No More Credit For Small Business?
A few weeks ago, I wrote a post saying there was not a credit crunch for small businesses (businesses under 500 employees), and that in fact, the commercial and industrial loans from banks were up through mid-October. Furthermore, they had been consistently rising since September 2007. This information came from two economists who are consultants to regional Federal Reserve Banks. I think the information was sound.
However, I just read an article in the current issue of Entrepreneur magazine stating that 65% of senior bank loan officers reported that they recently tightened standards for small businesses seeking loans. This did not match what I had previously understood, so I called a banker I know who deals primarily with small businesses, and was told the federal bank regulators were insisting that the bank change the way it does business.
This came from a sound bank that has been dealing primarily with small businesses for decades. In fact, most local and regional banks were not a part of the financial debacle on Wall Street at all. Unfortunately, this banker was telling me that the federal government is now calling the shots on bank lending policy everywhere. No wonder the number of senior loan officers tightening small business loans is at a record level—it’s not the banks, it’s the federal government.
The biggest problem with this is that, it is small business that will lead the U.S. out of recession. Big business has proven many times over that they cannot improve a flagging economy…they are followers, not leaders. During the last downturn when almost 3 million workers were layed off in 2002, small businesses created over a million new jobs in 2003, and had almost all the 3 million unemployed back to work by the end of 2004—while big business was still downsizing. It would be another three years before big business even replaced the jobs lost in 2002 and 2003. We can expect similar (or worse) performance from big business this time around.
Here are my suggestions for stopping rampant unemployment and starting a recovery of our business sector:
- Have the government stop thwarting the growth of small business. It is not the small businesses that created our recession…it was the greed and incompetence of big business. Let the local and regional banks do their jobs just as they always have, so small business can begin to grow again.
- Remove unnecessary government regulations from small businesses. Small businesses spend 67% more per employee on tax compliance than big businesses do. Sarbanes-Oxley was established to avoid another Enron—it also crippled the growth of many small businesses.
- Offer incentives to start and grow small businesses. Small businesses hire 40 percent of high tech workers (scientists, engineers, computer workers), so why not encourage more small businesses.
Letting the federal government control all banking will only lengthen the recession…if not drive our economy into depression. Local and regional banks are what sustain the growth of small businesses…the same small businesses that will lead the U.S. out of its financial crisis. Let us not allow the government to see problems where none existed—they always come in and, “…hunt mice with a cannon.”
Hang Onto Your Laptop
I recently read that, according to a study done this past summer for Dell, travelers lose more than 12,000 laptops per week in U.S. airports. Of course, some are simply “left” and show up in lost and found, but most of them are actually stolen.
There have been two leaders in computer tracking for quite some time. Absolute Software, and Brigadoon Security. Now a new service has appeared on the scene: Adeona (adeone.cs.washington.edu). This new service is free and open source, allowing the software to evolve with experience and new ideas by other developers. Might be something to look into.
Of course, the best thing is to hang onto your laptop in the first place.
Venture Capital – I
Venture capitalists rely primarily on an Initial Public Offering (IPO) for their big payday, but now, because of the recession, that window has been slammed shut. Does that mean venture capitalists are temporarily out of business?
Absolutely not, according to a recent report by PricewaterhouseCoopers. Venture capitalists have simply modified their strategy to accommodate the current economic conditions. As a result, U.S. venture capital investing has remained within historical norms through the third quarter of 2008. In fact, venture capitalists entered into more deals in the first three quarters of 2008, than in the same three quarters of all years since 2001. The trend for venture capital investments is up…and so should be the spirits of any company looking for venture investments.
In addition, the major changes the venture firms are making are likely to work better for most new companies, such as:
- The life cycle of the average investment is now longer (due to lack of IPO exits). Earlier venture investments were planned to end in four or five years—now they are looking at eight or nine years. This means that venture firms may invest additional capital, over a longer period, to assure continued growth of your company until “payday.”
- On the front end of the life cycle, the venture firms are typically investing sooner in the seed and early stage start-up phase. This means they may initially invest smaller amounts than they might have in prior years. This is good news for many ready-to-start companies.
Of course, the requirements for acquiring venture capital is about the same as they always have been—that is, a great idea, and an outstanding management team. Oh yes, you also must have a willingness to work harder than you ever thought you possibly could. Venture capital is not for everyone, and it is very difficult to obtain, but for those companies that need a sound investor to help grow their business, venture capital is necessary—and available.
