Barbara’s Blog

Luddites were 19th century English textile workers who smashed the newly invented machines they feared would replace them. We now know that machines and other technology are enhancements used to increase productivity and don’t necessarily replace workers. Still, the post-recession economy may prove the Luddites right.

Technology replacing workers
New machines, software, cloud applications, and other technologies continue to debut. They help to make companies run more efficiently and, in many cases, using fewer workers. Earlier this year, AP reported “Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.”

Other findings by AP:

• Technology is enabling startups to launch with one-third fewer employees than in the 1990s
• Companies in the S&P 500 Index grew profits post-recession by one-third while cutting their payrolls in half

Low-paid workers
Those who have jobs may not have enough spending money to oil the economy. Kiplinger reported that 28% of workers are in jobs that earned them less than the poverty level (this is 5% more than in 2002). The Kiplinger Letter had it right: “An economy can’t grow if too many workers don’t have money to spend.”

The answer from some economists and politicians has been to raise the minimum wage. However, many small business owners have said that a higher minimum wage will force them to use fewer workers. What’s the right answer? I don’t know.

Conclusion
Early in the last century, the story goes that Henry Ford paid his workers $5 an hour, an unprecedented sum for the times, so that they could afford to buy the cars he sold. The real story (the reason for the high pay and how it was figured) may be somewhat different, but the lesson seems sound. In the short run, replacing workers with technology and paying low wages are helpful to the bottom line. I’m no economist, but it seems to me that in the long run, there may be few left to buy what we have to sell. The Luddites in the 19th century were concerned with their jobs; now it seems that they had a point when it comes to the economy.

Tragedy and trauma are the words that come to mind when I remember the images of the bombings at the Boston Marathon’s finish line. As the days passed, and residents in Watertown, MA, and other areas were ordered to stay in their homes, I began to think about the impact that these events have on small business. Here’s my take.

1. Always expect the unexpected. Life is unpredictable and your course can change in an instant. The best laid plans often have to be postponed, remade, or abandoned due to things beyond your control (e.g., weather, power outages, and now domestic terrorist events). Having a Plan B can come in handy.
2. Consider business interruption coverage. Businesses near the site of the bombing had their glass blown out and suffered other property damage. These losses are probably covered by a business owners’ policy (BOP) (check whether your policy covers losses due to terrorist acts and riots because these occurrences may be excluded). But these businesses and others in the Boston/Cambridge area became part of crime scenes and were shut by authorities, causing substantial losses (e.g., Legal Seafood had to dispose of thousands of dollars of fish that could not be consumed because of the closure). Business interruption insurance provides protection in these instances, helping you pay your bills as well as giving you the profits you would have earned during the time you could not operate. Talk with your insurance agent about this coverage.
3. Review your “absence” policy. Your doors may have been closed, or your business was outside the parameter of mandated closures, yet employees may have been unable to get to work. Transit systems were shut and residents in certain areas were told to stay put. Do you pay your workers for their absence? Businesses with strict policy about absences should re-think the treatment of workers who are prevented from showing up because of no fault of their own. A paycheck for these days means a lot (it’s a show of good faith to your workers and an indication of normalcy).
4. Review your supply chain. Your business may be across the country, but if your suppliers were in Boston, your shipments may have been delayed. This is a lesson for businesses everywhere: Make sure to have alternate suppliers that you can turn to when your shippers—for whatever reason—cannot meet your needs.
5. Enjoy every moment. Too often, company owners are so wrapped up in their business activities that they fail to enjoy the process. Take time to celebrate small achievements (such as landing a new customer), milestones (such as reaching your 5th year in business), and the personal and professional moments of your people (such as completing an education course, getting married, or being promoted).

Terrorist experts have predicted that events similar to the bombings in Boston may happen again, in other locations. While we don’t want to live in constant fear or to change our way of life, small alterations in our outlook and our actions can help us get through whatever we may face in the future.

