The Big Question: Independent versus Employee Status
Are you workers independent contractors or employees? This is a compelling question, especially where the Internal Revenue Service is concerned. Every worker claiming status as a non-employee means payroll taxes and social security contributions that won't fall into the IRS's pockets.
Now many states are taking a closer look at the question, too. They are increasingly on the lookout for new sources of state revenue, including workman's compensation and unemployment insurance, both of which can be bypassed when a business uses independent workes.
to read the full article... click here.
And be sure to check out our Next installment in the Exit Planning Strategy series, Article 4: "How to Hold on to Key Employees" this Friday, March 25th.
Showing posts with label employees. Show all posts
Showing posts with label employees. Show all posts
Monday, March 21, 2011
Thursday, January 21, 2010
Entrepreneurship & Employment
It's Time to Elevate Entrepreneurs
By Diana Furchtgott-Roth
WASHINGTON-When President Obama delivers his State of the Union address next Wednesday evening, many Americans will be hoping he will offer help on the employment front. The president could usefully approach job creation by adopting measures to help entrepreneurs, the main drivers of innovation and job creation.
The employment situation is worrisome. Not only are over 15 million Americans unemployed, with the national unemployment rate at 10%, but the ratio of Americans of working age in the labor force - the employed plus those looking for work - is 64.6%, the lowest since 1985. Almost 40% of the unemployed have been out of work for six months or more.
The Labor Department's broadest measure of underused human resources-the unemployed plus the discouraged who have stopped looking for work (and so have dropped out of the labor force) and people working part-time because they cannot find full-time jobs-is 17.2%.
If job creation is the country's paramount economic objective, does it matter if the economy is populated by a few large, regulated firms, or by a broad base of entrepreneurial activity in smaller units? It matters, because entrepreneurship and innovation-the driving elements of economic growth-flourish best in smaller business units.
The key is innovation: introduction of new products and services that displace their predecessors because they yield greater output for any given application of labor and capital. Innovation is vital to sustained economic growth.
Entrepreneurs, determined individuals with new ideas, are most responsible for creating innovations. Not all new ideas are economic successes. Some lead to greater wealth and economic growth, and others fail. The beauty of our economic system is that it separates productive from unproductive ideas, allowing the former to flourish.
On January 19, Carl Schramm, president of the Ewing Marion Kauffman Foundation, which promotes entrepreneurship, gave his annual State of Entrepreneurship Address at Washington's National Press Club. (Full disclosure: the Kauffman Foundation has funded some of my past research.)
Mr. Schramm offered several ideas that President Obama could use to promote entrepreneurship and employment.
Fix our immigration policy. Many entrepreneurs want to hire workers with math, science, and technology skills, but not enough native-born Americans go into these fields. Yet, after we grant college and graduate degrees in these fields to foreigners, we often do not allow them to stay in America. Some education is provided at taxpayer expense, through research grants to universities from the Departments of Energy and Defense.
Hence, we now have the perverse situation where America educates many foreign graduates in math and science and sends them back home to compete against us. Alternatively, Mr. Schramm suggests, "We could start by offering instant citizenship to any of the thousands of bright young people from foreign countries who graduate from our universities."
Let me suggest that the United States could go even further and offer citizenship to foreign graduates who wish to come here from major science universities around the globe, such as China's Tsinghua University and India's Indian Institute of Technology.
Defang Sarbanes-Oxley. Evidence is mounting that the 2002 Sarbanes-Oxley legislation, accounting rules designed to protect shareholders from corporate abuses after the collapse of Enron and Tyco, discourages companies from expanding and going public. Furthermore, some new companies are choosing to locate in London and Tokyo rather than in the United States.
Mr. Schramm proposes that Congress allow shareholders to vote on whether Sarbanes-Oxley applies to their companies. Congress might not buy this, but the accounting requirements would be optional, and companies whose shareholders believed the costs of compliance would be greater than the benefits could choose not to comply. Some firms would be able to operate more nimbly without the SOX regulations.
Develop Commercialization of Academic Research. Mr. Schramm suggests that the government could encourage a free market in the licensing of innovations developed by professors, rather than having these licenses controlled by the university, as occurs now. This would enable the development of a vibrant market to commercialize research. This might require legislation to amend the Bayh-Dole Act, which gave universities ownership of rights to inventions developed through federal funding of research.
Similarly, the government could set up a system of commercialization fellowships to encourage post-doctoral scholars to work on promising ideas.
