HOW TO TAKE THE BITE OUT OF RAISING FEES

Original Story: pnc.com

All companies struggle with pricing — how much is too much? It can be especially difficult for small and midsize businesses to balance what they charge with what the customer will bear.

However, there comes a time when it just makes sense to raise prices, and with the health of the economy improving, this could be a prime time to reassess your pricing strategy and make some upward adjustments. A Memphis small business lawyer assists small business clients with business operations, state and federal business laws, and with business taxation issues.

With that said, any kind of price increase should be considered thoughtfully and implemented carefully. In this post we provide a few ideas to help you evaluate your market, establish new pricing, and ease your existing customers into paying a bit more for what they already know and love.

Evaluate Your Market

Before raising prices, it's important to get a clear picture of what your industry and competition is charging. If you’re a hyperlocal business, evaluate other businesses in your area that serve your industry. If you have a larger reach (national or international), conduct a wider-ranging evaluation of going rates for similar products and services.

You may also find that a pricing increase is warranted based on your overall reputation, demand for your products and services, and your business volume based on referrals. When people love what you do and how you do it, incremental price increases can increase profits while still keeping your most critical business asset (your customers) happy.

Establish New Pricing

When implementing new pricing on existing products and services, you need to determine an acceptable threshold. A Boca Raton business lawyer is following this story closely. Here are some questions to help you put prices in context:

• Do my current margins allow me to earn an acceptable return on this product or service?
• How much do I need to increase pricing to make offering this product or service worth my company’s while?
• Are there additional features being added to existing products and services that will help justify the increase?
• Can I offer client testimonials to help support my pricing increase?

Ease Customers into New Pricing

There’s always the fear that raising prices could alienate your existing customer base. When you’re ready to roll out your revised pricing, here are a few strategies that can help ease the transition:

• Offer grandfathered pricing for existing customers: Acknowledge customers who have been with the company by letting them pay the old pricing for a set time period (say, six or 12 months).
• Gradual escalation: If you’re a service-based company, it may be helpful to offer a scheduled increase in costs — for example, an increase of X percent up front, with additional X percent increases at three and six months.

When it comes to pricing, you're the only one who's going to keep your company's pricing inline with both the value you offer and the standards for your industry. A Dearborn business lawyer assists clients with business law matters. Pricing isn't just about how much you charge. It's about keeping your company profitable — in every economy.

SMALL BUSINESSES IN SOCAL INCREASINGLY OPTIMISTIC, SURVEY FINDS

Original Story: latimes.com

Businesses in Southern California are increasingly optimistic, with most expecting better revenue this year and even higher sales in 2015, according to a new report.

The vast majority expect to maintain or boost their investments in leases, contracts and other long-term commitments, according to the survey. Nearly all expect to do the same with their marketing and sales budgets.

The percentage of businesses who expect to trim full-time head counts is in the single digits, with business and professional services most likely to anticipate boosting hiring. More than a third said they’re planning to bring on additional part-time workers.

The survey was commissioned by Los Angeles financial institution CTBC Bank Corp. and conducted by FTI Consulting from 432 respondents at businesses with 1,000 employees or fewer.

“This was the black-and-white, graphic proof of the optimism,” said Noor Menai, chief executive of CTBC. “This really comes from the ground up – you’re talking about the lifeblood of the U.S. economy in small businesses.”

Doing business in Southern California has some major advantages, respondents said. The workforce is enormous and the education level of workers is higher than it is in most other places.

And manufacturers especially said the easy access to national and global markets through extensive transportation networks was key.

“There was a gestation period. We saw during the crisis that a lot of business left the country or went dormant,” Menai said. “But they’ve started seeing the right things happen in recent years. It’s coming together.”

But the sense of cheer among local businesses is tinged with reservations.

More than 7 in 10 respondents said it’s difficult to find and retain workers with desirable skill sets.

Two-thirds said they had to alter their business strategy to draw talent. Many suggested that companies increase on-the-job training while also encouraging educational institutions to direct students into disciplines most needed by employers.

Many complained that tight capital and cash-flow problems were holding them back from starting new businesses, as were high labor costs. Government taxes and regulations at the state level were also troublesome, as was the cost of real estate and facilities.

Half of the survey respondents said they were located in Los Angeles County. More than a third hailed from Orange County or San Diego. The rest came from the remaining Southern California counties.

Six in 10 respondents said they were managers; the rest said they were owners. Manufacturers made up 15% of participants; professional services constituted 10%. The rest included business and financial services, construction, information technology and other companies.

The largest percentage of respondents – 19% – said they had revenue of $5 million to $10 million each year.

MCDONALD'S RULING IGNITES BUSINESS-LABOR FIRESTORM

Original Story:  USAToday.com

Labor advocates are claiming a big victory after a federal agency said Tuesday that McDonald's central, corporate operations can be lumped in with its thousands of franchises for liability purposes.

The world's largest fast-food chain promises to fight a National Labor Relations Board decision that it says "changes the rules for thousands of small businesses."

"HUGE victory for labor & fast food workers!" tweeted the Service Employees International Union. The union was responding to news as relayed in a The New York Times report that McDonald's corporate apparatus must address workers' complaints that they were fired or disciplined for participating in protests calling for higher wages.

U.S. Chamber of Commerce spokesman Randy Johnson says in a news release the NLRB move "upends existing law and is part of a larger agenda at the NLRB to overturn the joint-employer standard."

Another Chamber exec, Glenn Spencer, calls it "a ploy that could threaten nearly 800,000 franchise businesses and the millions of people who work for them."

The key phrase in the NLRB decision is "joint employer" -- that's the term that the agency's general counsel, Richard Griffin Jr., says can apply to the corporate entity, thus linking it to the franchises. Griffin is a former NLRB board member and served on the board of directors for the AFL-CIO lawyers coordinating committee.

The NLRB has determined that 43 of 181 complaints filed since November 2012 have merit to proceed, the agency says on its website. Of those "43 cases where complaint has been authorized, McDonald's franchisees and/or McDonald's, USA, LLC" -- the central, corporate entity -- "will be named as a respondent if parties are unable to reach settlement."

It is not clear from the NRLB statement how many of the cases involve franchised locations. Sixty-eight cases were found to have no merit, while "64 cases are currently pending investigation," the NLRB says.

Protests over pay at McDonald's have gained traction in recent months. SEIU President Mary Kay Henry was among those arrested in a protest preceding McDonald's shareholders meeting in May. Several McDonald's workers -- among a crowd brought in by 32 buses, police said -- were arrested as well.

The Rev. Dr. William Barber II, head of the NAACP's North Carolina chapter, led the protest march onto McDonald's headquarters campus in Oak Brook, Ill., telling USA TODAY that a "living wage is a moral mandate, and it's time for McDonald's to pay fast-food workers their just due now."

McDonald's has about 3,000 franchises in the U.S., according to the company's website. The company has a total of about 14,000 restaurants in the U.S.

"Wrong" is McDonald's way of describing the decision.

"McDonald's also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States," says Heather Smedstad, speaking on behalf of the company.

Smedstad, senior vice president over human resources in the U.S., says in a release that the fast-food giant "as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country."

LET DIVORCE BE AN ENTREPRENEURIAL SPRINGBOARD

Original Story:  USAToday.com

Hi Gladys, I am 55 and recently divorced. I have two kids who are both in college. During my marriage I work at various part-time jobs. But I can't say that I really did anything significant. Now I am in a situation where there is nothing to hold me back from really doing something with my life. I would like to start a small business but most of the business magazines I read seem to focus on young entrepreneurs. Sometimes I feel like I have waited to long. My friends keep telling me that it's never too late. But I don't know about that. -- M. L.

I agree with your friends, it's never too late. As long as you are living and breathing there is no reason to avoid venturing into new things.

Arriving at the mid-point in life has many rewards that you can bring to the world. You have gathered information and knowledge as a result of your experience during your life. And you have come to understand many things and most often that understanding leads to wisdom. And how that wisdom can be applied is unlimited.

You say that you haven't done anything significant, but I would say that raising kids, keeping a household running and working at any type of job outside of your home is significant. I often tell people who feel like you to make a list of all of the things that they have learned in life and in nearly every case they have expressed surprise at the things that life has taught. And even more important they have found several gems in their list that can be turned into a successful business

Taking care of a family is not an easy task. Each family member has his or her own personality and traits and must be dealt with individually and yet collectively. Facing divorce or the death of a spouse teaches one to learn to cope with change and uncertainty. And to handle your household while working outside of your home also gives you added skills.

