Jan Norman on Small Business

Calif. small businesses cut jobs, wages in October

Jan Norman, small-business columnist — Fri, 06 Nov 2009 20:00:37 +0000

California small businesses cut staffing and wages in October, according to SurePayroll Inc, an online payroll service for more than 25,000 businesses.

It is the 14th straight month of job cuts and 9th straight month of reduction in average paycheck for California firms, according to SurePayroll’s data. Year-to-date, the number of employees is down 2.1% and average wage down 2.5%.

In other regions, hiring is up, but average payroll is down.

SurePayroll also surveys small-business owners each month. In the last week of October, optimism levels of those surveyed dropped to 50%, a 10-point decline from the optimism level in September.

“With hiring increasing, the cost of labor declining, and the government’s recent measures to open up credit for small businesses, you’d think small business optimism would be higher,” SurePayroll President Michael Alter says on his Managing People blog for Inc. “But here’s the thing: When we look a little closer, we see that most of that hiring was driven by independent contractors, not employees. And because of continually decreasing wages, less and less money is being pumped into our economy.

“So, while Wall Street is telling us we’re starting to recover, it seems that half of the business owners out there adamantly disagree. And if you ask me, no one is more in touch with the economy and how it affects their business than entrepreneurs. You are playing it safe by opting to hire independent contractors instead of employees — and you should continue to hedge your bets. Now is the time to forget about shooting for huge growth and instead conserve cash.”

The national jobless rate just hit 10.2%, the Bureau of Labor Statistics said today.

Other surveys indicate the jobs picture will improve in the coming months:

Robert Half International and CareerBuilder say more than half of employers plan to hire full-time workers in the next 12 months while 40% will hire independent contractors and 40% will hire part-timers (no doubt considerable overlap in those responses)
Intuit Payroll says 44% of its survey respondents plan to hire in the next 12 months
12% of members of the National Asso. for Business Economics will add jobs and 31% will cut payroll

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Post from: Jan Norman on Small Business

California lags as good place to locate a business

Jan Norman, small-business columnist — Fri, 06 Nov 2009 14:00:35 +0000

California ranks 22nd - tied with Minnesota - as a good place to locate a business, according to the November issue of Site Selection magazine.

The annual business climate rankings are determined 50% on the availability of new and expanded commercial facilities and 50% on a survey of people who scout new sites for companies.

With the executives, California ranks 24th, meaning the state’s buildings are better than its other factors.

Executives were asked: “Based upon your experience, what are the top 10 state business climates, taking into consideration such factors as lack of red tape, financial assistance and government officials’ cooperation?”

The people who choose corporate sites also were asked to rank the factors most important to them when determining a location for a new facility. The top three factors are:

Transportation infrastructure
Existing work force skills
State and local tax schemes

The top states in the 2009 survey are:

North Carolina
Texas
Virginia
Ohio
Tennessee
South Carolina
Alabama
Georgia
Indiana
Kentucky

California ranks 9th in new plants in 2009, but 45th in new plants per million population.

Site Selection magazine, published by Conway Data Inc., provides information about business expansion to 44,000 executives at fast-growth firms.

Click here for Site Selection business climate stories.

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Post from: Jan Norman on Small Business

Local small-business lending picks up

Jan Norman, small-business columnist — Thu, 05 Nov 2009 20:00:01 +0000

More local businesses are getting federally guaranteed loans in the new fiscal year that started Oct. 1 after two years of declining loan numbers, reports the Santa Ana District office of the U.S. Small Business Administration.

For the two weeks ended Oct. 14, 32 businesses got 7(a) loan (the largest SBA-guaranteed program) approvals for $14.3 million. That a 60% jump in the number of loans and more than double the dollar amount for the same period a year earlier.

The Santa Ana District encompasses Orange, Riverside and San Bernardino counties. Here are the loan numbers from past years:

Source: SBA

To boost the lending program more, President Obama recently called on Congress to increase the maximum amounts for SBA loans:

SBA 7(a) (the largest program) loan limit $5 million, up from $2 million
SBA 504 (for real estate and capital spending) loan limit $5 million, up from $2 million
SBA Microloan limit $50,000, up from $35,000

The rationale for the increase, the SBA says, is that the percentage of SBA 7(a) and 504 loans exceeding $1.5 million has grown significantly since 2005: 7(a) loans larger than that amount to 21%, compared with 13% in 2005; and 504 loans, 28% vs. 15%. The latter is especially true in Orange County, where real estate prices are higher than the national average.