In addition to Mr. Schramm's proposals, there are drags on entrepreneurship from uncertainty over taxation and regulation.
Remove uncertainty over taxes. Most entrepreneurs file tax returns as individuals. Their highest tax rate is set to rise from 35% now to 40% on January 1, 2011, if Congress does nothing, and their lowest rate is scheduled to rise from 10% to 15%. Small business deductions for equipment would shrink. It's natural that some entrepreneurs will think twice about starting or expanding a business if they don't know what taxes they will face.
More business regulation is clearly on the congressional agenda. Even though Congress's present version of health "reform" may not survive the election of Scott Brown in Massachusetts, environmental and financial regulation are high on the lawmakers' to-do list, adding to uncertainty and to costs of doing business.
We have no way of knowing what auspicious innovations the future holds, and what small businesses will grow from mom-and-pop shops to global powerhouses. But President Obama should know that most innovations and many jobs will be generated by entrepreneurs, and we need more of them, not fewer.
By Diana Furchtgott-Roth
WASHINGTON-When President Obama delivers his State of the Union address next Wednesday evening, many Americans will be hoping he will offer help on the employment front. The president could usefully approach job creation by adopting measures to help entrepreneurs, the main drivers of innovation and job creation.
The employment situation is worrisome. Not only are over 15 million Americans unemployed, with the national unemployment rate at 10%, but the ratio of Americans of working age in the labor force - the employed plus those looking for work - is 64.6%, the lowest since 1985. Almost 40% of the unemployed have been out of work for six months or more.
The Labor Department's broadest measure of underused human resources-the unemployed plus the discouraged who have stopped looking for work (and so have dropped out of the labor force) and people working part-time because they cannot find full-time jobs-is 17.2%.
If job creation is the country's paramount economic objective, does it matter if the economy is populated by a few large, regulated firms, or by a broad base of entrepreneurial activity in smaller units? It matters, because entrepreneurship and innovation-the driving elements of economic growth-flourish best in smaller business units.
The key is innovation: introduction of new products and services that displace their predecessors because they yield greater output for any given application of labor and capital. Innovation is vital to sustained economic growth.
Entrepreneurs, determined individuals with new ideas, are most responsible for creating innovations. Not all new ideas are economic successes. Some lead to greater wealth and economic growth, and others fail. The beauty of our economic system is that it separates productive from unproductive ideas, allowing the former to flourish.
On January 19, Carl Schramm, president of the Ewing Marion Kauffman Foundation, which promotes entrepreneurship, gave his annual State of Entrepreneurship Address at Washington's National Press Club. (Full disclosure: the Kauffman Foundation has funded some of my past research.)
Mr. Schramm offered several ideas that President Obama could use to promote entrepreneurship and employment.
Fix our immigration policy. Many entrepreneurs want to hire workers with math, science, and technology skills, but not enough native-born Americans go into these fields. Yet, after we grant college and graduate degrees in these fields to foreigners, we often do not allow them to stay in America. Some education is provided at taxpayer expense, through research grants to universities from the Departments of Energy and Defense.
Hence, we now have the perverse situation where America educates many foreign graduates in math and science and sends them back home to compete against us. Alternatively, Mr. Schramm suggests, "We could start by offering instant citizenship to any of the thousands of bright young people from foreign countries who graduate from our universities."
Let me suggest that the United States could go even further and offer citizenship to foreign graduates who wish to come here from major science universities around the globe, such as China's Tsinghua University and India's Indian Institute of Technology.
Defang Sarbanes-Oxley. Evidence is mounting that the 2002 Sarbanes-Oxley legislation, accounting rules designed to protect shareholders from corporate abuses after the collapse of Enron and Tyco, discourages companies from expanding and going public. Furthermore, some new companies are choosing to locate in London and Tokyo rather than in the United States.
Mr. Schramm proposes that Congress allow shareholders to vote on whether Sarbanes-Oxley applies to their companies. Congress might not buy this, but the accounting requirements would be optional, and companies whose shareholders believed the costs of compliance would be greater than the benefits could choose not to comply. Some firms would be able to operate more nimbly without the SOX regulations.
Develop Commercialization of Academic Research. Mr. Schramm suggests that the government could encourage a free market in the licensing of innovations developed by professors, rather than having these licenses controlled by the university, as occurs now. This would enable the development of a vibrant market to commercialize research. This might require legislation to amend the Bayh-Dole Act, which gave universities ownership of rights to inventions developed through federal funding of research.
Similarly, the government could set up a system of commercialization fellowships to encourage post-doctoral scholars to work on promising ideas.