My friend Marta worked in a part-time clerical position for years while raising her two kids and at the age of 59 she decided to enroll in a theological seminary to study theology and religion. After a several years of dedication and hard work she graduated with a degree and soon after was appointed to pastor a small church.

I have another friend who returned to school to get a Masters in Fine Arts so that she could sharpen her acting skills. Also at the age of 59, she received her degree and packed up her Volkswagen after selling her house and headed to California to find her way into acting. And so far she has managed to find quite a few acting jobs and she is often hired to perform in stage plays.

Keep in mind that Margaret Mead's career flourished in her mid-life and after divorce, as did Martha Stewart's.

The important thing is to have confidence in yourself and stop questioning your ability to reinvent yourself.

Business leaders warn as cliff nears

originally appeared in USA Today:

Business leaders are getting more worried about the fiscal cliff, and urging Congress and President Obama to make a deal before the New Year triggers a series of tax increases and spending cuts that would likely put the nation back in a recession.

The Business Roundtable released a letter signed by 158 chief executives of companies with more than $7.3 trillion in sales and 16 million workers, saying congressional Republicans need to make concessions on revenue, and Democrats need to give ground on entitlements such as Medicare and Social Security.

At the same time, the National Federation of Independent Business said a survey of its members showed a huge drop in confidence after the November election, as the cliff drew closer.

The NFIB survey of business confidence fell almost six points to 87.5, the lowest score since 2009 and far below stock market expectations for 92.5. The drop is a sign that business owners are losing confidence as Congress moves closer to raising taxes on couples making more than $250,000 a year, even though less than 5% of business owners make that much, said UBS economist Drew Matus. Only 9% expect better conditions in six months, compared with 49% who expect things to get worse, the NFIB said.

The United States will suffer significant negative economic, employment, and social consequences for going over the fiscal cliff, the CEOs said in a letter to congressional leaders. In many cases, the damage will be long-lasting, if not permanent. But it does not have to happen.

The chief executive of USA TODAY parent Gannett, was one of the CEOs who signed the letter.

The NFIB survey showed declines in nine out of 10 indicators of confidence, with a slight uptick in hiring plans for early next year, the federation said.

Marginal investments may not be undertaken as the increase in taxes moves some investment from the yes to the no column. The debate is whether that marginal investment is a significant source of innovation or employment.

The survey was more bearish than other indicators of business confidence recently. Moody's Analytics' weekly survey of business confidence, released Monday, said confidence rose slightly but remains at a low level. About a third of respondents expect the economy to get worse in the next few months, Moody's reported. In Moody's survey, government officials were the most pessimistic about the economy.

Like investors, businesses appear to believe that policymakers will come to terms before pushing the economy back into recession, Moody's chief economist wrote in a report. However, business sentiment appears very fragile and likely to turn sour quickly if policymakers do fall short.

Small business owners created 19,000 new jobs in November, payroll processing company ADP reported on Dec. 5.

Some Small Businesses in Fear after Election

story first appeared in The Wall Street Journal

The results of the presidential election dampened the spirits of many small-business owners who now worry that forthcoming federal policies, including potentially higher taxes and health-care reform, could stunt growth and hiring at their firms.

A November survey from Vistage International Inc. and The Wall Street Journal found a significant drop in optimism compared with the months leading up to the election, as respondents anticipated a worsening economy in 2013.

Julie Sanderson, owner of Vail Condo Rentals, a small business operating with a tight budget, says her main concern is health insurance. She believes that with rates already "sky high," she will be unable to keep her employees if her business costs go up.

The survey's overall confidence index, based on responses of 740 small-business owners, fell to 83.9 from 95.3 in October. That is the lowest in the survey's six-month history.

Specifically, the survey's index of expected economic conditions fell to 77 from 105, a result of 43% of the respondents anticipating worse U.S. conditions in the next 12 months. That is nearly twice as many as October's 23%. The index of business profits also fell to 122 from 135 as only 43% of owners anticipate higher profits in the coming year, down from 50% last month.

Some policies that Mitt Romney had proposed during his campaign were appealing to small-business owners, such as keeping taxes low and repealing President Barack Obama's health-care reform.

Anticipating higher taxes under President Obama, more business owners are preparing cutbacks to their payroll and other overhead expenses. November's employment index fell to 124 from 141 as 16% of owners are planning to reduce staff in the next year, up from 9% in October. And the fixed-investment index fell to 107 from 123, in part because 23% of owners plan to decrease their investment expenditures, up from 14% last month.

Terry Racciato, one business owner, said she was despondent in the days following the election. Ms. Racciato is president of Together We Grow Inc., a pediatric health day-care business for special-needs children in San Diego that she started in 1990.

The top issue for Ms. Racciato is rising health-care costs. She provides benefits to her 52 full-time employees and personally gets coverage through her company's plan. Because she and her husband are now over the age of 60, their deductible and copayment for medical care recently doubled to $37,000 annually. That is money she could have used to bring on another employee, she said.

What's deepening her worry, she said, is that if she opts to drop health benefits to save money, she will, in 2014, have to pay a penalty—a provision that kicks in for companies with 50 or more full-time employees under the federal health-care reform.

She reiterates the fears of Mrs. Sanderson, who fears both her Vail business and her Deer Valley Condo Rentals will be in jeopardy because they operate at low costs. She says keeping vacation rental costs low for her customers is her greatest value, but isn't sure how she'll be able to keep up if her health care costs increase.

Ed Trevis, president and chief executive of Corvalent Corp., an industrial-computer manufacturer in Cedar Park, Texas, says the uncertainty about potential tax hikes is hurting his 50-person firm because he can't plan for the future.

A tax increase on higher-income earners may come as part of an agreement to avoid the so-called fiscal cliff—a series of across-the-board tax hikes and government-spending cuts that will kick in at the beginning of 2013. But Congress has yet to come to a resolution and Mr. Trevis is nervous that any agreement could come down to the last minute and be only temporary.

Global economic conditions are most troubling to William P. Southard, founder and president of DST Controls in Benicia, Calif. Mr. Southard and his 38 employees set up and service computer systems and monitoring panels on five continents.  

Small Businesses Fear Federal Budget Cuts

story first appeared on newsobserver.com

Laura Schoppe’s small Raleigh business gets about half of its revenue from contracts with the federal government. It’s at risk of losing a chunk of that money in 2013.

Schoppe and thousands of other small companies with federal contracts are watching to see whether Congress will stop a mandatory $109 billion in federal budget cuts scheduled to take effect Jan. 2 in what’s being called sequestration. Plans for the cuts were triggered by the failure of Washington lawmakers to strike a budget deal that would begin chipping away at the U.S. deficit.

A group of lawmakers is working on an agreement aimed at stopping the cuts, and many in Washington believe that the budget reductions will be put off. But if a deal falls through, it’s estimated that 10 percent of the federal budget will be cut. No one knows yet where exactly the cuts might be made, but many economists and lawmakers expect they would have a devastating effect on small companies and slow an already lumbering economy. According to one university study, the reductions could mean the loss of nearly 1 million small business jobs. In the meantime, small company owners are trying to find ways to soften any loss of revenue by prospecting for new business, cutting back on hiring and slashing spending.

Schoppe’s company, Fuentek, helps federal laboratories license their technology innovations so they can be sold to companies for use in their own research and development.

Most of the company’s government contracts are with NASA and the Pentagon. It also works with universities.

Schoppe says she believes Congress will find a way to avoid the cuts. But she’s taking no chances and is looking for other business that will make her company less dependent on the government. One snag is that U.S. universities also face the possibility of big cuts in the money they get from the government. That could make them less able to develop and sell their own technologies. In the coming years, Schoppe’s revenue could drop more. So she’s soliciting business from overseas schools.

Jobs factor

If she isn’t able to bring in enough revenue to replace money lost to budget cuts, Schoppe says, some of her staff of 30 would have to be furloughed until more business comes in.

Congress is in recess and isn’t expected to debate or vote on sequestration until after the election. It’s a thorny issue for small business owners because the planned cuts would coincide with tax increases scheduled to go into effect in January. The combination of steep budget cuts and higher taxes is being called the “fiscal cliff” because of warnings from some economists that it will send the country into recession. A bipartisan group of senators has been working on a plan to avert the cuts by creating a plan to reduce the federal deficit over the next 10 years – but the success of any proposal is uncertain given the sharp divisions in Congress.

