The Experts

With mid-term elections just around the corner here in the United States, we’re coming up half to the half time hooter in the main game. Let’s look at the scoreboard.

• The healthcare bill still confusing small (and large) business
• The small businesses stimulus package not so stimulating to many
• The banks still holding on to their cash despite repeated calls from Capitol Hill for them to help small business
• And the future seems bleaker in the eyes of the average small businessperson still slogging it out on the street.

This week the National Small Business Association released its midyear economic report. Based on a survey of 400 small business owners, the report found;

• A decrease in optimism and confidence of small business growth
• Small business owners and managers are less confident than they were in December 2009
• Only 11 per cent of small businesses have hired, while 25 per cent have cut jobs
• 41 per cent say they are unable to secure financing
• 45 per cent believe the economy is worse now
• 25 per cent predicted drops in revenue in the next 12 months
• 26 per cent of businesses are reporting higher revenue since the last report compared with 22 per cent in December.
• 24 per cent of the businesses reported that rising heath insurance costs have led to a reduction in work force, up from 20 per cent in December.

What’s causing this sentiment?

Well, here’s my take. As a speaker and author, I am lucky that I don’t really have a full time ‘job’ anymore – I get to choose my day and how I invest it. And, as a result, I spend a lot of time researching, reading, learning, and seeking to understand more about business in general, global influencers on business and, in particular, business in the US.

Some days that means I get to spend anything up to three hours watching, reading, listening to information. And I am confused about so much that so many governments of the day are trying to achieve. Translate that to what the average US small businessperson is trying to adsorb in probably a tenth of the time and, of course, you can only end up with a perceived bleak view of the future.

• They are confused about health care, despite education – and the relevant taxes that will inevitably creep in to pay for it
• They are confused on potential tax changes
• They are confused on potential credit card or debit card changes
• They are confused on the market – is it up, down or sideways?
• They are confused on who is helping them. The administration appears to be pro-small business, but continues to conflict this message with some of their decisions.

In short, the unknown is frightening. It stands to reason that you can’t plan around something you don’t know! So, therefore, your only friend is fear.

If the US economy is to come good sooner than later, it is going to be driven by small business stimulus. In the absence of any of that stimulus coming from any external source, there are simple things small business can do to get moving again. Step one is to take responsibly for their destiny and just get on with it!

• Work on the things they can influence, such as cost reduction, cash flow, management, staff morale or personal responsibility
• Set aside the things they have influenced as much as they can and stop letting them clutter their day and their progress
• Stop thinking about the things they cannot influence
• Seek alternative methods of business development. Stop waiting for a change in sales through traditional sales methods – that’s what everyone else is doing
• Seek alternative ways to structure your business in preparation to be more resilient next time a change like this comes around.

I am a firm believer that business happens in cycles, and your ability to manage these cycles successfully lies in how you interpret information from the past, deal with it in the present and prepare for the cycles of the future.

In the absence of any clear and concise message coming from any government of the day, take the responsibly on your own shoulders to analyze the information you do have at hand in your own business and use that to chart your course to a better future.

Troy Hazard is the former global president of the elite Entrepreneurs’ Organization, and Switzers’ resident alien in the United States. He has owned managed and run ten companies in the last two decades; is an international speaker and author of Future-Proofing Your Business.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

In an effort to drive the US economy, Washington continues its quest to get big banks to offer more to small business lines of credit, and week on week it seems to get more challenging.

And in part I can see why. For one, why would they extend cash to a small business that is already on its knees, meaning that they too put their line of credit and in turn their business at risk? I mean after all, their business model is already archaic at best and one of the most inefficient animals I have had to deal with. Overlay to that the potential of further bad debts and for sure you’ve got a bunch more that will hit the wall.

Now don’t get me wrong, I am not saying the banks should not ‘lend’ a hand, for sure they should pony up, after all so many of them helped create the position we’re in right now. And after 20 years in business you’re not going to find this entrepreneur taking the side of the bank. I’m yet to find a bank that I can say I truly have a relationship with, in fact I am yet to find a bank that I would not happily break out the snags if it was burning to the ground.

But you will find me taking the side of logic. And for sure if there is one thing that defies logic for me, it’s the basic American business banking system.