In addition to Mr. Schramm's proposals, there are drags on entrepreneurship from uncertainty over taxation and regulation.
Remove uncertainty over taxes. Most entrepreneurs file tax returns as individuals. Their highest tax rate is set to rise from 35% now to 40% on January 1, 2011, if Congress does nothing, and their lowest rate is scheduled to rise from 10% to 15%. Small business deductions for equipment would shrink. It's natural that some entrepreneurs will think twice about starting or expanding a business if they don't know what taxes they will face.
More business regulation is clearly on the congressional agenda. Even though Congress's present version of health "reform" may not survive the election of Scott Brown in Massachusetts, environmental and financial regulation are high on the lawmakers' to-do list, adding to uncertainty and to costs of doing business.
We have no way of knowing what auspicious innovations the future holds, and what small businesses will grow from mom-and-pop shops to global powerhouses. But President Obama should know that most innovations and many jobs will be generated by entrepreneurs, and we need more of them, not fewer.
Tuesday, January 12, 2010
An Era of "Temp"
The Disposable Worker
Pay is falling, benefits are vanishing, and no one's job is secure. How companies are making the era of the temp more than temporary
By Peter Coy, Michelle Conlin and Moira Herbst
On a recent Tuesday morning, single mom Tammy DePew Smith woke up in her tidy Florida townhouse in time to shuttle her oldest daughter, a high school freshman, to the 6:11 a.m. bus. At 6:40 she was at the desk in her bedroom, starting her first shift of the day with LiveOps, a Santa Clara (Calif.) provider of call-center workers for everyone from Eastman Kodak (EK) and Pizza Hut (YUM) to infomercial behemoth Tristar Products. She's paid by the minute—25 cents—but only for the time she's actually on the phone with customers.
By 7:40, Smith had grossed $15. But there wasn't much time to reflect on her early morning productivity; the next child had to be roused from bed, fed, and put onto the school bus. Somehow she managed to squeeze three more shifts into her day, pausing only to homeschool her 7-year-old son, make dinner, and do the bedtime routine. "I tell my kids, unless somebody is bleeding or dying, don't mess with me."
As an independent agent, Smith has no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance. But in recession-ravaged Ormond Beach, she's considered lucky. She has had more or less steady work since she signed on with LiveOps in October 2006. "LiveOps was a lifesaver for me," she says.
You know American workers are in bad shape when a low-paying, no-benefits job is considered a sweet deal. Their situation isn't likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That's because this recession's unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions' influence, new management techniques, and regulatory changes—that already had been eroding workers' economic standing.
...
...To view the rest of the article click HERE (or on the title)
Pay is falling, benefits are vanishing, and no one's job is secure. How companies are making the era of the temp more than temporary
By Peter Coy, Michelle Conlin and Moira Herbst
On a recent Tuesday morning, single mom Tammy DePew Smith woke up in her tidy Florida townhouse in time to shuttle her oldest daughter, a high school freshman, to the 6:11 a.m. bus. At 6:40 she was at the desk in her bedroom, starting her first shift of the day with LiveOps, a Santa Clara (Calif.) provider of call-center workers for everyone from Eastman Kodak (EK) and Pizza Hut (YUM) to infomercial behemoth Tristar Products. She's paid by the minute—25 cents—but only for the time she's actually on the phone with customers.
By 7:40, Smith had grossed $15. But there wasn't much time to reflect on her early morning productivity; the next child had to be roused from bed, fed, and put onto the school bus. Somehow she managed to squeeze three more shifts into her day, pausing only to homeschool her 7-year-old son, make dinner, and do the bedtime routine. "I tell my kids, unless somebody is bleeding or dying, don't mess with me."
As an independent agent, Smith has no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance. But in recession-ravaged Ormond Beach, she's considered lucky. She has had more or less steady work since she signed on with LiveOps in October 2006. "LiveOps was a lifesaver for me," she says.
You know American workers are in bad shape when a low-paying, no-benefits job is considered a sweet deal. Their situation isn't likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That's because this recession's unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions' influence, new management techniques, and regulatory changes—that already had been eroding workers' economic standing.
...
...To view the rest of the article click HERE (or on the title)
Tuesday, November 24, 2009
Article: Raising the Bar, One Employee at a Time
Raising the Bar, One Employee at a Time
Geoff Williams, AOL Small Business, AOL
Wendy Buckley has a hint for job seekers: When filling out an application, if there’s a question about what makes good customer service, don’t plagiarize a website that has an article about customer service and claim it as your own. Your employer probably has Google, too.