The cuts call for a reduction of 9.4 percent in non-essential defense spending, and 8.2 percent in non-essential spending on other programs. The risk to small businesses and the economy could be severe. Small businesses would have to eliminate more than 956,000 jobs if all the cuts were implemented, according to researchers at George Mason University and the economic forecasting firm Chmura Economics and Analytics.

Their findings are based on what they believed would be the most vulnerable agencies. But it goes beyond the job losses likely to be suffered by companies with government contracts. It also includes businesses that benefit indirectly. For example, a company that provides cleaning or catering services to a government contractor might be one of the casualties when a contractor has to cut costs. Or a retailer that depends on a contractor’s staffers for its business may have to lay off workers when sales fall.

Stephen Fuller, a professor of public policy at George Mason in Fairfax, Va. says small businesses would account for nearly 52 percent of the job losses expected from companies. The study forecasts that more than 157,000 jobs at federal contractors would be lost. Nearly 800,000 would be lost at subcontractors, suppliers and the retailers, wholesalers and service providers who sell to contractors or their employees. The exact number of small business federal contractors in the country isn’t known, but the Small Business Administration roughly estimates the number at more than 130,000.

Small Business Survival strategies

Federal contracts have been vulnerable to budget cuts over the years, even when the government’s deficit wasn’t seen as a crisis. The White House and Congress have routinely cut funding to some programs while boosting funding to others. Amber Peebles’ company, Athena Construction Group, has been a contractor and subcontractor on federal construction projects since 2009. She gets 85 percent of her revenue from the government doing everything from carpentry work to helping build hospitals for the Veterans Administration. She and her co-owner, Melissa Schneider, founded the Dumfries, Virginia-based company nine years ago. The former Marine was wounded during Operation Desert Storm in 1991, giving her company a special status that gives it preference in winning government contracts. It’s also reducing her anxiety over sequestration. Even if Peebles loses some contracts, she expects that competitive advantage to position her company to win others.

Bank of America Putting Pressure on Small Businesses

First appeared in the LA Times

Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.

The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.

One such customer, Babak Zahabizadeh, was told in a letter that the $96,000 debt carried by his Burbank messenger service must be repaid Jan. 25. A loan officer offered multiple alternatives over the phone that Zahabizadeh called unaffordable, including paying off the debt at 12% interest over two years. That's about $4,500 a month, nearly 10 times his current interest-only payment.

Zahabizadeh, known as Bobby Zahabi to his customers, said he has cut the staff of his Messengers & Distribution Inc. to 80 from 200 to nurse his business through tough times.

"I was like, 'Dude, you're calling a guy who's barely surviving!' " he said. "My final word was that I can double my payment — but not triple or quadruple it. I told them if they apply too much pressure they're going to push me into bankruptcy."

The capped credit lines stem from a corporate overhaul launched by Brian Moynihan, who became Bank of America's chief executive in 2010. He promised to address losses caused by loose lending and rapid expansion by reining in risks and shedding investments deemed non-core.

BofA spokesman Jefferson George said a "very small percentage" of small-business customers have been affected by the changes. He would not provide exact numbers except to say it wasn't in the hundreds of thousands. Some of the affected businesses had been customers of other banks that Bank of America acquired, but most were BofA customers from the start, George said.

"These changes were explained in letters to customers, and they were necessary for Bank of America to continue prudent lending to viable businesses across the U.S.," he said.

The bank still has 3.5 million non-mortgage loans to small businesses on its books. The affected business owners were notified a year in advance that their credit lines were being called, George said, although Zahabi and several others said they had not received the early warnings.

The changes also include added annual reviews of borrowers and annual fees, and often reductions in the maximum amount of credit. George said the aim was to reduce Bank of America's risks and to bring the loan terms in line with more stringent standards imposed after the 2007 mortgage meltdown and 2008 credit crisis.

Scott Hauge, president of the advocacy group Small Business California, called the credit cuts "a tragedy" for longtime BofA clients left vulnerable by years of struggle in a sour economy.

"If small businesses are going to lead the way out of the economic doldrums we now face in this country, they must have access to capital, not only to hire more people but to protect the jobs they are currently providing," Hauge said.

Bank of America was a leader in the banking industry's abortive attempt to impose debit card fees. But it appears to be a laggard in tightening business lending standards. Most other banks, having tightened lending standards in the aftermath of the financial crisis, had eased credit last year as competition for small-business customers heats up, bank analysts say.

"Everyone … is targeting commercial and particularly small-business lending as the real focus area for growth," said Joe Morford, an analyst in San Francisco for RBC Capital Markets.

While Bank of America is advertising its own commitment to small businesses, it needs to send another message to its government supervisors because it has less of a capital cushion against losses than major rivals, said FBR Capital Markets bank analyst Paul Miller.

Restricting credit lines "is a way to show the regulators they are serious about addressing risks," Miller said. "Bank of America is under great pressure, especially with another round of [Federal Reserve] bank stress tests coming up, as the regulators say: 'We want you to tighten up.' "

The analysts said all banks monitor business customers and restrict credit on a case-by-case basis. But they said they were unaware of any other large bank systematically capping credit at this time.

Customers interviewed by The Times said they could understand how the turbulent economy might result in some restrictions. But they complained that the credit cutoffs threatened to undo businesses they shepherded through the downturn by slashing costs, hoping to expand when brighter days return.

Several small-business owners indicated that they had nearly used up all the available credit on their Bank of America lines. However, George said maxing out the lines wasn't a major factor in the bank's reevaluation of the credit terms.

Kathleen Caid's Antique Artistry Studio in Glendale sells elaborately beaded, Victorian-style shades that she makes for lamps, chandeliers and sconces. She said she had understood that her $85,000 credit line would remain in place "as long as I wasn't in default," and she hadn't missed any payments.

Caid and her husband, Tim Melchior, a video producer with a Burbank media company, insist they are not in serious financial trouble despite having laid off her eight full-time employees and downsized her business space by two-thirds during the recession.

Yet Bank of America says that her credit-line debt, totaling $80,000, is due in May.

"I wouldn't have run it up if I knew what was in store," she said, adding that she would be speaking to an attorney and other banks about her options.

More Small Businesses to offer Health Insurance

The Wall Street Journal

The number of small businesses offering health insurance to workers is projected to increase sharply this year, recent data show, a shift that researchers attribute to a tax credit in the health law. Many small businesses, however, remain opposed to the law.

Some small businesses are benefiting from portions of the law, which includes a tax credit beginning this year that covers as much as 35% of a company's insurance premiums.

According to a report by Bernstein Research in New York, the percentage of employers with between three and nine workers and which are offering insurance has increased to 59% this year, up from 46% last year. The report relies on data from a September survey by the nonprofit Kaiser Family Foundation.

A full tax credit is available to employers with 10 or fewer full-time workers and average annual wages of less than $25,000. The credit phases out gradually and has a cap at employers with 25 workers and average annual wages of $50,000. The White House estimates that 4 million employers will qualify for the credit.

Small-business employers have been among the hardest-hit by double-digit premium increases, which health insurers blame in part on the cost of complying with new coverage mandates in the law, like allowing children to stay on a parent's plan until their 26th birthday.

They also are facing extra tax paperwork under the law, and the National Federation of Independent Business has joined 20 states that have sued to overturn the law.

The opposition by small businesses to the health law is a frustrating development for Democrats who had hoped to translate their signature legislative achievement into gains in this week's midterm elections.

Ken Weinstein, a Philadelphia owner of two eateries and a real-estate company, plans to begin offering health insurance to his five real-estate office workers—and possibly to his outside contractors—since he qualifies for the tax credit. Until now, Mr. Weinstein has subsidized individual insurance policies for his office workers but not the contractors.

While he said he was happy with that benefit, he was disappointed that his restaurant operation has too many employees to qualify for the credit, and said the health overhaul doesn't do enough to contain sharply rising insurance premiums.

"Costs keep going up and I don't think any parts of the legislation have yet addressed that," said Mr. Weinstein, owner of the city's Trolley Car Diner and Trolley Car Cafe.

Small business lobbyists say the Obama administration is overestimating the reach of the tax credit and failing to factor in a slate of new taxes in the health law that will fall on small business, such as a tax on insurers. NFIB, the small business lobby, estimates that fewer than two million employers will end up getting the credit.

