Tag Archives: business financing

Windows XP: Why It’s Time for Small Businesses to Say Goodbye

Ten years ago this week, Microsoft finished up work on a new operating system called Windows XP and shipped it off to PC makers. If you’d told Bill Gates and Steve Ballmer back then that XP would still be the dominant version of Windows a decade later, they would have mocked you.

So would have most Windows watchers, including me. Everybody knew that a major new version of the Microsoft’s desktop OS came along every two or three years. Everybody knew that even hidebound stragglers eventually upgraded.

Bitten By Vista, Shy About Windows 7

Everybody, it turned out, was wrong. According to research firm Net Applications, just under 50 percent of PCs on the Internet run Windows XP. That’s nearly twice as many as the number using the current version of Microsoft’s operating system, Windows 7, which hit the market in October of 2009. XP usage is slipping, but far more slowly than anyone expected.

Even today, I know more than a few small business owners who have no plans whatsoever to give up Windows XP.

How did it come to this? Two words: Windows Vista. The successor to Windows XP, unveiled in January 2007 after multiple delays, just didn’t work well enough, especially at first. Even after Microsoft released updates that made Vista less glitchy, it remained short on compelling features. And some of the features it did have felt like arguments for sticking with XP. (User Account Control, a security safeguard which tried to protect users from rogue software, was a jarring, confusing irritant.)

In the Windows Vista era, many businesses and consumers sensibly ignored Microsoft’s upgrade drumbeat. Many of them continued doing so even after the company released Windows 7. (The fact that Microsoft provides no way to install Windows 7 on top of XP and preserve your current apps and settings hasn’t helped. Unless you use LapLink’s PCMover utility, you need to rebuild your system from scratch if you want to upgrade.)

Windows XP: Not Dead Yet!

Microsoft, of course, relies on sales of Windows upgrades to drive its massive profits. So it’s been trying to wean the world off XP for years. It stopped selling shrink-wrapped copies long ago, no longer lets PC makers sell machines with XP preinstalled, and officially discontinued most support for the operating system in 2008.

But the company hasn’t quite driven a stake through XP’s heart. It says that it intends to provide basic support and security updates for Windows XP Service Pack 3, the current version, until April 8, 2014. And businesses that buy PCs with some versions of Windows 7 have the right to “downgrade” those computers to XP.

My feelings about Windows XP’s amazing staying power are conflicted. On one hand, I understand why small businesses instinctively stick with stuff that’s comfortably familiar. I admire their skepticism about overhyped, underperforming products such as Windows Vista. I think it’s smart that so many companies delay buying new technology until the most serious bugs have been discovered and fixed.

Why the Future Is a Windows 7 World

Here’s the thing, though: Windows 7 is pretty great. It’s the operating system that Vista should have been, and it’s well worth the cost (the Professional Edition upgrade lists for $199.99). Holding onto Windows XP until something better came along was a savvy move; holding onto it forever is not.

A few key points in favor of Windows 7 and against XP:

Windows 7 has a superior interface. Once you’ve acclimated yourself — which shouldn’t take all that long — you can work far more efficiently. Unlike Windows XP, it mostly stays out of your face. (You can prevent apps from distracting you with those annoying pop-up balloon alerts, for instance.) Its Taskbar lets you juggle apps and documents far more efficiently. The built-in search feature is more powerful, faster, and more pleasant than the one in XP. A slicker design and better font rendering makes everything easier on the eyeballs. I could go on for a few thousand more words — and did when I reviewed the operating system in 2009.

Windows 7 is much more secure. Businesses that are still smitten with Windows XP forget that it’s a notoriously insecure piece of software. Microsoft is still creating security updates for XP Service Pack 3, but that’s like trying to patch up an ancient, leaky boat. A recent Microsoft survey reported that Windows XP SP3 computers suffer an average of 15.9 infections by viruses and other malware per 1,000 machines. PCs running the 64-bit version of Windows 7 are infected only 2.5 times per 1,000 machines.