Buckley has been in the hiring process for a couple months now, employing three full-time managers back in September for the Screwtop Wine Bar and now is finishing up interviews as she puts together a part-time staff of 12 servers, gift shop and kitchen workers. But it was that plagiarizer that really stands out in her mind as something that didn’t impress her.
Wow, this sounds really professional, thought Buckley upon first reading the essay answer. But then she suddenly had a sinking feeling, started Googling, and found the incriminating text, word-for-word. Obviously, the applicant didn’t get an interview.
Of course, she was also not thrilled when she set up interviews for her managerial positions and had four no-shows. “Four,” says Buckley. “Four people agreed to interview and didn’t show up. I thought, ‘Are you serious? Don’t people need a job?’”
Still, Buckley managed to find three people to manage the bar, the gift shop and the kitchen--three people she is very pleased with. One applicant, in particular, seemed to be a standout. Buckley had asked her for an example of when she had been able to make a customer’s day, and the interviewee told her how a terminally ill mother and her daughter came into a Cheesecake Factory in Maryland. The mother had left a hospice, with the mission of having a chocolate godiva cheesecake, and the server, now seeking employment with Buckley, had the unpleasant task of telling this sick woman that they were all out. The daughter whispered to bring some other chocolate cheesecake, because her mother wouldn’t know the difference.
And so the server brought out the cheesecake but then decided she had to tell the truth. The woman had her cheesecake, apparently leaving without complaint, but the server naturally felt distressed and called other Cheescake Factories around Maryland, found a place that had it in stock, and then she soon personally delivered an entire chocolate godiva cheesecake to the dying patient.
Buckley listened to the tale, mesmerized. So did she hire her? “I couldn’t afford her,” sighs Buckley. “But what a great story.”
Other challenges
Throughout September and October, most of Buckley’s attention was focused on getting a builder’s permit from her county, which she says took about three weeks, and then overseeing the construction, which is still going on. She plans to open the ScrewTop Wine Bar on December 15.
In the meantime, starting up the business has been predictably screwy.
For instance, the oven arrived a month before it was due. This was a problem, because it’s a 500-pound oven, and with no builder’s permit and no construction started, Buckley had nowhere to put it. She managed to reach someone in customer service from the restaurant supply company and was told, “Refuse the oven.”
“How?” demanded Buckley, literally on her cell phone and racing after a departing UPS truck. “I’ve already accepted it!”
The UPS truck took it back, fortunately, but then two days before it was due, delivered it again. Buckley enlisted her husband, David, and some of the construction crew and managed to find equipment to move the mammoth oven into her wine bar’s kitchen, but the giant deli case was another matter. The next day, a semi-truck delivered the rest of the appliances, refrigerators and dishwashers, filling the sidewalk, and those, too, were moved into the kitchen without too many problems. But not the giant deli case.
“We’ve had architects and engineers measure everything,” says Buckley, “but the deli case, where we keep the cheese, was half an inch too wide for the door.”
Buckley says the company furnishing her doors has an agreement with her that if any other professional touches those doors, they’re no longer under warranty. So she had to hire the company—at $200 an hour—to come and remove the front door and the door frame, in order to haul the deli case into the restaurant. “It’s never coming out of there again,” she vows of the deli case.
Hire education
Then about a week ago, Buckley put out an ad on Craigslist for part-time help. The ad, in its entirety, read:
DO YOU LOVE WINE, CHEESE & CRAFT BEER?
Then come be a part of something very special here in Clarendon.
WE OFFER
*great employee discounts,
*flexible hours, (Day, Evening, Weekend)
*training and
*fun atmosphere where you are surrounded by fellow foodies and wine lovers.
*METRO ACCESSIBLE: We are just a short 2 block stroll from the Clarendon Metro on the Orange line.
WHAT IS SCREWTOP?
Screwtop wine bar is so much more than just a wine bar. It’s a café, a wine boutique, and a gourmet cheese shop as well. We are the neighborhood gathering spot, where all customers are treated like regulars, even if it’s just their first time in.
We are opening in DECEMBER and INTERVIEWING NOW for the following Positions:
*Please email us at the address below, telling us
1. why you’d like to work for screwtop,
2. how many hours you’d like to work and
3. what you are interested in making$
Having been burned by no-shows, Buckley emailed all her aspiring applicants this time, reminding them of the interviews and even offering a map on how to get to her place. “I probably shouldn’t have done that,” concedes Buckley. After all, if someone is a no-show to an interview, that’s a great clue that they aren’t going to be a good worker.