Click here for more details.

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Post from: Jan Norman on Small Business

Those interest-free federal loans hard to get

Jan Norman, small-business columnist — Thu, 05 Nov 2009 14:00:41 +0000

Buena Park consultant Mike Beard has tried unsuccessfully since July to get one of those deferred payment, interest-free federal loans promoted as a lifeline for struggling businesses.

The U.S. Small Business Administration announced with much fanfare in May the so-called ARC loans (short for American Recovery Capital) of up to $35,000 specifically for previously profitable small businesses that are struggling financially because of the recession. Click here to read a previous story.

The program is one of the few targeting small businesses in the federal economic stimulus efforts. Small businesses account for more than half the nation’s jobs and more than half the gross domestic product.

Beard, who has owned Value Based Project Management LLC since 2003 and self-employed since 2009, says his business certainly qualifies, but has been told the “initial response” (after 4 months) “would not be favorable” based on his personal credit history.

“If my company is negatively impacted by the negative economy for the past two years, caused by the greed of financial companies and banks, and I run a small consulting business then it stands to reason that the downturn is going to hurt my personal credit,” Beard wrote in a Nov. 2 letter to President Obama, the SBA, JP Morgan Chase Bank, 60 Minutes, Business Week magazine and the Orange County Register.

He says work has been tough to come by for two years and he would use the loan proceeds to pay off two business credit cards, thereby deferring the $700 monthly payments for up to a year.

Beard says he’s no fly-by-night flake. He’s president of the Association of Professional Consultants of Orange County.

The ARC loan web site states:

“SBA’s America’s Recovery Capital Loan Program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability.”

Despite tens of thousands of applications from small businesses, only 3,577 ARC loans averaging $32,000, have been made nationwide. Thirty have been made to businesses in the Santa Ana district covering Orange, Riverside and San Bernardino counties.

Beard says he first applied to Washington Mutual, which was taken over in September by JP Morgan Chase, which has made four ARC loans in the Santa Ana district.

Alex Hernandez, the Chase banker handling Beard’s application, said he is not authorized to discuss it and referred a request for bank comment to regional officials.

Beard says the bank in October asked him for documentation that he had already submitted to Washington Mutual, and dated his initial application Sept. 25. Beard called the SBA and found out his initial application had not been submitted to the agency.

Rachel Baranick of the SBA’s Santa Ana office, says, ” I spoke to him at length and referred him to the financial committee at SCORE (volunteer business counseling organization). We are hoping he will be able to get a loan perhaps with another bank.”

Other economy stories…

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Post from: Jan Norman on Small Business

Private employers cut 203,000 jobs in October

Jan Norman, small-business columnist — Wed, 04 Nov 2009 17:00:39 +0000

U.S. private companies, not counting farms, eliminated 203,000 jobs in October, the seventh straight month in which job losses were less than the previous month, according to the ADP National Employment Report released today.

The company also revised its September job losses to 227,000 from the 254,000 that it initially reported, said Joel Prakken, chairman of Macroeconomic Advisers LLC which compiles the monthly report based on actual payrolls of ADP clients.

The report, which does not include government jobs, is in line with economists’ expectations. The Bureau of Labor Statistics will release its October unemployment numbers Friday Nov. 6. The economists’ consensus is that report will show job losses of about 175,000, but Prakken said he expects the number to be closer to ADP’s because many government agencies and schools have been cutting jobs too.

Still, “I’m pretty confident that recovery is underway; GDP grew 3.5% in the third quarter,” Prakken said. “The recession probably ended late spring, early summer, but I still expect payroll declines through the end of the year.”

In a separate report, the outplacement firm Challenger, Gray & Christmas Inc. said companies in October announced plans to cut 55,679 jobs in the coming months, 16% fewer than in September. This report is in line with economists’ assertion that job losses will continue to slow before companies start to hire again.