The time has never been better for new company start-ups, and in future posts I will be giving some guidelines on how to prepare to seek venture capital.
Do You Have “Trigger Thumb”?
With all of the mini-keypad devices in our arsenal of technical gadgets, many users are experiencing a new form of tendonitis and joint disease currently referred to as “trigger thumb.” Loggers have experienced a similar problem for decades, as they aggravate their forefinger by operating the “trigger” on a chainsaw. Constant use of their forefinger results in a painful condition long known as “trigger finger.” I assume this is where the term “trigger thumb” came from.
Regardless of the origin of the term, “trigger thumb” is no laughing matter. It can develop into a very painful condition. More and more doctors are seeing patients with this condition. If the problem is not addressed early enough, it can develop into a degenerative condition with possible long-term disability.
So, how can we avoid “trigger thumb” and still get the benefits from our electronic gadgets? Here are some suggestions that a few of us might benefit from:
- Determine how important each use is. Do you really need to have that text conversation with a friend while shopping in a store—or driving?
- If you have to send a message, make it as short as possible. Don’t participate in long texting conversations.
- When you start to feel any pain or discomfort, stop using your device and rest as long as possible.
- If you already have a joint condition, like arthritis, don’t use your keypad any more than absolutely necessary.
- When all else fails, see your doctor. They may prescribe anything from rest to surgery, but, hopefully, the problem can be corrected.
- This last suggestion is the best of all—take a holiday! Put your devices in a drawer for a few days and do something out of the ordinary…like reading a book, going for long walks, or having face-to-face-conversations, and the like. This is not only good for your thumbs, but for your mind and your whole body as well.
I can’t imagine anyone giving up their electronic gadgets…we’ve come to rely on them too much…so we’ll just have to face the consequences. Maybe voice-recognition Blackberrys are just around the corner—of course that probably wouldn’t work while you’re texting during your boss’s staff meeting.
What is Business’s Responsibility to Society?
“Children born today, on average, won’t live as long as their parents. That’s the first time in our society that has ever been forecast.” These were the words of Secretary of the Interior Dirk Kempthorne in a speech to the attendees of the 2007 National RV Trade Show in Louisville, KY. He was referring to a recent report by the U. S. Surgeon General, which pointed out that illnesses due to physical inactivity—type 2 diabetes, heart disease, high blood pressure, and obesity—are a growing crisis.
Kempthorne expressed special concern for our children’s loss of connection to nature. The secretary pointed out that technology is keeping our kids indoors and sitting on the couch playing virtual games instead of being outdoors playing real games. Their are too many kids (and adults) that need to put down their Blackberry’s and go picking wild berries.
I wonder…when a company develops a new time-consuming gadget—from cell phones to the latest game-player—do they ever give any thought or consideration as to what physical effect their new gadgets will have on the users, or society in general? Apparently not, according to Alan Cooper, a highly regarded development engineer in Silicon Valley. In Cooper’s book “The Inmates are Running the Asylum”, he presents the premise that “…despite appearances, business executives are simply not the ones in control of the high-tech industry. It is the engineers who are running the show. In our rush to accept the many benefits of the silicon chip, we have abdicated our responsibilities. We have let the inmates run the asylum.”
As long as the engineers are developing “things” that sell well, the executives are happy—delighted, in fact. The possibility that these “things” are contributing to the potential breakdown of mankind—both socially and physically—is totally ignored, as long as the money keeps coming in.
Do you know what the highest grossing entertainment product in the world is? According to the Guinness Book of World Records, the highest grossing entertainment product in the world grossed $310 million in 24 hours—it was a video game. I also just saw that the number one Christmas gift this year is…video games.
It is easy for all of us to say, “It’s the parent’s responsibility to oversee their children’s lifestyle and activity.” Yes, that is true, up to a point, but through aggressive advertising, PR events, and peer pressure, it’s not that simple. The cell phone companies are constantly adding new features to attract kids, video games are getting more realistic and exciting, Blackberrys are de rigueur to a younger and younger group, computers are now a necessity for most school kids—and then, of course, there is television.
Where does the responsibility of we business people enter into this picture? Shouldn’t we consider some of the real impact of our products on society while we are developing them—or not?
I would really like to hear the views of others.
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