But, says Buckley, “as I’ve gotten further along in this process, I have so little time and so many things to get done, and I’m a very organized person. But every day, I’ll have a list of 20 things to do, and even if I finish them all, the next day, there will be 20 more things to do. I’m sure there will be a long list of things I have to do once I’m open and running, too, of course, but it astonishes me how fast these days are going by. I’ll look up at the clock, and it’ll be 8 p.m., and then I’ll be on the computer until midnight. I couldn’t sleep last night, and so I was up at 3, working on figuring out the schedules.”
The schedules, that is, of the people she hasn’t hired yet. “I have more people to interview tomorrow,” says Buckley. “Part of this not being to sleep, of course, is just this exhilarating excitement going on. There’s so much going on in mind and so many things we have to get done before we open.”
But at least she has her oven.
Geoff Williams, AOL Small Business, AOL
Wendy Buckley has a hint for job seekers: When filling out an application, if there’s a question about what makes good customer service, don’t plagiarize a website that has an article about customer service and claim it as your own. Your employer probably has Google, too.
Buckley has been in the hiring process for a couple months now, employing three full-time managers back in September for the Screwtop Wine Bar and now is finishing up interviews as she puts together a part-time staff of 12 servers, gift shop and kitchen workers. But it was that plagiarizer that really stands out in her mind as something that didn’t impress her.
Wow, this sounds really professional, thought Buckley upon first reading the essay answer. But then she suddenly had a sinking feeling, started Googling, and found the incriminating text, word-for-word. Obviously, the applicant didn’t get an interview.
Of course, she was also not thrilled when she set up interviews for her managerial positions and had four no-shows. “Four,” says Buckley. “Four people agreed to interview and didn’t show up. I thought, ‘Are you serious? Don’t people need a job?’”
Still, Buckley managed to find three people to manage the bar, the gift shop and the kitchen--three people she is very pleased with. One applicant, in particular, seemed to be a standout. Buckley had asked her for an example of when she had been able to make a customer’s day, and the interviewee told her how a terminally ill mother and her daughter came into a Cheesecake Factory in Maryland. The mother had left a hospice, with the mission of having a chocolate godiva cheesecake, and the server, now seeking employment with Buckley, had the unpleasant task of telling this sick woman that they were all out. The daughter whispered to bring some other chocolate cheesecake, because her mother wouldn’t know the difference.
And so the server brought out the cheesecake but then decided she had to tell the truth. The woman had her cheesecake, apparently leaving without complaint, but the server naturally felt distressed and called other Cheescake Factories around Maryland, found a place that had it in stock, and then she soon personally delivered an entire chocolate godiva cheesecake to the dying patient.
Buckley listened to the tale, mesmerized. So did she hire her? “I couldn’t afford her,” sighs Buckley. “But what a great story.”
Other challenges
Throughout September and October, most of Buckley’s attention was focused on getting a builder’s permit from her county, which she says took about three weeks, and then overseeing the construction, which is still going on. She plans to open the ScrewTop Wine Bar on December 15.
In the meantime, starting up the business has been predictably screwy.
For instance, the oven arrived a month before it was due. This was a problem, because it’s a 500-pound oven, and with no builder’s permit and no construction started, Buckley had nowhere to put it. She managed to reach someone in customer service from the restaurant supply company and was told, “Refuse the oven.”
“How?” demanded Buckley, literally on her cell phone and racing after a departing UPS truck. “I’ve already accepted it!”
The UPS truck took it back, fortunately, but then two days before it was due, delivered it again. Buckley enlisted her husband, David, and some of the construction crew and managed to find equipment to move the mammoth oven into her wine bar’s kitchen, but the giant deli case was another matter. The next day, a semi-truck delivered the rest of the appliances, refrigerators and dishwashers, filling the sidewalk, and those, too, were moved into the kitchen without too many problems. But not the giant deli case.
“We’ve had architects and engineers measure everything,” says Buckley, “but the deli case, where we keep the cheese, was half an inch too wide for the door.”
Buckley says the company furnishing her doors has an agreement with her that if any other professional touches those doors, they’re no longer under warranty. So she had to hire the company—at $200 an hour—to come and remove the front door and the door frame, in order to haul the deli case into the restaurant. “It’s never coming out of there again,” she vows of the deli case.