"Most of them tell us they can't qualify for the credit, or it's just too low an incentive to be helpful," said Brad Close, vice president of public policy for NFIB.

John Stein, co-owner of Harbour Coffee in Williamsburg, Va., decided to drop the health insurance plan that covers his wife and their 7-year-old child after his carrier notified him in September that his $450 monthly premium for a high-deductible plan was going to increase more than 20%. He switched this week to a cheaper plan with comparable coverage.

Mr. Stein has no plans to try to tap the tax credit for his coffee-roasting business. "The government in general doesn't have the faintest idea what helps small businesses," Mr. Stein said. "It costs a fortune just to get the plan going, and I get nothing out of it."

Karen Mills, chief of the U.S. Small Business Administration, says insurers already were imposing premium increases before the law took effect. But factoring in the tax credit, she said "the cost of health-insurance to small businesses is going to be, overall, going down."

The Obama administration also is considering making it easier for employers to retain their grandfathered status for health plans, an administration official said. That would exclude them for the time being from some new coverage mandates, such as the requirement to cover certain preventive care.

The move could make it easier for small companies to skirt premium increases, the official said. The administration is weighing whether to allow employers that rely on an outside carrier to absorb their risk and pay insurance claims to shop between carriers without losing grandfathered status.

Small-Business Owners may need Outside Help with Tech

USA Today

 

From smartphones to souped-up servers, a plethora of technological tools can help small businesses as they expand. Yet with so many options — and so many business demands that need to be met — technology can be daunting for even the most experienced entrepreneurs.

"It's this feeling that you're falling behind constantly," says Todd Thibodeaux, CEO of the Computing Technology Industry Association, the country's largest IT trade association.

"There is so much change out there," he says, and business owners often have much "fear and frustration" as they try to keep up.

There's the cost: Growing businesses often have to shell out big bucks for equipment that could quickly become obsolete. There's also the time factor: 43% of business owners spend more than two hours a week on technology problems, according to a National Small Business Association (NSBA) survey to be released this week.

In addition, many have the constant worry that pertinent information could accidentally be erased or fall into the wrong hands. Business owners must also be prepared to show that their data weren't changed or corrupted if audited, says Andy Monshaw, an IBM general manager who specializes in servicing small and midsize businesses.

"The big issue in the industry is the ability to respond to audits," he says. "Data protection and data security are very important."

With the rising popularity of LinkedIn, Facebook and Twitter, staking out a place in the social-media world is also an increasingly important part of meeting technological needs, Thibodeaux says. Most small businesses — even dry cleaners and restaurants — should create some sort of plan to "engage" customers, he says.

About one-quarter of small-business owners handle tech support for the entire company themselves, according to the NSBA report. They're taking on duties such as upgrading software, overseeing hacker- and virus-resistant e-mail systems and updating Facebook pages.

Consider seeking help

But IT experts say those already overburdened owners should consider seeking outside assistance.

Small-business owners often launch firms that capitalize on their strengths, whether it's baking pies or doing public relations, says Thomas Clancy, founding partner of IT consulting firm Valiant Technology. "But when it comes to doing technology, that's a separate skill set that goes on top of running a business," he says. "And it's something that many can't wrap their head around."

He says that in their bid for technological expansion, many business owners often get overwhelmed, overextend themselves and overspend.

"People get starry-eyed. They say, 'I'm not going to buy anything refurbished. I'm just going to buy new,' " he says. "And then they go to the Apple Store, and they plunk down the platinum card. Then that credit card bill is due."

He's been contacted by companies that have spent $100,000 on new equipment, only to realize that they can't afford it. They then want to pawn it off on someone else, but often, the equipment has lost half its value.

While there are many trying aspects of tapping into technology, when done right, it can rev up revenue.

Ed Eskew, chief information officer at apparel manufacturer Bernard Chaus, says his firm realized that it needed more detailed data on what was and wasn't selling at department stores, so it asked IBM to implement an improved data-tracking system.

"One of our biggest business challenges was trying to manage our retail point-of-sale information," Eskew says. The company wanted to know what styles were doing well and which weren't so it could respond by ordering more of the popular goods and discounting the duds.

Bar codes make things easier

In the past, Bernard Chaus employees traditionally spoke or e-mailed with department store buyers on a weekly basis to see how clothing was selling. But with an updated bar-code system, the firm now gets information on a daily basis.

"We're able to sort of deep dive under the covers," he says. "Now we've got a sense of what's hot and what's moving, and conversely, we know what's not moving."

He says the company is about to discount unpopular goods — and more quickly replenish the clothing lines that are selling well — "so we don't end up at the end of the season with all this inventory sitting in a store that's not moving."

Technological advances and competitive small business seo programs have helped his firm — and others — take on tough rivals, he says.

"It's made the smaller and midsize companies like (us) better able to compete with the bigger, billion-dollar operation," he says. "It's let us keep our doors open during one of the most competitive retail environments in probably 100 years. So we get to breathe another day."

TIPS ON TECH NEEDS

Talk with other owners: "Join a peer group, a local Chamber of Commerce or clubs in your area," says Thomas Clancy, founding partner of IT consulting firm Valiant Technology. "See how other people are doing it." Also ask those folks for IT staff suggestions. "Referrals are usually a pretty good way to find someone," he says. "That's why it's important to get connected into your local business community."

Go with a pro: Don't hire a tech-savvy college kid, an iPad-loving brother-in-law or the receptionist's boyfriend to tackle tough IT needs, Clancy says. Those without formal training don't have the skills to help a company grow — and if the receptionist gets fired, the company may find itself with a bunch of deleted information, he says.

Do some homework: A firm should do some sleuthing before contracting with an outside IT provider. Find out how long the company has been in business and ask to speak with current customers, says Todd Thibodeaux, CEO of the Computing Technology Industry Association, the country's largest IT trade association. Also, ask about their past "disaster recovery" efforts: "Ask them to think of a situation when their customer's (systems) went down and how fast they got it back up," he says.

Tap into IT's know-how: Disregard the false notion that most IT folks are geeks who only like to tinker with computer code and wire — and bring them into business discussions about forecasting needs. "An IT provider shouldn't just be serving your e-mail and making your printer work," says Clancy. "That's just the most basic level of service, and it's not going to help you grow your business."

Consider more than price:"Ask, 'What kinds of services can I expect?' " says Clancy. "You shouldn't think about price first. First find out what the company can do for you. Be open minded. In the end you may pay 10% more, but you could get 50% more capability."

Small Business Bill Signed into Law

Reuters

 

President Barack Obama signed a $30 billion small business lending bill into law on Monday, claiming a victory on economic policy for his fellow Democrats ahead of November congressional elections.

The law sets up a lending fund for small businesses and includes an additional $12 billion in tax breaks for small companies.

"It was critical that we cut taxes and make more loans available to entrepreneurs," Obama said in remarks at the White House. "So today after a long and tough fight, I am signing a small business jobs bill that does exactly that."

Obama is trying to show voters, who are unhappy about 9.6 percent unemployment, that he and his party are doing everything they can to boost the tepid U.S. economy.

Democrats said they backed the bill because small businesses had trouble getting loans after the financial crisis that began in December 2007. They estimate the incentives could provide up to $300 billion in new small business credit in the coming years and create 500,000 new jobs.

Republicans characterized the bill as a smaller version of the unpopular Wall Street bank rescue effort and blocked it in the Senate for weeks until two retiring Republicans broke ranks and voted to end blocking maneuvers.

Republicans are expected to make big gains in the November 2 elections and hope to win majorities in one or both houses of Congress.

Obama criticized the opposition party for fighting the bill and thanked the two Republicans, George Voinovich and George LeMieux, whose support allowed it to get through the Senate.

He said the measures would have fast-acting effects on the small business community, which both political parties are courting in an effort to boost jobs.

"It's going to speed relief to small businesses across the country right away," Obama said. "We've got to keep moving forward. That's why I fought so hard to pass this bill, and that's why I'm going to continue to do everything in my power to help small businesses open up and hire and expand."

New Tax Breaks for Small Businesses

Market Watch

The Small Business Jobs and Credit Act is about to be signed into law. New high-level, expensive government posts have been created. There’s money for Small Business Administration loans and state governments, and a few new tax provisions — including the good, the bad and the downright sneaky.