Windows 7 packs 64-bit power. Any PC you’ve bought recently probably packs a potent multicore 64-bit processor from Intel or AMD. It’ll work with Windows XP, but XP is only a 32-bit operating system — which means that your PC won’t run as fast as it could, especially for tasks that involve intense number crunching, such as working with giant spreadsheets and editing video. Windows 7 is available in a 64-bit edition that lets cutting-edge PCs live up to their full potential.

Windows 7 is compatible with the future. For now, most third-party software and hardware supports Windows XP. Given that it’s still the most popular operating system on the planet, that only makes sense. But the mustier XP gets, the more likely you are to find software that won’t work with it. Already, Microsoft’s Internet Explorer 9 — by far the company’s best Web browser to date — is available only for Windows 7 and Vista.

One other argument for upgrading to Windows 7 now: Nearly two years after its release, it’s a reasonably mature operating system. Microsoft released a Service Pack 1 update in February that rolled up all the fixes and tweaks it’s pushed out to date. The chances of you encountering any Vista-like crippling problems are small, and an optional feature called Windows XP Mode is available in case of emergency.

I realize that I’m not going to persuade all of you to dump XP this moment. If you keep using it, however, I beseech you: Please, please make sure you’ve upgraded to Service Pack 3 and that you install new fixes as they come along. That’ll make XP as good as it can possibly be, although it still won’t be nearly as good as Windows 7.

And even if you conclude that you’re happy with Windows XP, you need to plan now for life without it. You certainly shouldn’t use an operating system that’s unprotected from new security attacks, which means you’ll want to leave XP behind before Microsoft cuts off security updates in April of 2014.

By then, the current version of Windows won’t be Windows 7 — it’ll likely be Windows 8. Microsoft isn’t saying when it plans to release that version, but it’ll almost certainly be available by the fall of 2012. I wouldn’t be stunned if it arrives several months earlier than that.

We don’t know too much about Windows 8 yet other than that it sports a rather iPad-like touch-screen interface as well as one that looks more like the Windows we know; Microsoft says it’ll have much more to say at its BUILD conference next month. Stay tuned for news.

And hey, if you remain an XP holdout for now, telling people that you’ve been waiting for Windows 8 all along is a convenient excuse that might also prove to be a rational strategy.

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Help for social media mayhem

Holy crap! Someone used social media to trash your company.  Social media monitoring tools can minimize the damage.

Holy crap! Someone used social media to trash your company. Social media monitoring tools can minimize the damage.

NEW YORK (CNNMoney) — It wasn’t until a man diagnosed with measles ate at her New Jersey diner that Connie Correia Fisher, co-owner of The Pop Shop, discovered that the only thing that spreads faster than an infectious disease is bad news.

“We had every major TV station here. All the papers were here, and people were freaking out,” said Fisher, who co-owns The Pop Shop with husband and professional actor Stink Fisher. But that’s not all. Within no time, parents and restaurant regulars alike had taken to the Internet, voicing their health concerns on public platforms like Twitter and Facebook.

But while Fisher couldn’t stop the television crews from hanging outside her six-year-old restaurant, she was able to “constantly beat back down” the fear-mongering flooding social media channels, thereby saving her company “thousands of dollars” in lost business. That’s because Fisher subscribes to Sprout Social, a social media monitoring tool that, for $50 a month, helps her keep tabs on every single online conversation mentioning The Pop Shop.

Welcome to the world of social media where 140 characters can cause irreparable damage to your company’s reputation — and bottom line — in seconds flat. Blogs, Facebook, Twitter, LinkedIn — each one is a digital grapevine, letting consumers air their grievances to millions with the single click of a mouse.

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When someone posted a video on YouTube of rats running around a New York City Taco Bell restaurant in February of 2007, the video spread across the web like wildfire, causing Taco Bell’s (YUM, Fortune 500) stock price and sales to drop, and prompting duplicate videos with more than two million views to date.

And then there was the catastrophic BP oil spill in early 2010. Despite thousands of tweets from angry citizens being published within hours of the Gulf of Mexico disaster, it took the oil giant seven days to issue a Twitter response.

Despite these social networking snafus, multinational corporations can more easily rebound from an onslaught of unflattering tweets and derisive Facebook updates than a resource-strapped small business.