“While there are still some trouble spots, the continued decline in job cutting activity across most industries is a positive sign that the economy is slowly improving,” said Chief Executive John A. Challenger.

Prakken predicted that private employers will actually start adding jobs by February, 2010, but the unemployment rate may continue to climb — peaking at 10.1% — for a while after that because companies won’t add enough jobs to exceed growth in the labor force.

The unemployment rate might not return to 5% until 2014, he said.

Job losses in October were across all industries and all sizes of business:

Firms with fewer than 50 employees: - 75,000
Businesses with 50 to 499 employees: -75,000
Companies with 500+ employees: -53,000
Goods producers: -117,000
Services: -86,000
Manufacturers: -65,000

“Small-business jobs tend to be less cyclical because they just don’t have as much labor to shed as large companies, and they often have a family structure that causes small businesses to hang on to their employees,” Prakken said. “That pattern was playing out early on in this recession but last fall there was an abrupt change in behavior by small businesses that had to do with the tightening of credit and also the realization that the holiday season was not going to provide a respite for the economy.”

He expects the small-business job market to recover sooner and stronger than at large companies.

Other economy stories…

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Business owners tap personal assets to survive

Jan Norman, small-business columnist — Wed, 04 Nov 2009 14:00:54 +0000

More than 6 out of 10 small-business owners say they are likely to have to use their personal assets to help their companies survive until the economy recovers, according to the Discover Small Business Watch monthly survey.

That one statistic alone goes a long way to explain owners’ lukewarm attitude about spending for advertising and growth and unwillingness to hire more workers.

Are they reflecting economic reality or creating it? Small businesses account for most of the jobs and gross domestic product.

Most — 69% — have been hurt by the recession. Here’s what they say about their business’ ability to rebound in the coming months (click on the image for a larger view):

Source: Discover Small Business Watch

Their expectations for the economy as a whole is even lower:

Source: Discover Small Business Watch

“Small-business owners aren’t showing any new optimism in the economy,” said Ryan Scully, director of Discover’s business credit card. “Half of them think it will take more than 12 months before most people feel the economy has stabilized, and two our of three are expecting to dig into their own pockets to stay afloat.”

Other findings:

55% rate the economy as poor; just 8% say it’s good or excellent
44% think the economy is getting worse and 35% think it’s getting better
43% say economic conditions for their own businesses are getting worse; 29% say better

The Obama Administration’s proposal to increase the size of loans guaranteed by the U.S. Small Business Administration isn’t likely to help; 90% of those surveyed have never applied for an SBA loan, and 48% said they don’t need one.

So what is weighing most on small-business owners’ minds?

Sales generation, 28%
Taxes, 22%
Operating costs, 15%
Health insurance 10%
Access to capital, 5%
Inflation, 4%
Other, 6%

Rasmussen Reports LLC surveys 750 owners of businesses with fewer than 5 employees monthly for Discover Business card.

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O.C. small-firm bankruptcy filings 5th highest in U.S.

Jan Norman, small-business columnist — Tue, 03 Nov 2009 20:00:51 +0000

Orange County business bankruptcy filings were 5th highest in the nation at the end of the third quarter, reports Equifax Inc., an Atlanta-based financial data provider.

The local Metropolitan Statistical Area moved up from 11th place at the end of the second quarter.

Nationwide, commercial bankruptcies by companies with fewer than 100 employees jumped 44% in the third quarter from the same period a year earlier.

Eight of the top 14 metropolitan areas for bankruptcy filings are in California:

Los Angeles
Riverside/San Bernardino
Sacramento
Denver-Aurora, Colo.
Santa Ana-Anaheim-Irvine
San Diego-Carlsbad
Dallas-Plano-Irving, Texas
Portland-Vancouver-Beaverton, Ore.-Wash.
California areas outside the major MSAs
Oakland-Fremont-Hayward
Oregon areas outside the major MSAs
Chicago-Naperville-Joliet, Ill.
Houston-Sugar Land-Baytown, Texas
San Jose-Sunnyvale-Santa Clara

“Economic pain is continuing for small businesses across the country. We’re still seeing hefty increases in the number of bankruptcies in a lot of major metro areas.” said Dr. Reza Barazesh head of North American research for Equifax’s Commercial Information Solutions division.

