Barbara’s Blog

During the political conventions, both parties promised a new tomorrow for small businesses. Unfortunately, there is an unhappy small business community today. According to results from the recent SurePayroll survey, most indicators are down:

• Optimism of small business owners in August was at 60%, which represents a 2% decline from July.
• Hiring in August (compared with July) was down by 0.1% (and paychecks for employees was down by 0.2%)
• Only 18% of small businesses sought loans in 2012, and 32% of these had trouble obtaining them.

How does this play against the political backdrop?

Democratic Party platform
The Democratic Party platform related to small business states:

“Small businesses employ half of all working Americans, and, over the last two decades, have created two out of three net new jobs. Democrats believe that small businesses are the engine of job growth in America. President Obama signed 18 small-business tax cuts to encourage businesses to hire more workers and make job-creating investments in machinery and equipment and proposed significant additional small business tax relief. He encouraged investment and supported start-ups by allowing businesses to write off the full cost of new equipment and machinery they bought in 2011. Altogether, the President’s Small Business Jobs Act accelerated $55 billion in tax relief through 2011. Democrats made it easier for small businesses to access the loans they needed to grow and hire. The President signed into law changes to help entrepreneurs raise capital while maintaining key investor protections. Small businesses are now once again creating jobs. Democrats have helped small businesses provide health insurance to their workers with a tax credit to help pay for the cost of coverage. In 2014, the tax credit will grow and small businesses will be able to pool their purchasing power together to get affordable coverage.

We recognize the importance of small business to women, people of color, tribes, and rural America and will work to help nurture entrepreneurship.

President Obama and the Democratic Party are committed to continue cutting red tape for small businesses, helping them sell their goods around the world and access the capital they need to grow. This includes tax cuts for small businesses that make new investments, hire more workers, or increase wages.”

GOP platform
The GOP platform related to small business and entrepreneurship states:

“America’s small businesses are the backbone of the U.S. economy, employing tens of millions of workers. Small businesses create the vast majority of jobs, patents, and U.S. exporters. Under the current Administration, we have the lowest rate of business startups in thirty years. Small businesses are the leaders in the world’s advances in technology and innovation, and we pledge to strengthen that role and foster small business entrepreneurship.

While small businesses have significantly contributed to the nation’s economic growth, our government has failed to meet its small business goals year after year and failed to overcome burdensome regulatory, contracting, and capital barriers. This impedes their growth.

We will reform the tax code to allow businesses to generate enough capital to grow and create jobs for our families, friends and neighbors all across America. We will encourage investments in small businesses. We will create an environment where adequate financing and credit are available to spur manufacturing and expansion. We will serve as aggressive advocates for small businesses.”

Bottom line
It is great to see both parties acknowledging the importance of small business to the U.S. economy. This rhetoric is great, but actions following the election are the only meaningful thing for small business and our country.

It’s vital for small business owners to assess whether the last four years of a Democratic Administration have been helpful to their companies and the economy, and to decide which party going forward can better serve small business interests. Vote accordingly.

On Monday, July 16, Dr. Stephen R. Covey, author of The 7 Habits of Highly Effective People and founder of FranklinCovey Co., died as the result of a bicycle accident at the age of 79.

His books, including The 7 Habits, First Things First, The 8th Habit: From Effectiveness to Greatness, and Principle-Centered Leadership, sold millions of copies (more than 25 million worldwide for The 7 Habits alone). He was named one of TIME Magazine’s 25 Most Influential Americans and received The National Entrepreneur of the Year Lifetime Achievement Award for Entrepreneurial Leadership.

He’s had a profound influence on business owners, like me, who’ve read his books. Through his books, as well as how he led his life, here is some of the legacy he leaves behind:

• Follow the 7 habits. These are: (1) be proactive, (2) begin with the end in mind, (3) put first things first, (4) think win-win, (5) seek first to understand, then to be understood, (6) synergize (use positive teamwork), and (7) sharpen the saw (balance and renew personal resources for work-life balance).
• Be organized. Long before smartphones and even PDAs, there was Franklin Covey’s Franklin Day Planner in which to keep notes on appointments, contacts, and other vital business information. For many years, it was my mainstay for organization.
• Align your values with principles. In Covey’s view, principles are external laws of nature, but values are internal and changeable. Essentially, he advised that you make sure that your head is on straight.
• Be a teacher. He was a professor at Utah State University’s School of Business. While I never took any of his courses, here or in his previous positions, I’m sure he had a lot of valuable information and advice to impart.
• Keep family first. Success in business is meaningless without family to share it with.  Covey was a husband who had nine children and 52 grandchildren.