Cell phones are no longer listed property. Excuse my rejoicing, but this has been a nuisance for years. As long as cell phones were considered listed property, you were required to keep logs of personal versus business use. Corporations were hit hard on audits when staff used their company phones to call family and friends.

Were you keeping logs, or paying your company back for your personal use? Neither was anyone else. Frankly, no one really wanted to enforce those rules. After all, IRS staff were using their cell phones personally, too.

More time for bonus depreciation

Bonus depreciation was extended to Dec. 31, 2010. It was set to expire on Dec. 31 last year, but it got a reprieve. New business assets you bought since Jan. 1 of 2010 are apt to qualify for a 50% special depreciation deduction. The assets must have a recovery period of 7 years or less.

Because bonus depreciation is back, you may deduct up to $8,000 on the purchase of your new car. That, along with regular depreciation, allows you up to $11,060 worth of depreciation for the first year, according the experts at CCH, a Wolters Kluwer business.

Small-business health insurance

This has always been baffling. Small-business owners may reduce their taxable income for the cost of self-employed health insurance. But they have not been permitted to reduce their self-employment taxes by the cost of the health insurance.

For 2010 only, the health-insurance deduction will reduce your self-employment taxes, too. Why only for one year? Can you imagine the form changes IRS will have to make to change Schedule C for 2010 and then remember to change it back for 2011? This should have been permanent — like the cell phones.

Penalty relief — big time

The tax code hits businesses with penalties of 75% for not reporting “tax shelter” activities. Some of those penalties have been much higher than any possible benefit the business owner or investor ever got from the investment. In fact, many of the small business hit by these penalties didn’t even know they were engaging in tax-shelter activities.

According to CCH, since June 2009 the IRS has exercised forbearance in collecting some of those penalties. For now, if you were hit by those penalties after Dec. 31, 2006, the revisions to IRC section 6707A may have dramatically reduced the ceilings on your penalties. Sit down with your tax pro to see just how you’ve been affected. This may be a good opportunity to file some amended returns.

Good for really small businesses
If you’re the owner of a really small business, you perhaps tend to operate it using your own savings, personal loans, credit cards, and so forth, as a primary source of capitalization. That means you start out with a limited budget and pray that your clever marketing moves will generate enough money to cover operations, quickly. Sometimes that works.

The deduction for start-up costs has increased from $5,000 to $10,000 during 2010 and 2011. And, before, you lost this benefit if your start-up costs were $50,000. That has increased to $60,000. This will be a big help to the ma-and-pa-type start-ups. Remember, though, the business must have opened its doors during 2010 if you want to take advantage of writing off those start-up costs. So be sure to start selling something before Dec. 31.

Good for bigger small businesses, real-estate investors

Everyone’s favorite political football, Section 179 depreciation, just jumped from $250,000 to $500,000 for 2010 and 2011. The amount of assets your business may purchase before you are too big to qualify for this benefit also rose, from $800,000 to $2 million. In 2012, the Section 179 deduction will return to $25,000, with an asset purchase limit of $200,000. Unless, of course, it changes again.

Naturally, this increase does not apply to the behemoth personal vehicles. Those are still limited to a deduction of $25,000 in the year of purchase.

Certain real estate is now eligible for Section 179 benefits, according to Spidell Publishing Inc.: qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property.

Remember, to keep this Section 179 benefit, the asset you purchased must continue to be used for business for its entire tax life. If you stop using a 5-year asset, or sell it after 3 years, you must pay back the Section 179 benefit. Most people don’t realize that this applies to things like your computers, video cams, and other small, but expensive electronics that tend to be replaced every year or two.

Sneaky provision

Qualified Small-Business Stock (QSBS) has special provisions to encourage investors to risk their money in new, start-up corporations. If the company fails, there are generous provisions to write off part of the losses quickly. There are incentives allowing certain capital-gains exclusions when the stocks are sold.

QSBS investors have been getting a boost lately. Historically, we were able to exclude 50% of certain profits, if the stock had been held for five years or more. Then, it got pushed up to 75% of profits, for QSBS purchased after Feb. 17, 2009, and before Jan. 1, 2011 — with a special alternative minimum tax rate. The latest law increases the exclusion from tax to 100% for QSBS purchased after March 15, 2010, and before Jan. 1, 2012.

That sounds generous. Except for the little clause in the new law that says paragraph 7 of Code Section 57 does not apply. Congress took away the special alternative-minimum tax treatment. In other words, you exclude 100% of the gains from your regular income tax and pay 28% in AMT, or higher once the low capital-gains rates expire next year.

Waste of taxpayer resources

An interesting little feature of this bill “prohibits the use of funds under this Act to pay the salary of an individual officially disciplined for viewing, downloading, or exchanging pornography on a federal government computer while performing official federal duties.”

How much salary reduction do you expect to see from this? Or will the cost to enforce this be higher than the savings?

And more…

There are several other provisions that will enhance or confuse your business experience. Wait about two weeks for your tax professional to get up-to-date on all the details. Then make an appointment to do some planning. Definitely get a business tax tune-up before October ends so you can take advantage of tax benefits on money you’ve already spent, and see if that frees up money for some expansion or marketing. Or just to pay off some bills.

Fast Growth for Your Small Business isn't always Good

USA Today

Nick LaCava and his two business partners got sweet news this spring: O, the Oprah Magazine planned to tout their candy bars in the June issue.

The ensuing write-up was a mere 30 words. But its description of Chocomize's "luscious chocolate" whetted the appetites of thousands of people across the country. The small, New Jersey-based confectioner was hit with a dramatic rise in orders and an influx of calls and e-mails. Before the article, "we were probably getting around 15 e-mails and 15 phone calls a day," LaCava says. "After the magazine came out, we would get anywhere from 50 to 100 e-mails and phone calls a day, which made things really stressful."

The founders of Chocomize had anticipated a sales uptick, but they weren't prepared for the fivefold increase in orders. Then one of their chocolate-making machines gave out.

"It was like, 'Oh my God, we're not really sure about what we're going to do,' " LaCava says.

With some fast driving (one partner found a new machine and drove two hours each way to fetch it), and some quick thinking (they brought on college interns to answer calls and e-mails), they managed to survive the weeks of tumult that followed.

"We really had to really figure stuff out in terms of efficiency," says LaCava. "When things were pretty chaotic, we thought, 'We've got to try new things.' "

Rapid expansion can cause big problems for small firms. A huge rise in product demand — or overly ambitious internal plans to forge new sales markets, open satellite offices or hire more people — can easily topple a company. As many owners have learned, stretching too far too fast can lead to unhappy employees, strained client relationships and shoddy products.

"Fast growth is a double-edged sword," says Deam Roys, founder of Los Angeles-based Roys & Associates, which specializes in executive recruiting for mushrooming companies. "It's good because things are working. But if you grow too fast, things can really blow up."

Expansion plans sink

In the case of Jim Picariello's frozen treats venture, fast growth caused a business meltdown.

What was just an idea in 2006 — all-natural ice pops sweetened with honey — soon become an in-demand product. At first, Picariello would make the pops himself, producing 300 every two 11-hour days. But by 2008, his Wise Acre Frozen Treats firm had 15 employees and a 3,000-square-foot manufacturing facility in Blue Hill, Maine.

Picariello needed more equipment to meet increasing orders, so he sought outside investors. After a handshake deal for $1 million, he assumed that fresh capital would soon come in, so spent funds budgeted for other things on new equipment.

Soon after, the stock market tanked, and the investor pulled out. Picariello spent the rest of 2008 scrambling to find other capital, but it was too late.

"I had to lay everyone off, including myself — and by January and February of '09, I knew it was done," he says. "I personally had to go bankrupt … and the bank came and took all the equipment and took all the formulas and trademarks.

"It was like living in a nightmare," he says.

Growing pains can range in severity, and they can happen in all stages of company development.

Even megacompanies can fall prey to the troubles that come with too-quick expansion. Toyota Motor's unchecked growth caused its leaders angst, and put lives at risk. The carmaker's rapid U.S. expansion resulted in safety issues and recalls, CEO Akio Toyoda said in February to the House Committee on Oversight and Government Reform.

"Quite frankly, I fear the pace at which we have grown may have been too quick," he said.

Toyota had traditionally focused on safety, quality and volume, in that order, said Toyoda, who is a grandson of the car company's founder. Yet, "these priorities became confused, and we were not able to stop, think and make improvements as much as we were able to before," he said. "We pursued growth over the speed at which we were able to develop our people and our organization."