“Large enterprises spend a lot of money on public relations so they can throw an entire army at the problem,” said Tim Hickernell, an analyst with Info-Tech Research Group. “But a small business owner doesn’t have that army. He has to take the time to manage his company’s reputation.”

No wonder then that a growing number of small businesses like The Pop Shop are turning to social media tracking technologies such as those offered by Sprout Social, Radian6 (recently acquired by Salesforce.com (CRM)), HootSuite, Twitter Advanced Search, and Sysomos.

These modern-day eavesdropping tools scour the conversations taking place on social networks for relevant comments — and damning criticism, enabling companies to respond in real-time to online opinions. In fact, according to a Forrester survey, of the 301 customer intelligence professionals canvassed, 78 percent responded that they actively monitor what customers are saying online.

Take, Blue Sky Factory, for example. When a customer tweeted a complaint to his 50,000 followers about the Baltimore company’s customer service, Radian6 immediately caught the criticism and alerted Blue Sky Factory’s 23-person agency via email. Within minutes, a Blue Sky Factory customer service representative responded directly to the tweet with a very public apology. It was a critical intercept given that 22 percent of Blue Sky Factory’s business hails from social media channels. In fact, the company sees close to 1,000 mentions a month.

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Stephan Howard wasn’t so lucky. Instead of using a social media monitoring tool, Howard, the owner of Flik and Company, a Toronto interior design firm, learned from customers that his business was being trashed in a local community blog. ‘Have you been ‘Flick’d’ Over?’ read the thread initiated by a disgruntled Flik customer, who claims Flik failed to make good on a down payment for furniture until he took his ordeal to the blogosphere. (Howard denies the allegations).

In no time, the blog became ablaze with name-calling, finger-pointing and commentary from scores of customers. That is, until Howard contacted the local police department, which ordered the blog’s administrator to terminate the thread.

“It really did get ugly,” said Howard, who has since moved out of the neighborhood and relaunched his store under the banner Flik by Design. “I was bothered a lot by what happened, I was sick to my stomach, and there were nights when I didn’t sleep.”

Social media monitoring products can help. However, selecting the right one for your business requires sifting through “hundreds of tools from free services to million-dollar-plus technologies,” said Zach Hofer-Shall, a Forrester Research analyst. These products range from Web-based dashboards that aggregate social media data to sophisticated analytics tools that mine data and generate custom reports.

For cash-strapped small businesses, free tools such as Google Alerts and Twitter Advanced Search let users conduct keyword searches for the names of their companies and competitors, but have “very limited functionality,” warned Hofer-Shall.

That suits Parties That Cook just fine. The San Francisco corporate team-building and cooking class company relies on Google Alerts to flag mentions on user review sites like Yelp. “In a small company with limited resources, it just doesn’t make sense to spend the extra money or extra time [on a costly social media monitoring tool],” said Crissy Gershey, Parties That Cook’s marketing director.

Nevertheless, the $5.99 a month it costs for HootSuite’s basic analytics solution, or $500 a month for Sysomos’ more robust Heartbeat solution, can be a worthwhile investment. By upgrading from Google Alerts to Radian6, DJ Waldow, Blue Sky Factory’s director of community, said he spends nearly three times less sifting through company mentions, and no longer worries about angry tweets or Facebook comments “slipping through the cracks.”  To top of page

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A Day in the Life of a Fitness Franchisee

When Samantha and Oliver Beltran were only 22, they already knew they wanted to start a business that was fitness related, but they weren’t quite sure where to focus their energy. Oliver went to school for kinesiology but dreamed of owning his own gym; Samantha, a certified yoga instructor, hoped to open a yoga studio. But after seeing the success of a Snap Fitness location in Oliver’s hometown, the husband-and-wife team was ready to join the dynamic fitness franchise industry, and they opened the doors to their very own Snap Fitness franchise in Palestine, Texas, in November 2010.

Getting Started: Much of the Beltrans’ initial work was focused on getting members. The corporate office provided assistance with the grand opening marketing campaign by providing direct marketing materials such as direct mail, posters, and door hangers, but the Beltrans kept the momentum going by getting involved in their local community’s events and getting to know other business owners. “We worked hard to engage the community and create partnerships with local businesses in order to create a working relationship and cross-promote our club to their customers and vice-versa,� says Samantha. Their drive paid off and, within the first six months, the center already had more than 700 members.