• According to my ‘relationship’ banker here in the USA they are 10 years off an efficient online inter-banking EFT system. At the moment if you want to pay your bills online with vendors and suppliers, or have customers pay you through inter-bank EFT its $20 to 50 a transaction if they do not have the same banker. In fact I opened my business account in Florida, moved to California and went into my bank to update some information and was told that they had to ‘call’ Florida as they were on a different computer system and they could not access the information online. In their own business.
• EVERYONE writes ‘checks’ (cheques). They take the usual weeks to process in the normal business system, five days to get to you in the post, and further five days in some instances to clear and then you’ve got your money. ALREADY you have 10 business days, or a potential two weeks added to your debtor days, when small business is scratching to make payroll of Friday.
• The credit rating system to me is from the 60s. Here, I have NO credit. The bank cares less for my foreign asset, my history of earning in Australia, my Australian tax return as proof both personally and professionally of earnings in the last five years, nor my earning capacity here in the USA. BUT they are happy to take my cash each month and look after it for me. In short, we pay cash for everything here, phones, furniture, cars the lot. And when I did go to get the cash out of my bank to pay for our car, they would not give me the money. I was told I had to give them 24 hours notice on larger withdrawals… hmmm interesting concept that! You don’t trust me to lend me anything but you’re happy to have me make an advance request for my money back.
  Now I don’t know about you, but I can’t recall the last time I wrote a cheque in my business in Australia.
  In Australia, at the age of 17 I had a visa card for $500, at 18 years old, I had a car loan for $5000, at 24, one of Australia’s leading banks agreed to underwrite me for a $1.4 million acquisition of a radio station. And yet in the USA… I am a newborn!

You want to fix small business credit Washington? Fix the banking SYSTEM, get these guys online in into the new millennium. Get the efficiently right then they might just be able to wear the rollercoaster of the good days and the bad days with small business client lending.

Troy Hazard is the former global president of the elite Entrepreneurs’ Organization, and Switzers’ resident alien in the United States. He has owned managed and run ten companies in the last two decades; is an international speaker and author of The Naked Entrepreneur.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Last week I like the rest of the world, sat watching President Obama delivering his State Of The Union speech. And it missed the mark for me.

Like 23 million other small business owners across America, I watched in anticipation for the nuts and bolts of what the small business stimulus package might do for me.

A $5,000 tax break for any small business that employs someone in 2010

Well it sounds good, but the business owner still has to front the salary costs and more importantly have something for the new employee to do. This is not about paying tax, in order for a business owner to hire;they have to get over the fear of employing people. However I can see this being a great handout to corporate America as they put those staff on this year they had already budgeted to employ, what a great windfall. Hmm, I wonder if the banks will get the same break.

A small business finance package

This is the proposed redistribution of US$30 billion that was repaid by Wall St to help regional or community banks offer credit to small businesses to keep them afloat. Does this just mean easier lending terms? The Small business owner will still be the same risk no matter who lends it to them, with many insolvent or borderline Chapter 11, or worse facing bankruptcy. Will the US$30 billion underwrite the bad debts for unrecovered loans from these regional or community banks? Or will the initiative put us back in the same spot? That is, lending to those who cant pay it back.

A commitment to ‘slash the tax breaks to keep jobs at home’

The reality is that its US$20 a week for someone to work on the production line in China or India or Sri Lanka, and, at best, 15 times that in the US on minimum wage.

Tax cuts won’t mean a thing to the big business operator that has 2000-plus of these workers in a sweathouse in backwater Beijing.

A proposal to remove all capital gains tax on small business investment

This is great news for small business. And I am all for this.

But there needs to be a plan on how is he is going to pay for this cut.

And last but not the least of the highlights, a proposal to offer tax cuts to all business on capital investment

This is the one thing that I did get as a small business person, an excellent incentive for growth in my view.

Like many, I too have been putting off that new ‘something’ in my business making do with what I have. This is the first item of the small business stimulus package proposal that actually got my attention as being something that might just help me in 2010.

At the end of the day, I believe small business will be the thing that stimulates small business.

Let the pollies all scrap around in the background waiting for us to shift the market so they can take credit for the wonderful strategy they put in place to stimulate business, right up until it crashes again and they blame the banks.