He led an exemplary life. He’ll be missed.

On January 31, 2011, President Obama announced the “Startup America” initiative designed to help entrepreneurs start and grow businesses and hire workers. The initiative includes:

• An SBA commitment for early-stage seed financing of $2 billion over the next five years, to be matched by private sector investments.

• Some government-led mentorship programs.

• Private-sector commitments, including Startup America Partnership headed by AOL’s founder, Steve Case.

• Tax incentives and relief, including making the 100% exclusion for gain on the sale of certain small business stock permanent (it’s only set to run for stock acquired through the end of 2011).

What’s Good?
The best part of the initiative is recognition of the important role of entrepreneurship to the country.  A Kauffman Foundation Study last summer showed that most job creation comes from startup businesses—new companies add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually. So, any White House action to spur business creation is welcome.

The second aspect of the program that is encouraging is the emphasis on the private sector to help startups; it doesn’t take any tax dollars to work. This help will come from investments, mentoring, and other assistance from large corporations, including Intel, IBM, HP, and Facebook.

What’s Bad?
The initiative does not eliminate the government’s toxic role in hindering startup and growth. The government needs to look at the following stumbling blocks that it creates:

• Regulatory burden. While President Obama has issued an executive order directing reduction in the burden, the regulations from Washington just keep coming and coming.

• Tax burden. Every penny that a small business owner sends to Washington is one less penny to be invested in business growth. Most small business owners pay tax on their share of profits on their personal returns (only C corporations are separate taxpayers). While favorable tax rates have been maintained for another two years, they could rise after 2012. A permanent, low top tax rate would help small businesses. The President’s new initiative has a couple of tax incentives, but none that would help the vast majority of small businesses.

• Health care premiums. Obamacare was sold with the idea that it would bring down costs; just the opposite has happened so far. What’s needed is action that will reduce premiums. This could include, for example, tort reform and other measures to reduce health care costs.

The Startup America initiative is a step in the right direction. Let’s hope it goes farther than just the end of the block.

My mother isn’t an entrepreneur and never was, but her sound advice on how to behave provides great lessons to live by…and to run your business by. In the days following Mother’s Day this year, it’s fun to reflect on this basic advice and how it can help in business.

“Always say please and thank you.” Basic rules of civility can easily be overlooked today in the fast pace of the business world and in online anonymity. But moms know best; being polite is good business practice.

• Ask permission to include customers and prospects on your email marketing list. This helps ensure that your messages will get through and won’t be treated as spam.
• Thank customers for their business. Consider using loyalty programs as a way of saying “thank you.”
• Thank customers, associates, or anyone else who provides you with referrals. Accompany a word of thanks with a small gift, or a discount or coupon for a future purchase.
• Thank employees for good work. Employee recognition by itself is good; financial rewards where appropriate are even better!

“Just because everyone is doing it doesn’t mean you have to.” (The follow-up statement: “if everybody jumps off a bridge, will you?”) What the advice is saying is that the mainstream may not be right for you. Sometimes you have to go in new directions; if you always follow the herd, you’ll always be one step behind.

• Now is a great time to explore new marketing venues, including social media and mobile opportunities. Alternatively, you may decide that the time (and in some cases cost) of social media may not make sense for your business model. Decide what’s right for your situation.
• To grow your business in a tough economy, find a niche that you can exploit. For example, if you are a web designer, consider specializing in creating sites for a particular group, such as performing artists or service professionals.

“Do your homework.” It does without saying that moms stayed on top of things to make sure you did what you were suppose to, and on time. Doing homework in business is essential, too.

• Before a sales call, study up on the person you’re visiting as well as his/her company so you can be prepared. Find out how to find out “hidden” information from Take the Cold Out of Cold Calling.
• Before you hire a new employee, do a background check so you can avoid costly “wrongful hiring.”
• Before you take any major action—expand into a new line, relocate to larger quarters, enter into a joint venture—do extensive research into the ramifications of your action. Will you be able to afford larger space if you experience an economic setback? Are there any unknowns about your partner in a joint venture? It’s better to find out sooner rather than later.

“Because I said so.” Moms often insist you follow their directives even if you don’t understand the reasoning behind them. Some things have no rational basis, but you should do them anyway. I’m not talking about listening to your mother in this case, but rather listening to your inner voice. It may be counterintuitive, for example, to become an entrepreneur during a recession, but this may turn out to be good timing.