Toyota executives — like many at flourishing companies — lost sight of the mission that paved the way for initial success.

Executives who become too focused on swelling revenue and increasing market share sometimes overlook what made the product or service special, says Mark Lange, executive director of Edward Lowe Foundation, a Cassopolis, Mich.-based non-profit that seeks to accelerate entrepreneurship.

Once those managers get overly fixated on a particular goal, "they often lose track of other important things," he says.

Anticipating results

That's where discipline comes in.

Companies need to strive for "sustainable growth" says recruiter Roys, who's helped more than 300 businesses prepare for expansion. "It's very good to grow, but you can't bite off more than you can chew, because that could bury your company."

Yet, it's hard not to take that mouthful.

Sometimes it takes strong internal reserve to hold back on an urge to sign a massive product distribution deal. Other times, the advice of a CFO, board member or business partner can help to pull in the reins.

"Seeing that brass ring could be a very seductive thing, but you need to decide what's best for you," says Bo Fishback, vice president of entrepreneurship at the Ewing Marion Kauffman Foundation, Kansas City, Mo. The foundation focuses on entrepreneurship activities. "The ability to say 'No' to an amazing opportunity is something that very successful entrepreneurs have in common."

n some cases, the knowledge just has to come from learning from past mistakes.

The founders of Guidant Financial Group found out the hard way that it's better to expand their employee roster slowly and carefully.

"From '03 to '08, we grew from two founders, a laptop and less than $10,000 to an Inc. 500 company doing $12.5 million and employing 110," says David Nilssen, co-founder of the Bellevue, Wash.-based company that provides financing, IRA and 401(k) assistance for businesses.

But when the markets began to crumble in late 2008, sales fell. "As the markets declined, so did our business — and we found ourselves top heavy," he says. The result: two rounds of layoffs and about 70 employees losing their jobs

The firm is hiring again, but at a cautious pace. Nilssen says that company leaders realized the importance of becoming a lean, efficient firm so now they can get more work done with fewer employees.

"We certainly learned some tremendous lessons

Texas on Top of CNBC's Best States for Business List

CNBC

 

They say everything in Texas is big, and that sure goes for its stature in business.

With the biggest point total in the history of our study, Texas posts a big victory as America’s Top State for Business 2010.

Top Five

Texas reclaims the top spot from last year’s winner, Virginia, which slips to No. 2. Texas was last on top in 2008, and Virginia took the crown in the inaugural year of our study, 2007. That leaves Texas and Virginia dead even in the battle for bragging rights at two wins apiece.

Rounding out the top five are No. 3 Colorado, No. 4  North Carolina, and No. 5 Massachusetts, which makes its first appearance among America’s Top States for Business.

Scoring & Categories

Our fourth annual study of America's Top States for Business puts all 50 states to the test, measuring them on 40 different metrics in ten key categories of competitiveness. We developed these categories back in 2007 with the help of business groups including the National Association of Manufacturers. And we weight the categories based on how frequently states use them as selling points to attract business. That way, we hold the states to their own standards, and tell you how they measure up.

The categories and weightings, for a total of 2,500 points, are:

    * Cost of Doing Business (450 points)
    * Workforce (350 points)
    * Quality of Life (350 points)
    * Economy (314 points)
    * Transportation & Infrastructure (300 points)
    * Technology & Innovation (250 points)
    * Education (175 points)
    * Business Friendliness (175 points)
    * Access to Capital (50 points)
    * Cost of Living (25 points)

We use publicly available data on the metrics in each category to score the states, and then add up those scores to rank America’s Top States for Business.

2010 Dynamic

Coming out on top is always an accomplishment, and never more so than this year. The national economy is anemic, and state budget pressures are growing across the country. In fact, even top-ranked Texas is struggling to make ends meet. The state faces a Texas-sized, $4.6 billion budget shortfall for fiscal 2011, according to the non-partisan Center on Budget and Policy Priorities. That is more than 12 percent of the state budget.

Add to that a sluggish job market across the country, and even the top states cannot afford to rest easy.

In No. 3 Colorado for example, unemployment in May was a relatively low 8 percent. But KUSA-TV reporter Greg Moss in Denver says the unemployment rate does not tell the full story.

“Although ours is way below the national average, it's remained pretty flat. So we're seeing a lot of long-term unemployed," Moss says.

In runner-up Virginia, which has a built-in cushion of technology and government jobs, particularly in the northern part of the state, the employment picture statewide is somewhat shaky.

“The recession of the past two years has hit manufacturing rather hard,” says reporter Tom Schaad of WAVY-TV. “Here in Hampton Roads, International Paper in Franklin closed a major mill, putting 1,100 people out of work. That’s one example.”

What separates the top states from the rest is their ability to cope with those types of economic stress, offering environments that allow businesses to thrive even in a slowdown.

Texas By The Numbers

Texas powers past the tough times on the strength of its economy—top-ranked in our Economy category four years in a row. The Texas economy is the 15th largest in the world, according to government figures; larger, for example, than all the Scandinavian nations combined.

The Lone Star State is home to 64 Fortune 500 companies, more than any other state, in a wide variety of industries. So while the state’s last win in 2008 came with oil at a record $145 a barrel—a natural tailwind for the largest industry in Texas—the state managed to do even better this year despite the fact that oil is trading at roughly half that price.

Texas has also managed to avoid the worst of the real estate crisis, according to reporter Ashanti Blaize of KXAS-TV. “While in other major cities we’ve seen condo high-rise projects either slowed or come to a screeching halt, in Dallas we've seen an influx of some of those projects,” says Blake.

However, that economic strength has a side effect. Rising commercial rents and high wages hurt the state in the all-important Cost-of-Doing-Business category, where it comes in at number 30.

Virginia Still Impresses

Virginia comes in second overall this year, but the Old Dominion State still has plenty for which to be proud.

In the Business Friendliness category, which measures the states’ legal and regulatory climates, Virginia is second only to neighboring Delaware. And Virginia offers a diverse economy, making it chock-full of business opportunities, from imports and exports to government contracts in the state that is home to the Pentagon.

“Hampton Roads has the third largest port in the country. That, along with heavy military presence usually provides for a stable economy,” says WAVY-TV’s Schaad, who also notes that federal stimulus money, particularly in the area outside Washington, D.C., is keeping overall unemployment well below the national average.

But with pockets of severe joblessness hampering growth—including in tourism-dependent Williamsburg—Virginia dropped four places to number 11 in the “Economy” category. Virginia also lost critical points in the “Education” category, dropping six places to number 13 as class sizes rose and school spending fell.

While Texas and Virginia duke it out for the top spot year after year and Colorado stays consistent at No. 3, the rest of the rankings are less predictable.

Carolina Comeback

North Carolina, which finished a disappointing ninth in 2009, jumped to No. 4 in 2010. The corporate home of a number of giant financial institutions, including Bank of America and BB&T, North Carolina’s business climate and Raleigh real estate benefited from the easing of the financial crisis, according to WCNC-TV’s Jeff Campbell in Charlotte.

“There are also lessons the state has learned from the recent crisis, and that’s really helping the state diversify towards some other industries like clean energy and tourism,” says Campbell.

As a result, North Carolina has seen a surge of investment, pushing the state to number 10 in our Access to Capital category, up from number 36 last year. That was enough to propel the Tar Heel State back into the top five overall for the first time since 2007.

Massachusetts Moves Up

Massachusetts never ranked among America’s Top States for Business before 2010. Its ranking this year also marks the first time a northeastern state has finished among the top five.

But the Bay State has always been a contender—it finished No. 8 overall last year. Massachusetts’ greatest strength is its schools. The state boasts the best performing K-12 schools in the country, as well as some of the top universities in the world, placing it at the top in the Education category.

The strong education system helps Massachusetts capture near top rankings in Technology & Innovation (number three, up from number five last year) and Access to Capital (number two for the second year in a row). Even in Business Friendliness—not generally considered a hallmark of New England states—Massachusetts finishes a respectable 14th.

Notable Mention

This year’s most improved state is Pennsylvania, which jumped a whopping 13 places to No. 20 overall, from number 33 last year. However, it is unclear whether the Keystone State truly bettered itself, or if others simply got that much worse. Pennsylvania’s best category was Economy, where the state improved to number 15 compared to a 37th place ranking in 2009. Yet the state still faces persistent unemployment and a $4.1 billion state budget shortfall.