Hire education
Then about a week ago, Buckley put out an ad on Craigslist for part-time help. The ad, in its entirety, read:
DO YOU LOVE WINE, CHEESE & CRAFT BEER?
Then come be a part of something very special here in Clarendon.
WE OFFER
*great employee discounts,
*flexible hours, (Day, Evening, Weekend)
*training and
*fun atmosphere where you are surrounded by fellow foodies and wine lovers.
*METRO ACCESSIBLE: We are just a short 2 block stroll from the Clarendon Metro on the Orange line.
WHAT IS SCREWTOP?
Screwtop wine bar is so much more than just a wine bar. It’s a café, a wine boutique, and a gourmet cheese shop as well. We are the neighborhood gathering spot, where all customers are treated like regulars, even if it’s just their first time in.
We are opening in DECEMBER and INTERVIEWING NOW for the following Positions:
*Please email us at the address below, telling us
1. why you’d like to work for screwtop,
2. how many hours you’d like to work and
3. what you are interested in making$
Having been burned by no-shows, Buckley emailed all her aspiring applicants this time, reminding them of the interviews and even offering a map on how to get to her place. “I probably shouldn’t have done that,” concedes Buckley. After all, if someone is a no-show to an interview, that’s a great clue that they aren’t going to be a good worker.
But, says Buckley, “as I’ve gotten further along in this process, I have so little time and so many things to get done, and I’m a very organized person. But every day, I’ll have a list of 20 things to do, and even if I finish them all, the next day, there will be 20 more things to do. I’m sure there will be a long list of things I have to do once I’m open and running, too, of course, but it astonishes me how fast these days are going by. I’ll look up at the clock, and it’ll be 8 p.m., and then I’ll be on the computer until midnight. I couldn’t sleep last night, and so I was up at 3, working on figuring out the schedules.”
The schedules, that is, of the people she hasn’t hired yet. “I have more people to interview tomorrow,” says Buckley. “Part of this not being to sleep, of course, is just this exhilarating excitement going on. There’s so much going on in mind and so many things we have to get done before we open.”
But at least she has her oven.
Monday, October 5, 2009
Article: Recession Relapse??
Forbes.com
Digital Rules
Recession Relapse?
10.19.09, 12:00 AM ET
If our apparent third-quarter economic recovery proves weak and relapses into a second recession, the causes will be:
--Small businesses, constrained by lack of expansion capital and fearful of possible regulatory changes in health care, energy and union membership, sit on their hands and don't hire.
--Unemployment creeps above 10% and stubbornly stays there.
--Because small businesses can't or won't expand, commercial real estate values sink more than expected.
--Regional banks with lots of commercial real estate paper on their balance sheets fail by the hundreds.
In other words, a second leg of recession will occur if America's small-business sector doesn't expand. It's about the small-business economy, stupid.
Recoveries from recession in the U.S. are typically led by small businesses. We now have reached the inflection point--i.e., the recession is ending, but the recovery is embryonic--when small businesses historically jump to the lead and pull the American economy along. It is precisely at this time that small businesses ought to be emerging from their bunkers to lease or buy cheap commercial property as they start gearing up for growth. Six months from now unemployment should be back down to 8%--and headed toward 5%--and Americans should be toasting small businesses for creating four out of five new jobs.
Small-Business Recovery Is Lagging
But small businesses aren't hiring yet. We should be asking why not. Somebody high up in the Obama Administration must make the health of small business a top priority; otherwise the recovery will die, and unemployment will persist at 10%. If that happens the President can say good-bye to his large majorities in Congress 13 months from now.
Last month I gave a speech at an industry conference for restaurant owners and fast-food franchisees--typical American small-business owners. Recovery skeptics filled the room, even though some of the franchises represented, such as McDonald's, had weathered the recession fine and others, such as Panera Bread and Green Mountain Coffee, were growing impressively.
Their chief worries are those I described in the first paragraph. One is the difficulty of obtaining working capital. Restaurants need and use credit lines just to operate. Another is the set of cost concerns around President Obama's big plans for health care, energy and union labor. Another is the uncertainty of inflation and commodity prices that determine the cost of food production. Together, these worries are enough to dampen the spirits of small-business owners in the food-delivery industry. True, food delivery is just one industry, but it's a big one.