The Personal Side: Although the Beltrans received ample training and support from corporate, they still faced a steep learning curve, especially in their first year. Despite being knowledgeable about fitness, they possessed no business management experience and had to quickly learn about paying taxes, managing their finances, selling memberships, and doing bookkeeping. And though their youth filled them with boundless energy, Samantha’s father had to lend a helping hand when their non-existent credit  – due to their age  – prevented them from leasing the equipment they needed.

A Typical Day: With staffed hours from 10 a.m. to 3 p.m. Monday through Saturday, Samantha spends up to 35 hours a week in the club depending on the season, with January and February being the busiest months. When she’s not cleaning, giving tours, or teaching yoga classes, she’s out in the community marketing the business or behind the scenes working on the budget.

Secret for Success: “Our passion to succeed in fitness can be attributed to our background, but even someone with no fitness experience can run a fitness franchise,� says Samantha. “The systems and processes make it very turnkey and easy to follow, but you should definitely have a passion for fitness and helping people get results.�


Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at wilson.sara@gmail.com.

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10 People Who Rose from Employee to Business Owner

From the Mop to the Top

Of all the iconic stories about the United States, none is more enduring than that of the “American Dream,” that we live in a land of endless opportunities where anyone can make it big through hard work and determination.

Of course, this rags-to-riches tale is a little frayed in recent years, as more Americans struggle to make it to the end of the month, let alone reach the top. But it can be done. This is still a place where a penniless immigrant can go from pushing a mop in a fast food restaurant to enjoying life as a multimillionaire mogul.

We proudly present the true, inspiring stories of 10 ambitious employees-turned-business owners who are living the American Dream for real.

– Tim Devaney and Tom Stein

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Note to Merchants: Like It or Not, Chip Cards Are Coming

If you’re a merchant, you’ve no doubt heard of the chip card. It’s a credit card that holds all of the necessary information in a small computer chip rather than a magnetic stripe.

But you may not have seen one. That’s because they’re virtually nonexistent in the United States, even though they’re widely carried in the rest of the world, where they’re regarded as a more secure alternative to the old mag-stripe card.

So why aren’t chip cards more popular in the United States? The answer depends on who you ask. Banks say chip cards aren’t widespread here because merchants won’t invest in the new card readers they need at the checkout counter and this makes the cards impractical for consumers. Merchants say they don’t want to spend on new card readers until the issuing banks commit to investing money in the more expensive chip cards and pushing them out to consumers on a broad basis.

So Who’s Right?

Merchants have a pretty good case. Walmart has gone ahead and spent a lot of money to put chip-card readers at its registers, but the readers don’t get a lot of use because most customers are still carrying traditional magnetic-stripe cards, not the newfangled chip cards.

Issuing banks also have a reasonable argument. Most merchants, unlike big-bucks Walmart, haven’t invested in the new card readers and decline when customers brandish a chip card. And besides, banks ask, why should they put billions into chip cards when more advanced technologies — such as cell phone payment — may soon make chip cards obsolete?

And the winner will be †¦ probably neither merchants nor banks. The card companies, Visa and MasterCard, are strongly behind chip cards, and they have a sweet carrot and a sharp stick to ensure that the cards will soon be accepted. Both the carrot and the stick are aimed at merchants.

Visa, which makes a lot of money not only from its cards but also from its large electronic-payment-processing network, recently announced that it has developed a new countertop terminal that will accept magnetic-stripe cards, chip cards, and cell phone payments.

“We believe that as merchants start to move, the card issuers will see the merits as well,” Ellen Richey, chief enterprise risk officer at Visa, told The Wall Street Journal recently.

Sticking It to Merchants

To shift merchants out of neutral, Visa announced that, starting in October 2012, merchants that are using its new terminal for at least 75 percent of Visa transactions will be exempt from the current Visa requirement that they prove they comply with industry fraud-prevention standards.