Margaret Thatcher died on April 8th at the age of 87. She was known as the ‘Iron Lady’ and one of the most influential people of the 20th century.  She grew up as the daughter of a grocer; the family lived over the store (there was no hot water or an indoor toilet). At home she learned the value of hard work. Thatcher went on to a brief career in chemistry and ultimately to be Britain’s first woman Prime Minister, a post she held for 11 years.

She was an inspiration to me and she left behind important lessons that I’d like to share.

“My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day’s work for an honest day’s pay, live within your means, put by a nest egg for a rainy day, pay your bills on time, support the police.”

“Pennies don’t fall from heaven — they have to be earned here on Earth.”

“You may have to fight a battle more than once to win it.”

“Being powerful is like being a lady. If you have to tell people you are, you aren’t.”

“The problem with Socialism is that you eventually run out of other people’s money.”

“Look at a day when you are supremely satisfied at the end. It’s not a day when you lounge around doing nothing; it’s a day you’ve had everything to do and you’ve done it.”

“Any woman who understands the problems of running a home will be nearer to understanding the problems of running a country.”

“There is no liberty unless there is economic liberty.”

“Plan your work for today and every day, and then work your plan.”

“What is success? I think it is a mixture of having a flair for the thing you are doing; knowing that it is not enough, knowing that you have got to have hard work and a certain sense of purpose.”

It seems to be the norm these days. The Bureau of Labor Statistics reported recently that the average number of hours worked by all types of full-time employees in the U.S. (other than on farms) in February was 34.5 hours (up 0.1 hour from January). Hours for those in manufacturing: 40.9 hours (up 0.2 hours). For owners, who knows? Many owners I know work 60 hours a week or more.

Impact on health

Do long work hours adversely impact health? An article in a scientific journal suggests they can kill you! Working longer than eight hours increases the chances of coronary disease by 40% to 80%. You certainly don’t want this for yourself or your staff.

Reasons for overwork

There’s no single answer for why you and your staff are putting in long hours. Examine which of these possible reasons apply in your situation so you can address them properly.

Technology

The ability to work after regular work hours is all too easy these days, with smartphones, tablets, and WiFi just about everywhere you go. The result: the boundary of the workday has virtually disappeared.

What to do: Limit business time during off hours. Mute devices and wait until business hours to respond to business communications.

Smaller workforce

The recession (which continues for many small businesses despite economic indicators) forces many companies to make do with the staff they have, even if it’s smaller than would be optimum. Employees who are still with the company must handle more work than when the company was fully staffed.

Even more problematic are the companies that are now flourishing and could use more help. Even if they could afford the substantial added cost of new workers (wages, employment taxes, workers’ compensation, and employee benefits your current staff enjoys), there’s a sticking point that isn’t easily overcome. If a company becomes a “large” employer (more than 50 full-time employees), it’ll be subject to the employer mandate for providing affordable health coverage (or paying a penalty) starting in 2014. The determination of whether an employer is “large” is based on 2013 payroll.

What to do: Some companies are alleviating overwork for existing staff by taking on part-timers (less than 30 hours a week). They can carry some of the extra work load without triggering the employer mandate in 2014. Determine whether part-timers may be a solution for your business.

Competitiveness

Maybe it’s compulsion that drives some people to work longer hours that may be required by an employer or the scope of the job. Certainly, with the lack of job security these days, many feel compelled to show their commitment to the company in the hopes of increasing their worth to the business (which is meant to create some job security).

What to do: Be clear to workers what is and is not required of them. Simply sitting longer at a desk and looking busy doesn’t help your business. For some types of businesses, it makes more sense to set tasks or projects that need to be completed; when they are done, the workday can end. Sometimes this may require extended hours, but good planning and scheduling can help to limit employees’ hours.

Final thought

As the saying goes: Stop and smell the roses.

Will federal sequestration—the automatic budget cuts set to take effect on March 1—impact you? It depends on your business and on who you ask.

What is sequestration?