When the Blue State Obama Administration thinks of small business, it undoubtedly dreams of promising startups churning out solar panels for office buildings or turbine blades for windmills. If its dreams are serious, the Administration should get behind a crackling good idea proposed by entrepreneur Paul Graham. It's called the Founder Visa, and the idea is to make it easy for the world's entrepreneurs to come to the U.S. As Paul Kedrosky describes it on the Web site Growthology: "The particulars are still getting worked through, but it has to do with getting a modicum of [private] funding ($250,000) and approval from an independent board that this represents a real startup deal, not some back-room finagling for a visa, and that's it: You're in the country and you're off and running."
This is a heck of a good long-term idea, and let's hope the Obama Administration embraces it. But for the short and medium term, high-tech startups alone will never return America to 5% unemployment and defuse the commercial-property bomb. Most existing small businesses don't need assistance from the government. What they need is across-the-board relief on taxes. They need benign legislation (or no change) on health care, energy and unions. A wish list, in other words, that runs counter to everything the Obama Administration is currently trying to pass.
Small businesses have always infuriated some liberals. Sinclair Lewis was awarded the Nobel Prize in Literature for Babbitt--the story of a small-minded Realtor in the 1920s. The word "Babbittry" soon became synonymous with "philistine." Liberal writer Michael Lind argues on Salon.com for sacrificing small business at the altar of corporatism in order to pass Obamacare:
"The solution may be corporatism or corporate paternalism--by which I mean the mandatory universalization of private-employer benefits. If the politics of ethnic diversity makes movement in a universalist, social democratic direction impossible in the U.S., then the alternative might be to mandate that all employers provide certain benefits to all employees, with no exceptions. The costs of such unfunded mandates might drive some small businesses out of existence. But small-business owners are the most vocal opponents of wage and benefit reform in the U.S. The replacement of Scrooge & Marley by a smaller number of bigger private and public employers who treat Bob Cratchit and Tiny Tim better would not necessarily be a tragedy."
There you have it: small business as Scrooge! If Obama defender Lind represents the thinking of President Obama and congressional Democrats, then our small businesses are in for a long siege. Hunkered down, they will not expand, hire or defuse the commercial-property bomb. That's a formula for a second recession.
Digital Rules
Recession Relapse?
10.19.09, 12:00 AM ET
If our apparent third-quarter economic recovery proves weak and relapses into a second recession, the causes will be:
--Small businesses, constrained by lack of expansion capital and fearful of possible regulatory changes in health care, energy and union membership, sit on their hands and don't hire.
--Unemployment creeps above 10% and stubbornly stays there.
--Because small businesses can't or won't expand, commercial real estate values sink more than expected.
--Regional banks with lots of commercial real estate paper on their balance sheets fail by the hundreds.
In other words, a second leg of recession will occur if America's small-business sector doesn't expand. It's about the small-business economy, stupid.
Recoveries from recession in the U.S. are typically led by small businesses. We now have reached the inflection point--i.e., the recession is ending, but the recovery is embryonic--when small businesses historically jump to the lead and pull the American economy along. It is precisely at this time that small businesses ought to be emerging from their bunkers to lease or buy cheap commercial property as they start gearing up for growth. Six months from now unemployment should be back down to 8%--and headed toward 5%--and Americans should be toasting small businesses for creating four out of five new jobs.
Small-Business Recovery Is Lagging
But small businesses aren't hiring yet. We should be asking why not. Somebody high up in the Obama Administration must make the health of small business a top priority; otherwise the recovery will die, and unemployment will persist at 10%. If that happens the President can say good-bye to his large majorities in Congress 13 months from now.
Last month I gave a speech at an industry conference for restaurant owners and fast-food franchisees--typical American small-business owners. Recovery skeptics filled the room, even though some of the franchises represented, such as McDonald's, had weathered the recession fine and others, such as Panera Bread and Green Mountain Coffee, were growing impressively.
Their chief worries are those I described in the first paragraph. One is the difficulty of obtaining working capital. Restaurants need and use credit lines just to operate. Another is the set of cost concerns around President Obama's big plans for health care, energy and union labor. Another is the uncertainty of inflation and commodity prices that determine the cost of food production. Together, these worries are enough to dampen the spirits of small-business owners in the food-delivery industry. True, food delivery is just one industry, but it's a big one.
When the Blue State Obama Administration thinks of small business, it undoubtedly dreams of promising startups churning out solar panels for office buildings or turbine blades for windmills. If its dreams are serious, the Administration should get behind a crackling good idea proposed by entrepreneur Paul Graham. It's called the Founder Visa, and the idea is to make it easy for the world's entrepreneurs to come to the U.S. As Paul Kedrosky describes it on the Web site Growthology: "The particulars are still getting worked through, but it has to do with getting a modicum of [private] funding ($250,000) and approval from an independent board that this represents a real startup deal, not some back-room finagling for a visa, and that's it: You're in the country and you're off and running."