And if this isn’t enticing enough? That’s where the stick comes in. Beginning in 2015, merchants that aren’t using the new Visa terminal could have to shoulder the cost of any fraud that results from a transaction in which a chip card is offered but not accepted. (These costs are currently paid by the issuing bank.)

So let’s put that in plain English. You’re a merchant and a customer tries to pay with a chip card. You don’t have the new Visa terminal so you ask for a magnetic-stripe card instead. Then, somewhere down the line, an identity thief gets that card information and goes on a spending spree. Guess who pays the bill? Yup, you do.

Please pass the chips.


Follow Tim and Tom on Twitter @timntom

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BP oil spill fund: $5 billion in claims paid out

BP's $20 billion oil spill claims fund: $5 billion paid

The BP oil spill fund for the Gulf of Mexico has paid out $5 billion of $20 billion set aside for recovery, claims administrator Kenneth Feinberg says.

NEW YORK (CNNMoney) — The fund to compensate Gulf Coast businesses and residents for damages from last year’s BP oil spill says it has paid out $5 billion of the $20 billion set aside for recovery.

The Gulf Coast Claims Facility, which took over the claims process from BP (BP) in August 2010, has approved 38% of the 947,892 claims submitted, according to an executive summary it released Tuesday.

The fund, which has employed as many as 3,000 people, has received claims from all 50 states and 36 countries.

The vast majority of the claims paid have gone to five states. Florida residents and businesses have been paid $2 billion, more than any other state. Louisiana recipients have been paid $1.5 billion. Recipients from Alabama, Mississippi and Texas round out the top five, respectively.

The historic environmental disaster was the worst oil spill in U.S. history, claiming 11 lives and spewing over 200 million gallons of oil into the Gulf.

The spill had wide-ranging economic consequences in the region. Businesses such as fishing, oyster harvesting and charter fishing boats, were impacted directly by oil in the water. Restaurants, hotels and rental properties that depend on tourism money saw a drop-off in sales, even in cases where there was no oil visible on the beaches.

“It is interesting to point out the different nature of the claims coming from Florida, largely tourism, as opposed to Louisiana, largely commercial fishing,” said Kenneth Feinberg, the head of the fund and the former administrator of the 9/11 Victims Compensation Fund.

As the leader of the fund, Feinberg has taken heat from both BP for being too generous in his payments and from the government for being too stingy in his payouts.

One year after the BP spill, this family business is still reeling

Many of the claimants who were denied payouts say the process was unfair. The U.S. Coast Guard, which has reviewed more than 1,000 claims from unhappy claimants, has sided with Feinberg’s decisions.

Also, for the sake of full transparency, the fund has agreed to be independently audited by the U.S. attorney general by the end of the year, according to the executive summary.

The Gulf Coast Claims Facility will continue to process claims until August of 2013.  To top of page

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USB 3.0: A Quick’Tech Guide for Small Businesses

It seems like Universal Serial Bus (USB) technology has been around forever. That’s probably because compared to many kinds of computer technology, it has been around forever — the first USB 1.0 devices hit the mass market way back in the mid-1990s.

That early version of USB was fine for connecting a mouse or keyboard, but it was unbearably slow at moving data. Then in 2000, USB 2.0 came along and finally made it practical to transfer data from cameras, hard drives, and the now-ubiquitous “thumb drives” that most of us use (and lose!) every day.

Now there’s a new kid on the USB block. And if you haven’t met them yet, it’s time to get acquainted.

Introducing USB 3.0

The USB 3.0 standard was approved in 2008. Like most such standards, however, it took a couple of years for manufacturers and developers to get onboard and start using it. Today, you can find USB 3.0 as a default option on almost every new laptop and desktop PC (with one very notable exception — more on that in a moment).

The biggest benefit of USB 3.0 is by far its speed. On paper, USB 3.0 devices can transfer data at a top speed of 4.8 gigabytes per second, or 10 times faster than a USB 2.0 device and 400 times faster than old USB 1.0 devices! In practice, you’ll never see that top speed, because actual transfer speeds are always lower, and they depend on the hardware, drivers, and other variables.