Sequestration is the name for federal budget cuts (primarily in defense spending) scheduled to begin on March 1 if Congress fails to find way to make required budget cuts to meet a pre-set level. The exact amount of these cuts is difficult to determine; it changes from source to source (I’ve seen mention of $85 billion in initial cuts). Overall, sequestration is supposed to make cuts of $1.5 trillion over 10 years. Also, sequestration means that the federal government is limited in the amount of additional borrowing. Details about the cuts from sequestration can be found in a Congressional Budget Office Report.

Sequestration was suggested by President Obama and agreed to by Congress in the Budget Control Act of 2011 as part of a compromise to raise the federal debt limit.

Which businesses will likely be impacted?

Entrepreneur Magazine said sequestration could result in a “dramatic decrease” in government contracts (how much is unclear). The Chairman of the House Small Business Committee agrees. Many small businesses receive contracts directly or as subcontractors of prime contractors.

A White House blog fact sheet sequestration could result in fewer SBA-guaranteed loans. These are commercial loans that receive government guarantees. The fact sheet pegs the cutback at $902 million.

The New York Times reported that a senior policy analyst with the National Federation of Independent Business thought it impossible to predict the impact of sequestration on small business and whether it would hurt the economy.

Final thoughts

Let’s be realistic about the specter of sequestration vis-à-vis small business. Not every small enterprise is in the market for a loan or is a government contractor. Little else has been discussed on the overall impact that sequestration would have on small business. The actual budget cut resulting from sequestration is only a drop in the federal budget bucket (probably about 2%). Many businesses I know would readily cut their budget by this amount if they didn’t have the funds to pay 100% of what they had previously expected. Why shouldn’t the federal government do the same?

What’s more, even if March 1 comes and goes without further Congressional budgetary action, nothing prevents some activity down the road. Let’s not panic. Let’s wait and see.

Valentine’s Day is a highly personal event for lovers, lovers-to-be, and those who want to share love with friends and relatives. But it also has a minimal impact on your business, unless you happen to sell holiday-related items, such as flowers, jewelry, greeting cards, and candy. For the rest of us, here are some issues of concern.

Supporting healthy choices

You want your staff to be healthy and your company supports healthy choices. How does the box of chocolates on the receptionist’s desk impact your goals? It doesn’t, but what can you do about it, and, even if you can do something, do you want to?

Okay — it’s one day, and displaying candy or pink donuts may not be the worst thing. While the calories may add up, so, too, will the benefits to the company from workers enjoying the day and bonding with each other on a common subject.

Consider sharing the treats with customers and clients — they, too, will enjoy the day.

Office romance policy

Many government agencies and large corporations have formal policies about dating co-workers; most small businesses do not. Should you?

Recognize the dangers of office romances. They can be distractions from the work at hand. And, if things go sour, they can create bad feelings and a chilling effect on the team. Perhaps the worst effect is the possibility of sexual harassment claims, which may lead to legal problems; relationships between supervisors or managers with rank-and-file employees should be a no-no.

Be careful about your dating policy. There’s a fine line between personal and business matters. It may simply be better to monitor activities relating to your staff (dating usually impacts more than just the couple) and react to problems if and when they arise.

Owner’s practices

What should you do (or not do) today? Give gifts? Best wishes? It depends on your company culture, your personal comfort level, and what you want to spend on the holiday. There’s nothing wrong with a little levity in the workplace. Whatever you decide, be fair and share your generosity with your entire staff.

Once a year, football titans meet in the Super Bowl. This year, the Baltimore Ravens meet the San Francisco 49ers in New Orleans. Whether you’re a football fan, this game will surely impact your business.

Increased business for locals

Some businesses directly benefit from the Super Bowl. Small businesses in New Orleans — restaurants, hotels, sign printers, transportation companies, and security firms — are sure to reap revenue from tourists attending the event. The tally on this pop won’t be known until after Sunday.

Local businesses outside of New Orleans

The National Restaurant Association reported last year that an estimated 48 million Americans were expected to order takeout or delivery for the Super Bowl. Of these Super Bowl viewers, 61% said pizza was a must-have.

Not everyone stays home. The same report estimated 5% would watch the game at a restaurant or bar.