However, Equifax’s data indicate “that the East Coast may be experiencing an earlier recovery from the recession than the West Coast,” Barazesh added.

For example, the number of filings dropped 69% in Charlotte and 49% in New York-White Plains. And 9 of the 15 MSAs with the fewest bankruptcy filings are along the East Coast. None is west of Texas.

Equifax reviewed and analyzed its database for the month of September, the latest month for which complete statistics are availale. It analyzed Chapter 7 (liquidation), 11 and 13 (both are reorganizations) filings.

We have been tracking the bankruptcy filings for Orange County and the neighboring counties. Click here to read the latest numbers.

Here are the numbers for September, the most recent published by the U.S. Bankruptcy Court (click on image for a larger view):

Source: U.S. Bankruptcy Court

Local bankruptcy experts say this region has been one of the hardest hit by the sub-prime mortgage meltdown and king-sized housing slump that started in 2007. Some project the numbers to continue climbing until 2010.

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Post from: Jan Norman on Small Business

O.C. new-business filings drop again in October

Jan Norman, small-business columnist — Tue, 03 Nov 2009 14:00:53 +0000

Filings for new fictitious business names for Orange County firms dropped 15.3% to 2,859 in October compared to the same period in 2008, according to the Orange County Clerk Recorder’s Office.

Source: O.C. Clerk Recorder

Filings commonly called DBAs (doing business as) were down just three from September in what has essentially been a see-saw year, up slightly one month and down the next, according to county statistics.

Business owners file for a fictitious name if they are doing business under any name other than their own. Some filings represent a change of location or ownership, but the new filings are an indication of economic direction. Notice in the chart above that filings have steadily dropped from their 2007 peak.

To minimize the impact of seasonal ups and downs, look at the number of filings over the past 12 months compared with the 12 months before that: November 2008 through October 2009: 33,355, off 15.6% from November 2007-October 2008. That’s about the downturn in October alone, so the decline isn’t deepening but it’s not shrinking either.

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Post from: Jan Norman on Small Business

Holiday shopping at work to almost triple

Jan Norman, small-business columnist — Mon, 02 Nov 2009 20:00:23 +0000

Employees, on average, plan to spend almost two working days — 14.4 hours — shopping online in November and December, according to a survey for ISACA, a trade group for information technology professionals.

That compares with less than 5 hours in the 2008 survey, called “Shopping on the Job: Online Holiday Shopping and Workplace Internet Safety.”

Tell us if you shop from work and then read on:

Do you shop online from work?

In a separate survey of 1,500 ISACA members, 25% estimate the productivity loss from online holiday shopping at work at $15,000 or more per employee.

This group cares about the potential security issues of online shopping including viruses, spam and phishing attacks that can cost thousands of dollars per employee in lost productivity and potentially millions of dollars in destruction or compromise of corporate data.

Employers should take steps to protect their computers because they’re not going to be able to block online shopping completely, ISACA says.

“With the Internet now available to almost any employee in the workplace, it’s unrealistic to think that companies can completely stop the use of work computers for online shopping,” said ISACA Vice President Robert Stroud. “What companies can and should do is educate employees about the risks of online shopping and remind them of their company’s security policy. This is especially important this year, when the convenience of shopping online may be very appealing to employees whose workloads have doubled or tripled because of downsizing.”

Half of all workers surveyed plan to do their holiday shopping online with 10% expecting to spend at least 30 hours shopping online at work.

The biggest reasons for shopping at work: convenience, cited by 34% of respondents, and boredom, mentioned by 23%.

Employees who shop online at work are also likely to do other online activities that expose the company computers to potential problems:

51% bank online from work
40% click on e-mail links redirecting them to shopping sites
15% click on links from social network sites

Here are some ISACA tips for employees to reduce the risk of spam, viruses and accidental downloading of backdoor agents that can highjack corporate data:

Use your desktop PC, not your mobile device, to shop, because your desktop browser is likely to be more secure.
Protect sensitive information, like credit card numbers, by password-protecting both your mobile device and its memory card.
Make sure you update your anti-virus and anti-malware programs continually.
Treat social networking sites with the same caution as other web sites—social sites are a growing target for fraudsters and virus writers.
Be cautious of special offers. If it looks too good to be true, it probably is. Fake online offers and coupons may lead to harmful sites, so be suspicious.