But the bottom line doesn’t change: USB 3.0 is a huge improvement over its predecessors when you’re doing things like transferring large files to and from portable hard drives. That’s especially true now that today’s “portable” hard drives may have capacities of 2 terabytes or more, and many small businesses routinely work with very large image, video, graphics, and business data files.

There are other benefits to using USB 3.0, including the technology’s ability to deliver more power to connected devices when it’s needed and less power when it’s not. That makes USB 3.0 both more flexible and more efficient.

In one respect, though, USB really isn’t an improvement over its predecessors: cable length. Unless you buy special extension gear, you’re still limited to about 3 meters (10 feet).

Also keep in mind that USB 3.0 is both backward- and forward-compatible with legacy USB gear. In other words, a USB 2.0 device will work fine with a USB 3.0 slot, and a USB 3.0 device will work with a USB 2.0 slot. (You’ll just have to accept the lower USB 2.0 transfer speeds.)

USB 3.0: It’s (Almost) Everywhere

Like I said, if you’re buying a new system, you’re probably all set: USB 3.0 is now standard-issue on most new PCs and laptops. However, there are two big exceptions at this point:

  1. Tablets and smartphones: USB 3.0 is now available on many portable devices, but not all of them. If data transfer-speed is a priority for you, be sure to check whether that new smartphone you’re looking at supports USB 3.0.
  2. Apple hardware: As of August 2011, Apple still doesn’t support USB 3.0 on any of its computers. It’s not clear why, but this may have something to do with Apple’s desire to promote a competing high-speed peripheral interface called Thunderbolt. There’s a silver lining, though: You can buy third-party hardware that adds USB 3.0 support to some desktop Macs.

Does Upgrading Make Sense?

You might also own a PC or laptop that predates USB 3.0. If you want to upgrade an existing laptop, you’re probably out of luck; these systems just aren’t built for after-the-fact modifications. Many desktop PCs, however, have internal PCI expansion slots that can support an add-on USB 3.0 card. These plug in to your PC’s motherboard and add a set of USB 3.0 slots that will be accessible on the back of the PC.

If your PC supports this, adding one of these cards is something most users can do themselves in just a few minutes.

But before you invest in an add-on card, or even run out to buy a new PC, keep in mind that there are cases in which USB 3.0 might be more than you really need. This is a standard that was designed to move large amounts of data; it’s perfect for use with external hard drives, digital video and still cameras, and similar devices. If, on the other hand, all you want to do is connect a mouse and keyboard, USB 3.0 is overkill — and a waste of money. As with all technology, decide what you really need to get the job done before making a purchasing decision for your small business.

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Warren Buffett Speaks the Unspeakable

For years, Warren Buffett has been called the “Oracle of Omaha,” not only because of his business — he built Berkshire Hathaway into one of America’s most successful companies — but also because of his sage investment advice. He was named the third wealthiest person in the world this year, yet still lives modestly. The accolades could go on and on.

He’s like the uncle every family wishes it had; kind, unassuming, thoughtful, soft-spoken, tight with a penny, yet also generous with his advice and time. He also recognizes that not everyone is as fortunate as him and he’s pledged to give 99 percent of his money to charity. But last week, he did the unspeakable: He called for a tax increase on the super wealthy. “My friends and I have been coddled long enough by a billionaire-friendly Congress,” he wrote in a recent New York Times column. “It’s time for our government to get serious about shared sacrifice.”

His words produced an explosive reaction on Fox News. He suddenly became creepy, old, eccentric Uncle Warren, the kind of moocher who always shows up at your home uninvited and always overstays his welcome. He was accused of inciting “class warfare.” (Wait, isn’t he part of that class?) One Fox commentator even branded him a “socialist.” The Daily Show’s Jon Stewart had a field day with that.

The conservative Heritage Foundation was quick to jump into the fray. On its blog, The Foundry, Mike Brownfield reminded us that daffy, old Uncle Warren really doesn’t know what he is talking about when it comes to investing. (Say what?). Among other things, he took issue Buffett’s biggest blaspheme — that tax rates don’t affect investment decisions.

“I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain,” Buffett wrote in his column. “People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.”