Similar results are likely this year. Thus, small business owners of restaurants, bars (especially sports bars), taverns, and other establishments offering food, drink, and perhaps TV are sure to have a good day on Sunday.

Lost productivity

But not every business is necessarily happy about the Super Bowl. Office pools, lateness or absences on the Monday after the game, and other reasons add up to less work being done. A few years ago it was estimated that $820 million was lost in worker productivity. There’s no reason to expect different results this year.

As a business owner, what can you do? Probably not much, assuming you wanted to. The big game is part of the American fabric and putting a ripe in it would likely hurt morale, which could result in lower productivity for a longer period than this first week in February. Instead, it’s probably wise to acknowledge or welcome the camaraderie fostered by the event. A friendlier workplace is sure to attract and retain the best and brightest, and that’s ultimately what you want for your business.

Can you dictate what employees can and cannot do on social media? … Up to a point.

There’s some guidance on this from the National Labors Relation Board (NLRB) through rulings it has issued on specific cases and issuance of three memorandums.

These guidelines, which may be helpful in crafting a social media policy, apply to companies whether or not they are unionized.

1.    You can’t “chill” a worker’s right to discuss the workplace
You can’t limit employees’ rights to talk about workplace conditions, wages, or how other employees or the company is performing. Putting in a “privacy clause” (about not sharing personal information about co-workers) does not make such limitation permissible.

2.    You can bar “rants”
While talking about workplace conditions is permissible, ranting about it is not. What’s a rant? The NLRB says it is inappropriate comments and posts that are not part of a dialogue.

3.    You can require confidentiality for trade secrets
While employees can discuss workplace conditions, company policy can restrict their right to talk about trade secrets. However, you cannot threaten discharge or criminal activity for failing to report any disclosures.

4.    You can bar egregious behavior
You can limit employees from posting anything that is unlawful. This includes posts amounting to sexual harassment, threats of workplace violence, bullying, or malicious activity. You can also bar obscene language as part of an overall ban on egregious behavior.

5.    You can bar use of social media during work hours
Because the equipment is yours, you can dictate when and the extent to which it is used by employees for social media activities.

6.    You can’t bar an employee from outside posts
While you can suggest or request that employees refrain from discussing company matters on their own time (with their own equipment), you can’t bar it. However, the NLRB did uphold one company’s policy barring the display of a “bad attitude” or acting offensively.

7.    You can restrict the use of the company’s IP
Employees may be barred from using company logos and other protected marks for commercial purposes. However, they can use company marks for noncommercial purposes, such as in discussions of workplace conditions.

You can bar employees from using the company’s copyrighted material without permission.

8.    You can’t require employees to seek permission for posts
You cannot make employees ask permission before posting comments about workplace conditions. You can, of course, suggest that they check on whether other comments may or may not be related to non-disclosable confidential company information.

9.    You can’t bar discussions on the company’s labor policy
Whether or not the company is a union shop, employees cannot prohibit employees from talking about union activities. What’s more, if you implement a social media policy in response to any such activities, the NLRB likely will scrutinize it.

10.    You can require that employees disclose their posts as personal opinions
Employees can be barred from representing themselves as company spokespersons. When posting opinions, they should make it clear they are personal opinions and do not represent the company’s views.

Conclusion
Your company’s social media policy is not automatically permissible merely by including a so-called courtesy clause (a general prohibition against the use of unseemly remarks). Similarly, a savings clause (a statement that the policy will be administered in compliance with applicable laws and regulations) cannot cure ambiguities in a policy. Poor taste, for example, cannot be prohibited.

If you have concerns about your company’s social media policy, discuss this with an attorney knowledgeable about this matter.

By late November through the end of December, many business owners experience fatigue resulting from trying to get everything tied up neatly before the end of the year.  During this period, the need for more working hours in the day has never been greater.

I hear from owners about what they should do regarding year-end tax planning, which requires them to take various actions. I receive numerous invitations for holiday parties, which means that someone is planning and hosting these events. And for many owners, the end of the year is their busy season. These and other factors can be overwhelming and result in end-of-year fatigue.