This is a heck of a good long-term idea, and let's hope the Obama Administration embraces it. But for the short and medium term, high-tech startups alone will never return America to 5% unemployment and defuse the commercial-property bomb. Most existing small businesses don't need assistance from the government. What they need is across-the-board relief on taxes. They need benign legislation (or no change) on health care, energy and unions. A wish list, in other words, that runs counter to everything the Obama Administration is currently trying to pass.
Small businesses have always infuriated some liberals. Sinclair Lewis was awarded the Nobel Prize in Literature for Babbitt--the story of a small-minded Realtor in the 1920s. The word "Babbittry" soon became synonymous with "philistine." Liberal writer Michael Lind argues on Salon.com for sacrificing small business at the altar of corporatism in order to pass Obamacare:
"The solution may be corporatism or corporate paternalism--by which I mean the mandatory universalization of private-employer benefits. If the politics of ethnic diversity makes movement in a universalist, social democratic direction impossible in the U.S., then the alternative might be to mandate that all employers provide certain benefits to all employees, with no exceptions. The costs of such unfunded mandates might drive some small businesses out of existence. But small-business owners are the most vocal opponents of wage and benefit reform in the U.S. The replacement of Scrooge & Marley by a smaller number of bigger private and public employers who treat Bob Cratchit and Tiny Tim better would not necessarily be a tragedy."
There you have it: small business as Scrooge! If Obama defender Lind represents the thinking of President Obama and congressional Democrats, then our small businesses are in for a long siege. Hunkered down, they will not expand, hire or defuse the commercial-property bomb. That's a formula for a second recession.
Monday, March 30, 2009
Before You Buy That Small Business
Before You Buy That Small Business
Buying an existing business is often safer than starting one on your own. But watch out for these red flags.
By Cliff Ennico June 18, 2008
There's no doubt that buying an existing small business is less risky than starting one from scratch. Why? Because, unlike a startup:
•the business has equipment and inventory;
•the business already has a location, and maybe there's a few more years left on the lease;
•the business has employees, some of whom you may actually want to keep;
•the business has customers, most of whom probably will stick with you (unless this is a professional service business or practice); and
•most importantly, the business has a track record--you can look at the business' books, records and tax returns and get some sense of how much money you will make.
But there's still risk. Whenever you buy an existing business and look at its records, you're looking at the past. There's no guarantee things won't change going forward. If you're negotiating to buy a business and you think the seller is giving you a great deal, be very suspicious--there's probably something heading down the road at 90 miles an hour that will blow this business apart when it hits.
To view the entire article click HERE
Buying an existing business is often safer than starting one on your own. But watch out for these red flags.
By Cliff Ennico June 18, 2008
There's no doubt that buying an existing small business is less risky than starting one from scratch. Why? Because, unlike a startup:
•the business has equipment and inventory;
•the business already has a location, and maybe there's a few more years left on the lease;
•the business has employees, some of whom you may actually want to keep;
•the business has customers, most of whom probably will stick with you (unless this is a professional service business or practice); and
•most importantly, the business has a track record--you can look at the business' books, records and tax returns and get some sense of how much money you will make.
But there's still risk. Whenever you buy an existing business and look at its records, you're looking at the past. There's no guarantee things won't change going forward. If you're negotiating to buy a business and you think the seller is giving you a great deal, be very suspicious--there's probably something heading down the road at 90 miles an hour that will blow this business apart when it hits.
To view the entire article click HERE
Friday, February 20, 2009
Employee Theft - Trusted Employee is an Oxymoron
Being in daily contact with a wide variety of business owners, I am hearing increasing stories of "trusted" employees ripping off their business owners. Some of the schemes have been going on for years and involve significant sums of money. The downtown in the economy has resulted in more and more owners taking a close look at their expenses and business practices. The deeper they look for ways to cut costs and examine their expenses, employee theft has often been exposed. During goods times many owners turned a blind eye to employee theft with the attitude that it was bound to happen but it just needed to stay within "acceptable limits". With declining sales and increased expenses many owners are forced to adopt a "zero tolerance" policy in order to keep their business afloat during these troubled economic times. I have heard of many instances where discovered losses have exceeded six figures--if a business owner hasn't done their own loss prevention analysis--now is the time! Hint: "trusted employee" is indeed an oxymoron.
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