O.C. business sales drop 54% in October

Jan Norman, small-business columnist — Mon, 02 Nov 2009 13:00:07 +0000

Less than half the number of small- to mid-sized businesses sold in Orange County during October compared to a year earlier, according to BizBen, a California businesses-for-sale web site.

Here are BizBen’s data for Orange and surrounding counties and for all of California (click on image for larger view):

Source: BizBen

This is the 14th straight month of year-over-year sales declines in Orange County.

Orange County’s October sales were also fewer than in September, an indication that the business market is still in a slump. Would-be buyers are still having difficulty getting bank loans for the purchase price. Fewer are able to tap home equity, another common source of capital to buy a business prior to the housing slump.

Southern California sales are down more than the state as a whole, especially Orange, San Bernardino and Riverside counties which were hardest hit by the housing and mortgage declines.

A recent survey indicated that 65% of business owners fear their businesses might fail by 2011, hardly a ringing endorsement for potential buyers. Also, Orange County taxable sales declined in the third quarter, sign that retail businesses are dicey purchases even if they are profitable.

Peter Siegel of BizBen has said not to expect a recovery in the market until next year.

Other economy stories…

Post from: Jan Norman on Small Business

Poll: Is your boss honest?

Jan Norman, small-business columnist — Sun, 01 Nov 2009 19:00:50 +0000

Is your boss honest? Take our poll then see what others said.

Is your boss honest?

When Harris Interactive asked that question, 53% of U.S. workers said “no.” In addition, two-thirds said their boss isn’t loyal and a fourth distrust their employer’s honesty about their job security.

A factor that may be in play in this survey is that “honesty is more than truth or lies,” according to Steven Gaffney, author of Honesty Works!

Or how about the conclusion of a recent study conducted by North Carolina State University that bosses who treat their employees with “honesty, kindness and respect” will succeed?

A kind person may be dishonest, but it’s interesting that in the workplace many employees think the traits go hand in hand.

The Harris survey of almost 1,147 U.S. adults working full- or part-time was done in early October for Adecco, a global human resources company.

Other findings in the Harris/Adecco survey:

61% wouldn’t want their boss’ job
87% say their boss is as accessible now as when the recession started
89% say their relationship with the boss is important to their job satisfaction.

“Good or bad economy, how employees feel about their work life is very much dependent on their relationship with their boss,” said Bernadette Kenny, chief career officer at Adecco Group North America. “Increasingly difficult jobs require impactful managers who lead by example and create the best possible environment for their staff.”

Adecco’s advice for bosses:

Encourage open dialogue
Exhibit loyalty
Communicate opportunities
Improve morale

Click here to read Adecco’s press release about the survey.

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Post from: Jan Norman on Small Business

Check out this award-winning O.C. landscaping

Jan Norman, small-business columnist — Sun, 01 Nov 2009 13:00:48 +0000

Bemus Landscape Inc. based in San Clemente has been honored twice recently for its landscaping work on two separate projects in Orange County.

Talega, a 4,000 home community in San Clemente, has received a national merit award from the 40th Annual Environmental Improvement Awards Program, sponsored by the Professional Landcare Network. The award was presented Friday, Oct. 30, in Kentucky.

And the company’s landscape management of One Ford Road, a gated planned community in Newport Coast, has been awarded the Judges Beautification Award from the O.C. chapter of California Landscape Contractors Association. The award goes to the contractor that exhibits the single finest example of Landscape management in Orange County.

Check out these photos from Bemus of its One Ford Road project (Click on images for larger view):

PLANET represents 3,200 companies and suppliers in green-industry services nationwide. One of the biggest challenges facing landscape management companies is to beautify properties while conserving water and saving clients’ money by using drought-tolerant plants and water-conserving irrigation systems.

Bemus clients, include property managers, developers, general contractors, cities, homeowners and landscape architects.

The company has been family owned since it started in 1973.

Other local business stories…

Post from: Jan Norman on Small Business