Up The Creek Without a Paddle
Published by Bob Foster· Comments Off
I think we have all been up that proverbial creek at some point in our lives…maybe several times. But now we have an answer—we know where to get our paddles so we can safely get back down the creek. Or not.
I hope you have a good week.
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Business Credit Cards At Risk
Published by Bob Foster· 4 Comments
A large majority of small businesses have credit cards issued in the name of the business. According to the National Federation of Independent Business (NFIB), 85% of small businesses have at least one card issued to the business. A recent report by the SBA, indicates that business credit cards represent about 70% of small-business lending by banks.
Moreover, a poll by the National Small Business Association (NSBA) indicated that credit cards are the top source of small-business capital.
That is why it is very timely that the Credit Card Act passed by the current session of Congress came along when it did…right?…WRONG!
It seems the new Credit Card Act conveniently excludes credit cards used for business. This means that credit card companies are free to have their way with small businesses that use their cards. Small business is still prey to the predators of big banks and finance companies.
In fact, in the same poll by the NSBA, 75% of respondents said they had been hit with higher interest rates; 60% said they had received their bills after the due date, and 15% said they had their cards cancelled for no reason, and without explanation.
A small-business owner could use their personal credit cards…except that transfers the liability from the business to the owner—and heaven help you if the IRS ever audits you. It is always recommended to not comingle business and personal expenses.
So, once again, our illustrious members of Congress have stuck it to small business—the very group of businesses that were supposed to bring this country out of recession. Yet, it seems like every time a small-business owner turns around they are being hit with higher fees, unknown additional costs for healthcare, threatened increases in taxes (expiration of tax cuts—or worse), and hidden extra costs like this exclusion from the Credit Card Act.
And everyone wonders why small business is so slow to spend money on hiring people and increasing capacity. Good Grief!
Am I the only one that is concerned about the future of small business?
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Can the U.S. Education System be Fixed?
Published by Bob Foster· Comments Off
I have pointed out on this blog from time-to-time that the U.S. is rapidly falling behind the rest of the world in new technology and new product innovation. Every year it seems that we fall one or two places further behind while other nations are rapidly rising. Why is that?
I have also taken the position that the main reason the U.S. is falling behind the rest of the world is because we are not educating our young people. Why are the school kids in the U.S. only 17th in the world in science proficiency? Or worse yet…why are we only 25th in the world in math proficiency?
Why should this even matter? Well, I believe that, as a result of a dearth of young scientists and engineers, we are no longer technology leaders in the world, and that is impacting our economy, our society, and our standard of living. So, what can we, as a nation, or especially as a private citizen, do about it?
Here is what one nation has done. Finland decided to change from an agriculture based country to a technology based country, and they started by educating their young people. That is the reason Finland is now 1st in the world in science, and 1st in the world in math. For a closer look at this effort by the Finnish people, take a look at a Brian Williams spot on NBC Nightly News that played last week. It is a real eye opener.
(email subscribers need to view on my blog)
Points to consider about Finland’s education system:
- Teachers are considered Professionals—the same as doctors and lawyers. Finnish teachers come from the top 10% of their class, while 47% of America’s teachers come from the bottom third.
- Teachers in Finnish schools must prove they have a strong commitment to the teaching profession. They also must have a Masters Degree.
- Education is of National importance.
- Parents are heavily involved in seeing that their children get an education.
- The national dropout rate in Finland is 2%. In the U.S. it is 25%.
- The Finnish culture “values” education. The average student speaks 4 languages, including English.
Here’s a couple of things I found to be of special interest from watching this video clip:
1) I watched it several times, but I did not see a single cell phone, or text-messaging student, even though Finland’s mobile phone service is many times better than the U.S.
2) All of this attention on education should be very expensive…right? Well, the cost of education in Finland is $3,000 dollars per child per year less than in the U.S.
So, what is the answer for America? Should we make education a national priority? Should we turn the schools back to the teachers? Do we have too many “administrators?” Do we have the right structure in place for overseeing our schools? I have many more questions, but one person’s opinion is not going to make any difference…the important thing is: What does America think about education? What do you think about education in the U.S.? Many of us would like to know.