The biggest drop came in Vermont, which fell seven places overall to No. 37. While economic conditions have improved in the Green Mountain State, business costs have gone up and the quality of the workforce has declined according to our study.

Two states drop out of the top five in 2010.

Iowa falls to No. 6 from No. 4 last year, and Utah, a consistent player in previous years, moves into a tie for eighth place with Minnesota.

Our study scores all 50 states, so if there are going to be Top States, it stands to reason that there will also be bottom states. Alaska is America’s bottom state for business again this year, hampered by its high cost of living, relatively high cost of doing business, and a weak infrastructure.

After Alaska, there is a big change among the also-rans. Rhode Island drops to No. 49 overall, following its 48th place finish in 2009. The Ocean State is among the least friendly to business, and ties with Nevada for the worst overall economy.

Rhode Island’s drop is good news for those other islands—Hawaii, which climbs to 48th place overall. No great surprise, the Aloha State is number one for Quality of Life. Unfortunately, you get what you pay for. Hawaii ties with California as the most expensive state in which to live, and is second only to New York in the cost of doing business.

Station Owners Divided over Scrapping the BP Brand

USA Today

 

BP gas station owners across America are divided over whether the oil giant stained by its handling of the Gulf spill should rebrand U.S. outlets as Amoco or another name as part of its effort to repair the company's badly damaged reputation.

Some who have seen their sales plunge because of protests say BP (BP) has already sought a fresh start by naming an American to replace its gaffe-prone British CEO, so why not change the name on gas station marquees as a further symbol of that culture shift.

Others worry that a name change is a big deal and risky given all the marketing dollars already spent building up the BP brand. They also believe a successful turnaround with the existing brand will have a bigger payoff.

In the aftermath of the oil spill, some BP-branded gas stations reported sales declines of 10% to 40% from Florida to Illinois. BP later responded by offering distributors of BP gasoline cash in their pockets, reductions in credit card fees and help with more national advertising.

The BP name and green-and-yellow sunflower logo took over after BP merged with Amoco in the late 1990s, replacing the Amoco name and its blue-and-red torch inside an oval logo.

There is precedent for such a drastic move to return to the Amoco name or to go with a new name. Think AirTran after the ValuJet crash and Xe Services after the killing of civilians by Blackwater Worldwide guards in Iraq.

John Kleine, who heads a trade group that represents distributors of BP gasoline in the U.S., told the Associated Press that interest in changing names has not reached a fever pitch by any means, but it has supporters and is percolating among station owners ahead of their annual convention with BP executives in October.

"Is it on the minds of people? Sure," Kleine said. "It would not be a topic of conversation if not for the oil spill."

Kleine noted that many distributors would still like BP to try to rebuild its existing brand, but if that cannot be done, then to consider alternatives.

Distributors in many cases also own and operate stations.

Two BP officials said in e-mails that the company is not considering rebranding U.S. gas stations.

BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel mostly under the BP banner. ARCO, a BP affiliate, is predominant in the West. Kleine said the Amoco name is no longer supposed to be used, but acknowledged in rare cases it may still exist in a few locations. Most BP-branded stations are owned by local people whose primary connection to the oil company is the logo and a contract to buy gasoline.

Bob Juckniess, who owns 10 BP-branded stations in the Chicago area, is in the camp that wants BP to consider rebranding to Amoco at U.S. outlets.

"The BP brand is very tarnished right now, not just the brand but the reputation as a company is tarnished," said Juckniess. He added, "Amoco was very well known and had a great reputation as a name and a brand."

Juckniess said he feels so strongly about the issue that he would "urge BP to look at the ramifications of such a change."

It is noteworthy that Bob Dudley, the American who will replace Tony Hayward as CEO on Oct. 1, worked for 20 years at Amoco.

On the other side of the debate is Jeff Miller, whose company owns, operates and supplies roughly 56 BP-branded stations primarily in southeastern Virginia.

He said that if BP does the job right and invests back in its brand and customer base, it stands to gain more by not changing the name at U.S. stations.

"When you look at all the case histories of all that have done it well, whether it is Toyota, Tylenol or Exxon, they have all reinvested in their brand and done a better job," Miller said. "If you just change the name and don't change the behavior, have you really gained anything?"

Miller said he has heard from a number of station owners who have suggested BP rebrand U.S. stations as Amoco, but he describes that as a "knee-jerk reaction."

"I think you get a better return by working on repairing your reputation than starting fresh," he said.

Jim Donnini, whose company owns, operates and supplies roughly 75 gas stations in Florida that fly under brands including Chevron, Exxon, Shell, Sunoco and Valero, said Amoco was a very strong brand in Florida.

"Everybody thought they missed their opportunity to keep it that way," Donnini said of BP, referring to the aftermath of the Amoco merger.

Donnini, who doesn't own any BP stations, said he has heard from owners of BP-branded stations in Florida who would like BP to consider a name change at U.S. stations.

"It's really a shame the independent businessmen that fly that BP flag are being victimized," Donnini said.

Sam's Club to offer Small Business Loans

Associated Press

 

Sam's Club said Tuesday it will offer small business loans of up to $25,000 to its small business members.

The division of Wal-Mart Stores Inc., which is based in Bentonville, Ark., is testing a program with Superior Financial Group, one of 13 federally licensed nonbank lenders, and will offer $5,000 to $25,000 loans to members who qualify.

Sam's Club says 15 percent of its business members reported they were denied a loan in a November survey. That's up from 12 percent in April 2009.

The program will focus on minority-, women- and veteran-owned businesses.

Sam's Club members who apply for a small business loan during the pilot will receive $100 off the application fee, a 20 percent discount and a discount on interest rates.

Businesses can pay $35 for a membership to Sam's Club that includes three annual membership cards that allow them to shop at 600 Sam's Clubs in the U.S. Sam's Club offers other memberships to consumers and businesses that cost as much as $100 annually depending on the features included.

Although the economy has grown for three straight quarters, tight credit remains a problem for many consumers and businesses.

"Access to capital is a major pain point for our members," said Catherine Corley, vice president, membership at Sam's Club.

Frustrated Franchise Owners want Help from BP

Yahoo News

Tension is mounting between BP and the neighborhood retailers that sell its gasoline. As more Americans shun BP gasoline as a form of protest over the Gulf oil spill, station owners are insisting BP do more to help them convince motorists that such boycotts mostly hurt independently owned businesses, not the British oil giant.

To win back customers, they'd like the company's help in reducing the price at the pump.

BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel under the BP, Amoco and ARCO banners. Most are owned by local businessmen whose primary connection to the oil company is the logo and a contract to buy gasoline.

In recent weeks, some station owners from Georgia to Illinois say sales have declined as much as 10 percent to 40 percent.

Station owners and BP gas distributors told BP officials last week they need a break on the cost of the gas they buy, and they want help paying for more advertising aimed at motorists, according to John Kleine, executive director of the independent BP Amoco Marketers Association. The station owners, who earn more from sales of soda and snacks than on gasoline, also want more frequent meetings with BP officials.

"They have got to be more competitive on their fuel costs to the retailers so we can be competitive on the street ... and bring back customers that we've lost," says Bob Juckniess, who has seen sales drop 20 percent at some of his 10 BP-branded stations in the Chicago area.

Owners and distributors put forth their demands at a meeting in Chicago with BP marketing officials. BP's reply could come as early as this week, says Kleine, whose group represents hundreds of distributors.

Station owners are locked into contracts that can last seven to 10 years in some cases. So, switching to a competing brand if BP refuses to help may not be an option.

BP spokesman Scott Dean declined to offer specifics about the discussions when contacted by The Associated Press.

"BP is in daily contact with its independent distributors and franchisees and helping them manage the impacts the oil spill is having on their businesses," he said.

Gasoline retailing trade groups say the boycott's impact isn't only evident in southern states such as Florida, Georgia and Tennessee, but also in places further from the spill like southern Pennsylvania. Jim Smith, president and CEO of the Florida Petroleum Marketers & Convenience Store Association, said BP has given some station owners a one-cent-per-gallon discount, which "doesn't amount to much." Kleine told AP the discount appears limited to Florida. He declined to give the size of the discount that was requested at the Chicago meeting.

Websites and Facebook pages advocating a BP boycott popped up soon after oil started spewing into the Gulf in late April. Drivers only heeded the call when the spill's full impact became apparent.

