owners discussed the best means of getting credit to small businesses. One proposal which is actively supported by President Obama, is to raise the cap on SBA loans. Cynthia Blankenship, past chairman of the Independent Community Bankers of America, noted during one of the discussion forums that raising the loan cap "is a good idea, but you'd have to raise guarantees" in order for it to be effective. That statement resonated with many of the lenders in attendance.
http://www.wsj.com/
For SBA Loans, Stimulus Well Runs Dry
By EMILY MALTBY
Two popular stimulus provisions that drew hundreds of banks back to the small-business lending arena ran out of funding Monday, setting the stage for a potential new credit squeeze for business owners.
The two provisions, passed as part of the Recovery Act, raised the maximum guarantee on Small Business Administration loans to 90% from 75%, and temporarily reduced or eliminated fees associated with the loans. The measures are widely credited with getting millions of dollars into the hands of small-business owners and making it more attractive for banks to lend during the downturn.
The SBA had anticipated that funding for the provisions, totaling $375 million, would run dry ahead of the provisions' scheduled 2010 expiration dates. Last week, the agency alerted lenders that, as of Monday, the guarantee would be lowered to pre-stimulus levels and the fees would be reinstated, according to SBA spokesman Jonathan Swain.
That created a mini-rush, prompting lenders to issue – over the course of the last week – more than $1 billion in SBA loans, he said. That amount exceeds monthly lending volumes in each of the first six months of the government's fiscal year. As of Monday's cut-off date, there were 282 applications still pending for stimulus loans, totaling $128.7 million. Those applications will be put on a waiting list, and will move forward if borrowers and lenders cancel previously approved loans, he said.
Meanwhile, lending experts anticipate a drop in SBA loan volume unless Congress moves quickly to allocate more funds to renew the stimulus provisions. Last month, the House voted to continue the measures until September 2011, although the legislation has not moved forward in the Senate.
"We absolutely need to extend it, as it has been the driver of loan volume," says Tony Wilkinson, president of the National Association of Government Guaranteed Lenders in Stillwater, Okla. "It is proven, it has worked, and we have gotten credit in hands of small businesses. If it's not extended, we fully expect to see a substantial decline in loan volume."
The SBA has pushed Congress for an extension of the stimulus provisions, and as a first goal wants them to remain in place until mid-February. That was when the 90% guarantee was originally slated to expire, had funding been sufficient. The lower fees were scheduled to expire next September.
"We have been having positive discussions with folks on the Hill and in the administration," Mr. Swain said. "We're hopeful they will understand that these programs are effective."
In a forum on small business lending last week, lenders, government administrators, and business owners discussed the best means of getting credit to small businesses. One proposal which is actively supported by President Obama, is to raise the cap on SBA loans. Cynthia Blankenship, past chairman of the Independent Community Bankers of America, noted during one of the discussion forums that raising the loan cap "is a good idea, but you'd have to raise guarantees" in order for it to be effective. That statement resonated with many of the lenders in attendance.
Tuesday, December 1, 2009
Article: Bartender Turns Wine Into Clean Water
Bartender Turns Wine Into Clean Water
CNN
BLOWING ROCK, North Carolina (Nov. 30) -- Behind the bar at a local restaurant, Doc Hendley leans in to hear his customer over the band. "You like the pinot? Cool," he says.
It's a seemingly average interaction, but Hendley is not your average bartender. As he pours wine in the United States, he's also helping to save thousands of lives on the other side of the world -- and he's tapped into his regulars to help.
"[They] sit on the same stool, drink the same drink, pay the same tab every day. I felt like they really did want to be a part of something," Hendley says. "They just were waiting for somebody to bring that something to them."
That something is Wine to Water, Hendley's organization that provides clean water to people in developing countries through funds raised at wine tasting events.
Since 2004, Hendley has traveled to Sudan, Ethiopia, Uganda and Cambodia, working with local communities to build clean water wells and sanitation systems.
The 30-year-old first learned about the world's water crisis when he took a break from college, and his job as a bar-keep, to travel the world; he hoped it would ground his education and provide some direction. It did.
"I began seeing the figures [of] people that don't have access to clean water -- and it absolutely floored me," he recalls.
At least one in six people worldwide lack access to adequate amounts of safe water for drinking and hygiene, according to the United Nations. This contributes to diarrhea, the leading cause of illness and death, and translates to 1.5 million preventable deaths each year.
After returning to school, Hendley realized that just by using his ability to bartend and create relationships with people, he might be able to help the problem. At the bars where he worked, he solicited evenings to host wine tastings and provide information about the global crisis. By graduation, Hendley's "Wine to Water" events had yielded enough funding to implement water projects in the developing world.
He approached a local contact, Kenny Isaacs of Samaritan's Purse, with the intention of handing over the funds for their international charitable water projects. Instead, Hendley found himself in Sudan in spring 2004, training to oversee water projects and developing and installing water systems in zones deemed too dangerous for United Nations aide workers -- all in the midst of civil war.