But Brownfield was quick to counter: “We’ll take Buffett at his word that he doesn’t consider the tax implications for his investments (even though it is well documented in several books that he does consider them — one of the major tenets of the value investing practice Buffett follows is to hold equities as long as possible to minimize the impact of taxes and therefore maximize internal returns), but the rest of the investing world is solely concerned with after-tax returns to their investments. Tax rates including the capital gains rate, dividends rate, corporate income tax rate, and individual tax rate are major determinants of after-tax returns.”

Brownfield clearly missed the point. Buffett never said he doesn’t “consider” taxes; he said tax rates never stopped him from making a sensible investment — two different things. But what I find insightful about this exchange is about how circular, meaningless, and politically driven the debate over the economy has become in Washington.

The anti-tax lobby is so hardened and uncompromising, it’s become ridiculously self-destructive in these hard times, as the recent debate over the debt ceiling showed. To dismiss Buffett as a socialist or a crackpot, or to claim he doesn’t understand investing only illustrates the point. What I like about Buffett is he began his career on Main Street as a small businessman, and, in a sense, he’s never really left, despite all of his success.

Buffett isn’t minimizing the debt problem or the need to control government spending, but he realizes that it will take both spending cuts and revenue increases to keep the economy moving forward. “For those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains,” Buffett wrote in his Times article. “And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate,” he added.

Any increase in revenues, however, should be directed into a jobs program to put Americans back to work. Right now, ask any small business owner what they want the most, and it won’t be lower taxes or less regulation; it will be more customers coming through the door. And those customers need salaries in order to spend. But where are their jobs going to come from? Business won’t create them, and rightly so. Unless firms see rising sales, no business will hire, no matter how many tax incentives they receive. So where do you start?

President Franklin Roosevelt hired 3 million people through the Works Progress Administration and other programs during the Great Depression. The WPA budget in 1935 was $1.4 billion a year (about 6.7 percent of the 1935 GDP), and it spent $13.4 billion over its existence. At its peak in 1938, it provided jobs for three million workers, from the unskilled to writers and artists. In all, more than 8 million jobs were created by the time the program expired in 1943.

That would be the equivalent of 22 million jobs, adjusted for population growth. Today, some 25 million Americans — 16.1 percent of the work force — are jobless, work part-time, or are under-employed. Put these people back to work and watch the economy blossom.

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How to Determine If Your Funding Deal Can Be Saved

For six months you’ve been carefully nurturing an equity investor and now he’s threatening to back out of the deal.

Despite an endless number of presentations, term sheets, meetings with partners, and expensive legal documents, it looks like the whole thing is going to unravel. And that would probably make your young business unravel, too.

What’s an entrepreneur to do?

Good negotiating might mean you have to walk away. That advice might work well when buying a new car, but it often gets in the way of building a great business. Before you throw in the towel, ask yourself the following questions:

  • What’s best for the business? Often an experienced investor will spot a weakness in the business that you cannot yet see. Take the opportunity to view things through the investor’s eyes. Probe for the real reasons behind the investor’s objections or suggestions. Evaluate whether the business as a whole is likely to be more successful by following his or her advice. Your objective should be to enable the fastest, most profitable, and sustainable growth. If that is not your sole objective, you may not ever come to terms with a potential shareholder; barring rapid and profitable growth, there’s not much else in it for an equity investor.
  • What’s your core skill? Investments often fall apart because of a disagreement over the roles of founders and key executives. Maybe the investor sees a weakness in you and wants to replace you as chief executive. If you simply can’t live another day without being the big boss, maybe you’re allowing emotion to ruin a great opportunity. Step back and decide if you might have more fun, and learn more, in a role other than head honcho. Plenty of founders, including Bill Gates, find they can drive the kind of results they crave from a chair other than the one in the CEO’s office.
  • Does the investor’s personality fit your team? Early disagreements could be the sign of something deeper, such as a cultural or personality mismatch. When a deal is in jeopardy, get back to basics. Spend some time with the person away from the negotiating table. Revisit your background checks and discussions with the person’s references. Is this a person you want to answer to when times get tough? If you can work through the problems by connecting on a personal level, you may be able to form a partnership that will weather the more difficult days ahead.
  • What’s the best-case result? If you’ve come to an impasse on the “down-side� or worst-case scenario, refocus your priorities on incentives to succeed. (After all, the worst case is no fun for anyone. If you can’t build a profitable business, maybe you need to take your lumps.) Instead of worrying about worst case, ask what happens if the company succeeds. Can you and your investor agree on the right incentives to keep the company growing? For you that means getting paid for success. For the investor it might mean allowing new investors to come in. Let go of worst-case nightmares and build a solid case for success.
  • What’s the “and� solution? So many business cases appear to be black or white. Either you accept the investor’s terms or you walk away. Fortunately real life allows for more complexity and creativity. When an investor insists on one thing, find something else to balance the equation: “I’ll give you a board seat if you give me annual salary increases.� Instead of saying “or,� try saying “and.� You may be surprised that the result is stronger than either of you imagined.