Warning signs

You can admit to having end-of-year fatigue if you are experiencing any of the following symptoms:

• Anxiety—concerns about whether holiday sales will live up to expectations, whether you’ve given the right holiday bonuses and gifts to staff/customers, or if you’ll make it to January 1.
• Distractedness—the inability to concentrate on business because your thoughts are elsewhere (you’re thinking about shopping for holiday presents for the family; attending holiday functions, etc.).
• Grumpiness—the bah-humbug feeling that you wish this season was over.

Recognize the signs of fatigue and stress in your employees and customers, too. Handle them accordingly; be patient and understanding.

What to do

You’d think that this year-end fatigue for small business owners would be easy to cope with after having experienced it year after year. But many re-live these symptoms with no relief.

Here are some things to remember that will help you cope.

• Focus on the positives for this time of year. Keep your good fortune in mind. Maybe it is concluding a profitable business year. Maybe it is enjoying the holidays.
• Be thankful. Tell your employees how grateful you are for their assistance throughout the year, and especially during this holiday season. Tell your customers that you are thankful for their business.
• Remember that the New Year is just around the corner. The end of year feeling is, by definition, finite. A New Year begins on January 1 and you can put the old year behind you.

Did I mention it’s almost time for New Year’s Resolutions!

Another thought

Don’t confuse end-of-year fatigue with serious health-related fatigue programs. If your fatigue is more than just a mild care of too much holiday spirit, consult a doctor. One resource that may be helpful is “Fatigued to Fantastic, 3rd ed.” by Dr. Jacob Teitelbaum, which is about chronic fatigue syndrome and fibromyalgia.

Small business owners may complain throughout the year about taxes, government regulations, and the economy; I know I do. On this day of Thanksgiving, it is a good idea to remember all of the things we have to be thankful for in the United States. Here are some you may have overlooked:

Taxes could be higher
We gripe about our current tax rules and the Medicare additional taxes poised to start for high-income individuals on January 1 of next year. Sure, these will be a burden on successful business owners and may impede their ability to hire more people, invest in equipment, and make capital improvements. And corporate tax rates in the U.S. are the highest of any of our leading trading partners.

But rates on individuals could be higher. According to one source, France’s top rate is 48% (with a proposed “supertax” of 75% on those making more than one million Euros), and Spain’s top rate is 52%. Western Europe on average has a top individual income tax rate of 46.1%. This compares with our current top rate of 35% (which could rise to 39.6% in 2013 unless Congress maintains the status quo).

And the top corporate tax rate may come down in the near future. President Obama has, from time to time, supported a reduction in this rate to 28% (and even lower for manufacturers). This could become part of comprehensive tax reform undertaking in 2013.

Regulations could be worse
Over the past decade, the federal government has issued about 38,000 new final regulations to govern not only businesses but virtually every other aspect of daily activity. Many small business owners complain that some regulations are choking the life out of their companies. But it could be worse. The WEF Global Competitiveness Index survey ranked the United States in the middle of Organization for Economic Co-operation and Development (OECD) countries in terms of regulatory burden.

For a report on 2013 regulations on small and mid-size businesses worldwide, go to DoingBusiness.org.

And there are some in Congress who are speaking out against regulations that lack common sense (i.e., those that impose heavy fines for violations without first issuing warnings). Hopefully the regulatory climate will improve.

Interest rates and inflation are low
Two of the key killers to business growth are high interest rates and high inflation. Fortunately, neither exists at the present time. Of course, deficit concerns could result in inflation heating up (which is a way for the federal government to resolve its debt problem), but that probably won’t happen anytime soon.

Freedom to pursue dreams is still alive and well
November is Entrepreneurship Month and a good time to remember that the U.S. is still the land of opportunity. Anyone, regardless of age, sex, national origin, religion, or education, can start a business and achieve success.

According to the Global Entrepreneurship Monitor (GEM), the U.S. continues to display the environment supportive for business startups. While there are countries with better startup-rates and more business-friendly environments, there are many where things are worse. All in all, we don’t have it so bad.

Happy Thanksgiving to all!