Paola Soldevilla, manager of a BP station in Pembroke Pines, Fla., said it was only when images of oil-soaked birds appeared in newspapers that sales fell off. So sharply, in fact, that she won't be getting her usual one-week paid vacation.

Kevin Dalton can empathize. He owned a Citgo station when President Hugo Chavez made anti-American statements in 2006, leading to a boycott of the Venezuelan-owned gas company. Sales of gas and in-store items dropped more than 50 percent. Sales at his Shell station in Palm Beach Gardens, Fla., have increased 15 percent since the spill started in late April, but he says it's hard to directly tie that to a BP station less than a mile away.

Last week, Vincent Connolly's GPS guided him to a BP station off Interstate 480 in Cleveland. But he had second thoughts after filling up for $2.75 a gallon.

"You don't want to support anyone that's killing the environment," he said.

That connection to the destruction on the Gulf Coast concerns Juckniess, the Chicago station owner. He's been running his own promos — free coffee and $2 off a car wash — but he wants BP to step up support of both the stations and the BP brand.

"We're their branded marketers," he says. "It would be foolish for BP to not support its branded marketers when clearly we can document that some of the loss that we've experienced is due to the incidents in the Gulf."

The biggest hit comes not from lost gas sales but from lost convenience store business. Owners like Juckniess make just pennies on a gallon of gas. But they might make up to 55 cents on a $1 cup of coffee. The margins on candy and chips are about 48 percent and 37 percent, respectively, Jeff Lenard of the National Association of Convenience Stores.

The boycott's impact on BP is limited. The company makes most of its money exploring and producing oil in places such as Angola, Egypt, the North Sea and the Gulf of Mexico.

"The corner store is the face of BP, but by no means how BP gets its money," Lenard said.

And even if drivers opt to fill up at an Exxon or 7-Eleven, they still may buy BP gasoline. Because of the way gas is refined and marketed, BP fuel gets supplied to stations other than those with BP brands.

The boycott's impact is felt less in rural areas, where people know the owners personally. And it helps to sell other necessities.

Dacia Radabaugh, who manages a BP station owned by her parents in Williamstown, W.Va., thinks the station is as popular as ever because it sells liquor and cigarettes to a regular crowd.

And of course some drivers are just more pragmatic.

"Gas is gas, buddy," said Danny Sullivan, making no apologies for filling up at a Little General BP station in Charleston, W.Va. "It don't matter where it comes from."

BP Protests Threaten Independent Dealers

The Wall Street Journal

 

Protests and boycotts of the BP brand generated by the Gulf spill aren't likely to have a big immediate impact on BP PLC, but could threaten the thousands of entrepreneurs who have staked their livelihoods on the company's name.

Nearly all the 10,000 service stations around the U.S. flying the BP flag are owned by independent dealers that are obligated under long-term contracts to sell BP-branded fuel. Some worry that mounting anger over the spill's environmental and economic toll could turn the once-highly coveted brand into a liability.

But the actual gasoline the stations sell is a mixture of fuel from multiple refiners or importers, so the direct impact of any slowdown at BP-branded stations is minimal for the oil giant, which can sell excess supplies as private-label fuels to other retailers. Maintaining a brand presence is important to BP, but the marketing segment only represents a sliver of profit for the company.

BP stations in Florida immediately saw consumers turning away after the leak began in late April. Total sales at BP stations there declined 8%-10% in May compared with last year, while competitors benefited from additional traffic, said Jim Smith, president of the Florida Petroleum Marketers and Convenience Stores Association. The magnitude of the sales declines "means that we are going to have a lot of small business owners going out of business," he said.

Hundreds of Facebook pages and Twitter accounts have sprung up dedicated to the spill coverage, and some have organized protests. Some BP station owners are hearing complaints from customers about the spill or motorists yelling as they drive by. But station owners and independent distributors, who bring fuel to the stations, say it is more difficult to quantify the silent protesters who simply drive to other stations to fill up.

"People are kind of melting away," said Jay Ricker, chairman of Ricker Oil, noting that same-store sales across the company's 35 BP stations in Indiana fell 5.4% last week, the first decline seen this year.

Independent fuel distributors, known in the industry as jobbers, are worried about the reduced demand for BP-branded fuel. Station owners are concerned that a drop in motorists filling up their tanks will clip purchases for items such as chips and sodas at attached convenience stores, which account for less than a third of sales but two-thirds of profits.

"The distributor and retailer communities have really become the lightning rod of the consumer backlash, easy targets," said John Phelps, president of Carroll Independent Fuel Co., which supplies 110 BP stores in the Baltimore area. Carroll acquired most of them in the past five years in an effort to bank on BP's strong brand name and its push toward an environmentally friendly image, he said.

Some BP-branded fuel retailers say there has been a noticeable change in consumers' attitudes since the start of June, when images of oil-blackened wildlife and tar balls on beaches heightened the public's anger about the spill.

"It really coincided with the oil coming ashore," said Jeff Miller, president of Miller Oil Co., a family-owned distributor based in Virginia Beach, Va., that supplies about 50 million gallons of BP gasoline annually and owns 16 stations. He has seen gasoline sales fall 2%-3% this month at four BP stations in tourist areas.

BP employees are working with local fuel retailers to launch grass-roots marketing campaigns and are visiting sites to talk to concerned consumers, said John Kleine, executive director of the BP Amoco Marketers Association, an independent organization representing independent distributors. The company's support includes full reimbursement for advertising costs normally split with jobbers. The money frequently goes to on-site promotions at service stations.

"BP looks at what they are doing now as a long-term investment for the brand and knowing that investment will play out over time if you are doing the right thing," Mr. Kleine said.

So far, jobbers and retail stations are largely sticking with BP rather than switching to other brand names, which could require buying out expensive contracts, said Dan Gilligan, president of the Petroleum Marketers Association of America, an industry group.

Obama Sends Small -Business Lending Bill to Congress

USA Today

 

 

WASHINGTON — The Obama administration has sent Congress a proposal to create a $30 billion program to unfreeze credit for the nation's small businesses.

The $30 billion fund would provide support to small and medium-size banks with assets less than $10 billion to encourage them to increase lending to small businesses.

Obama outlined the effort in his State of the Union address in January. Initially the administration planned to obtain the money by tapping leftover funds in the financial bailout program. Officials said Friday that the effort now has no links to the unpopular Troubled Assets Relief Program.

In remarks to reporters at the White House, Obama said the program has been expanded to include a new state small business credit that would support efforts by state governments to provide loans to small businesses.

"This state initiative, which was designed with the help of governors and members of both the House and the Senate, will help expand lending for small businesses and manufacturers at a time when budget shortfalls are leading states to cut back on vitally important lending programs," Obama said.

An administration official said many states have their own programs to support loans to small businesses but these programs have faced cuts because of severe budget shortfalls.

This official, who spoke on condition of anonymity because he was not authorized to speak publicly, said the administration expects that Rep. Nydia M. Velazquez, head of the House Small Business Committee, and Sen. Mary Landrieu, head of the Senate Small Business Committee, would add their own proposals to the legislation as it moves through Congress.

"Getting capital to small business is going to be critical to sustaining our recovery and continued job growth," Velazquez, D-N.Y., said in a statement. "The committee will work to ensure that whatever Congress moves forward accomplishes that goal."

The administration has faced growing pressure to increase government help for small businesses. Lawmakers in both parties have complained that while the government created a $700 billion bailout fund that provided help to big financial institutions and two auto companies, small businesses have struggled to get the financing they need.

Many banks have tightened lending standards in the face of record home mortgage foreclosures and serious problems in commercial real estate.

The administration's initiative to support state lending to small business seeks to merge ideas that were suggested from various sources, including recommendations in a letter from 28 governors endorsing the use of loan guarantees.

The administration proposal also would provide support for a program currently being used in more than 20 states that gives capital assistance to banks providing loans to small businesses, an idea being pushed by Sen. Mark Warner, D-Va.

In addition, the administration's effort incorporates elements of a small business lending program that has been successful in Michigan. The Michigan program provides support to businesses that have seen the value of the collateral they have put up to obtain bank loans shrink during the recession.

Michigan Gov. Jennifer Granholm and members of the Michigan congressional delegation including Reps. Sander Levin and Gary Peters worked with the administration on this approach as did Sen. Sherrod Brown, D-Ohio.