To President Obama’s credit, he did put forward numerous ideas and strategies moving forward and he did call for unity from both parties to have some of these things passed so they can actually get things done in 2010, something we have not seen so far with the Health Bill. 

Time will tell if the State Of The Union will in fact unite Capitol Hill.

Troy Hazard is the former global president of the elite Entrepreneurs’ Organization, and Switzers’ resident alien in the United States. He has owned managed and run ten companies in the last two decades; is an international speaker and author of The Naked Entrepreneur.

www.troyhazard.com 

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

It’s interesting, 12 months ago while the world waited for a new President to appear in the United States, I was on radio across the US saying business people across the country here needed to simply claim some personal responsibility for their destiny, put their head down and the tails up, and run their own race regardless of a new guy in the Whitehouse.

Now, don’t get me wrong. I think it’s monumental that society has evolved so much since Martin Luther King Jr’s speech was delivered in August 1963 at the Lincoln Memorial in Washington DC. Even though I was only months old at the time, to think that we can go from one man's dream to another’s reality in one lifetime is extraordinary, and a true gauge of how the world is evolving. Or put more simplistically, how the world has just grown up.

As I stood listening and watching President Elect Obama’s acceptance speech, I felt this was to be one of those moments in my lifetime that I will remember forever. A moment when over a dinner table with friends one will answer the question, ‘where were you when…?'

However, it did take us 146 years to get there. It was 1 January 1863 when Lincoln signed the emancipation proclamation setting a path to the end of slavery, a document that was signed just around the corner from where President Obama took his oath of office.

Today, as we face our own personal issues right here, right now in business we simply don’t have that luxury of time. Years ago, these two very important gentlemen in American history chose to create change, not wait for it to happen around them. And now it is our turn to do the same.

We can’t spend another 12 months sitting back and waiting for President Obama to fix all of the problems of the economy, deliver a stunning unemployment figure and have the entire country back at work, have the banks toe the line, and believe he can change the world before the Easter Bunny comes.

That’s almost believable as the Bunny himself. And it would be a business bunny to believe otherwise.

If we’re to get through these next 12 months in business, we need to do it on our own. Because nobody is going to be able to facilitate change faster than you in your own business, no matter what the politicians tell you, anywhere in the world.

It’s time to claim responsibility and just get on with it. If we don’t, we destined to simply stop, fall over, and die. I mean, just take a look back over the last 12 months in the face of economic change while everyone has been pointing the finger. Think about it.

The Democrats have been saying it’s the Republicans fault for not seeing the signs.

The Republicans have been saying the fat cat bankers have been irresponsible and taking huge salaries for making poor decisions.

The banks are saying they are doing their best to weather an international storm driven, in part, by the sub prime issues.

Well, for sure the banks did lend money irresponsibly to customers that could not pay it back.

The customers took that money irresponsibly knowing full well they would struggle to pay it back.

The politicians, all of them, from both parties, sat back and watched this happen, all the while knowing full well that there is an economic cycle.

The business world sat back and let the consumer spend the money irresponsibly rubbing their hands together and taking advantage of the business boom, knowing they too could jump on the gravy train, only then to proceed in many instances to spend the money just as irresponsibly and borrow more from the banks…

Go figure… So who’s at fault… well, in my view the entire country is at fault.

If we are to survive the next 12 months we all need to stop blaming others and start claiming responsibility and just get on with it. We need to stop sitting back and waiting for the next Presidential election, Osama to be found, the stock market to bounce, or a solution to global warming to be found.

Unless you are thinking of becoming President, having dinner with Warren Buffet, or you’ve stumbled across Thomas Edison’s notebook, then there’s not a lot you can do to facilitate change with any of those actions. But you can take responsibility for your own actions.

As we enter the second year of the new president in office, it's encouraging to see that the country at least now wants to take responsibility for their actions with many of the business people I talk to in a given week chanting that they a are going to just get on with it in 2010.

Troy Hazard is the former global president of the elite Entrepreneurs’ Organization, and Switzers’ resident alien in the United States. He has owned managed and run ten companies in the last two decades; is an international speaker and author of The Naked Entrepreneur.

www.troyhazard.com 

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.