"[I was] seeing these people living in conflicts, bullets whizzing by their ears -- yet their biggest concern was the huge loss of life because of the unclean water," he recalls. "That's when water changed from being my passion to the burden of my life."
After a year of service in Darfur, Hendley returned to the states and continued his fund-raising events while focusing on ways his group could improve upon other water project models.
"Throughout the desert there were bore holes [for wells] all over the place, they just weren't working," says Hendley. "Organizations would put a brand new, $15,000 bore hole in a village that already had one; [they] didn't stop to think that maybe that one is broken or just needs some parts."
Wine to Water is dedicated to achieving sustainability through education and empowerment of local community members, training them to install, maintain and repair their own water systems.
Hendley has found this approach reduces overhead costs, leaving more for investment in water initiatives and local economies. Because his operation is small, Hendley says he's less deterred by the instability of areas in dire need and is able to access pockets of the world that larger organizations may have to avoid.
To date, Hendley's group has worked in five developing countries, including India, bringing safe drinking water to more than 25,000 individuals in refugee camps, orphanages, schools, hospitals and a leper colony, as well as directly into hundreds of homes through the installation of bio-sand filters.
In the face of the overwhelming global crisis, Hendley says his work may be a drop in the bucket, but to him it's nothing short of a miracle.
"You can be a bartender in Raleigh, North Carolina; you can be just a regular anybody. And you really, really can change the world," he says. "You can touch thousands of lives. I'm walking truth of that."
CNN
BLOWING ROCK, North Carolina (Nov. 30) -- Behind the bar at a local restaurant, Doc Hendley leans in to hear his customer over the band. "You like the pinot? Cool," he says.
It's a seemingly average interaction, but Hendley is not your average bartender. As he pours wine in the United States, he's also helping to save thousands of lives on the other side of the world -- and he's tapped into his regulars to help.
"[They] sit on the same stool, drink the same drink, pay the same tab every day. I felt like they really did want to be a part of something," Hendley says. "They just were waiting for somebody to bring that something to them."
That something is Wine to Water, Hendley's organization that provides clean water to people in developing countries through funds raised at wine tasting events.
Since 2004, Hendley has traveled to Sudan, Ethiopia, Uganda and Cambodia, working with local communities to build clean water wells and sanitation systems.
The 30-year-old first learned about the world's water crisis when he took a break from college, and his job as a bar-keep, to travel the world; he hoped it would ground his education and provide some direction. It did.
"I began seeing the figures [of] people that don't have access to clean water -- and it absolutely floored me," he recalls.
At least one in six people worldwide lack access to adequate amounts of safe water for drinking and hygiene, according to the United Nations. This contributes to diarrhea, the leading cause of illness and death, and translates to 1.5 million preventable deaths each year.
After returning to school, Hendley realized that just by using his ability to bartend and create relationships with people, he might be able to help the problem. At the bars where he worked, he solicited evenings to host wine tastings and provide information about the global crisis. By graduation, Hendley's "Wine to Water" events had yielded enough funding to implement water projects in the developing world.
He approached a local contact, Kenny Isaacs of Samaritan's Purse, with the intention of handing over the funds for their international charitable water projects. Instead, Hendley found himself in Sudan in spring 2004, training to oversee water projects and developing and installing water systems in zones deemed too dangerous for United Nations aide workers -- all in the midst of civil war.
"[I was] seeing these people living in conflicts, bullets whizzing by their ears -- yet their biggest concern was the huge loss of life because of the unclean water," he recalls. "That's when water changed from being my passion to the burden of my life."
After a year of service in Darfur, Hendley returned to the states and continued his fund-raising events while focusing on ways his group could improve upon other water project models.
"Throughout the desert there were bore holes [for wells] all over the place, they just weren't working," says Hendley. "Organizations would put a brand new, $15,000 bore hole in a village that already had one; [they] didn't stop to think that maybe that one is broken or just needs some parts."
Wine to Water is dedicated to achieving sustainability through education and empowerment of local community members, training them to install, maintain and repair their own water systems.
Hendley has found this approach reduces overhead costs, leaving more for investment in water initiatives and local economies. Because his operation is small, Hendley says he's less deterred by the instability of areas in dire need and is able to access pockets of the world that larger organizations may have to avoid.
To date, Hendley's group has worked in five developing countries, including India, bringing safe drinking water to more than 25,000 individuals in refugee camps, orphanages, schools, hospitals and a leper colony, as well as directly into hundreds of homes through the installation of bio-sand filters.
In the face of the overwhelming global crisis, Hendley says his work may be a drop in the bucket, but to him it's nothing short of a miracle.
"You can be a bartender in Raleigh, North Carolina; you can be just a regular anybody. And you really, really can change the world," he says. "You can touch thousands of lives. I'm walking truth of that."
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