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Small Business Hit With Regulatory Costs
Published by Bob Foster· 2 Comments
On the eve of the newly passed small business assistance bill (TARPll?), the Office of Advocacy of the SBA released a new report on the impact of government regulations on small business. The timing is somewhat ironic in that the report discusses the onerous cost demands being forced on small business–while the new bill offers to cut taxes…taxes on what; I’m not sure.
Just for a benchmark, this new report tells us that the cost of federal regulations for all businesses has increased to $1.75 TRILLION per year, as of 2008. That number breaks down to $7,755 per employee for large firms (500 or more employees) and $10,585 per employee for small firms (fewer than 20 employees). That is a 36% difference.
Interestingly, it appears from the report that a good portion of this cost is for paperwork required by various federal regulations (and bureaucracies). For many of the regulations there is no differentiation between small firms (fewer than 20 employees) and large firms (over 500 employees). They all have to adhere to the same reporting requirements.
It just seems to me that in the face of our current economy, the bill that was just passed totally missed the boat if the intent was to get small business going in order to improve the economy. Passing a bill to reduce some of the paperwork demanded by federal regulations would have accomplished much more.
In addition, are there any small businesses out there that are not concerned about the cost of the upcoming implementation of the new healthcare reform law in 2014?
Is it any wonder that entrepreneurship in the U.S. is falling behind the rest of the world? Or, does anyone even care?
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Land of Vast Potential
Published by Bob Foster· 4 Comments
When thinking about a land of vast potential, one would not likely think about Detroit, Michigan. This was struck home tonight on the evening news that did a segment on the plight of Detroit.
The city is rapidly becoming a ghost town, with the population dropping from around 2 million people at its peak, to around ¾ of a million today.
However, earlier in the day I received an email with this movie trailer of a documentary film on the people of Detroit. That got me thinking about all the possibilities for new businesses—maybe even starting a whole new industry. Take a look at the trailer and tell me what you think.
(email subscribers can view on my blog)
When the full documentary film is released, I’ll let you know where you can view it, or obtain your own copy.
In the meantime, let your imagination run with the possibilities of remaking an entire city—and then let me know what you came up with.
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Perseverance in the Face of Adversity
Published by Bob Foster· Comments Off
At age 49, Bernie Marcus and his good friend Arthur Blank, were fired from their jobs with a Southern California hardware chain. Anyone reading this who has been in a similar situation knows that in our youth-oriented society, finding another job at this age is pretty tough.
That apparently was the case with Bernie as well, so he decided to team up with Arthur and they opened their own hardware store instead. In fact, they planned on having a chain of hardware stores someday, so they found an investor and opened two stores at once, in malls that had empty store buildings.
Unfortunately, they did not have enough money to stock both stores—one of the stores looked more like it was closing, instead of getting ready for a grand opening. So Bernie called on his experience in retailing and purchased empty paint cans and boxes, and filled all the upper shelves with them. By opening day, Bernie’s stores looked like real, well-stocked, hardware stores.
The Grand Opening, however, was still not a huge success—there were no customers. Bernie and Arthur even had their kids handing out $1 bills in the mall parking lot to entice people to come in. Fortunately the drought of customers was short lived as word of their great customer service spread.
Bernie’s experience taught him what customers really wanted and he capitalized on that. But, more than anything else, it was his determination and spirit that kept both he and Arthur going through the disappointments…and lack of customers.
It did not take long until their concept caught on and they began to expand. Two years after they opened their first two stores, Bernie and Arthur took their company public, and the rest is history.
Oh yeah, the name of their company was The Home Depot.
With companies like Facebook, Twitter, and a host of other high-tech companies trying to break into a profit after spending tens of millions of venture capital, it is interesting to see the tremendous financial successes of companies like Home Depot, Costco, and others like them.
What do you think about the relative successes of high-tech vs. mundane businesses like household hardware?
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