Finally, if you have gone through these questions and still can’t see the light at the end of the investment tunnel, perhaps it is time to walk away. Not every negotiation can be saved; there are people who are not meant to be in business together. But be sure you are walking away for the right reasons.

If the investment deal would jeopardize the business, your mental health, or your passion for growing a bigger company, the best deal you can make might be no deal at all.


David Worrell is founder and chief executive at
AmeriStart, and he also writes a blog here on AllBusiness.com about small business money issues.

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5 Employee Issues Your Small Business Should Be Worried About

It may not seem like it, but in some cities and some industries the job market is actually heating up. Last weekend I was talking to my cousin Barry Cohen, one of the managing directors of Rockwood Search Associates, an executive search firm in New York City. His company specializes in financial services, human resources, and marketing/sales positions, and right now he says the demand is climbing for positions in the financial services field.

And though you’re likely in another industry, soon enough you will be facing the challenge of attracting and retaining talented employees. The recently released PwC’s 14th Annual Global CEO Survey contains some interesting insights about the future of talent management. While this survey focused on leaders in big multinational corporations, the trends it highlights can — make that will — affect your small business soon enough.

Here are the surveyed CEOs’ key concerns:

1. Talent shortage. As I said, it may not yet be evident in your community, but companies worldwide are struggling to find the right people. In fact, 66 percent of CEOs are worried that a lack of suitable talent is going to hinder their companies’ chances of growth.

2. Aging workforce. In developed nations like the United States, the aging of the workforce is leading to a brain drain of some of the most skilled and experienced workers. To combat this, many corporations are seeking to retain their workers longer, while at the same time the economy is forcing many of those employees to stay on the job longer as well. But aging workers come with their own issues, like higher health-care costs.

3. New Millennials. The influx of Generation Y workers, or “Millennials,” is changing the way companies operate. Millennial employees have less experience and tend to have less company loyalty. They also have different criteria for what they want out of a job than prior generations did. As the Survey states: “Employers will have to offer greater autonomy, more flexible career options, and more opportunities for peer recognition, basically a mix of face time and Facebook time, to get the best talent from the next generations.”

4. Global mind-set. The CEOs surveyed are expanding their businesses into emerging markets. While your small business is probably not yet operating an office in Mumbai yet, you might already be outsourcing work to contractors there. But whether or not you’re working with businesses overseas, you are definitely competing with them, as increasing numbers of customers look for cheaper sources of whatever your company provides.

5. Collaboration. Today’s employees need to be able to collaborate. For global CEOs, these teams are often dispersed across the world; for your small business, they’re probably not that far-flung. But whether you’re operating in a physical location or running a virtual company, collaboration is more crucial than ever. It’s how you do more with less.

How are the global CEOs planning to tackle these concerns? Most (83 percent) plan to make at least “some” or “major” changes in how they manage employees. Specifically, 65 percent plan to use more non-financial rewards to attract, retain, and motivate workers. Creating a sense of employee ownership is one important strategy; this could be accomplished by employee stock ownership (ESOP) or profit-sharing plans.

Training and mentoring is a key area of focus for the corporations PwC surveyed. And today’s newest employees, Millennials, particularly value training and career development opportunities. When asked which benefit was most important to them, three times as many Millennials said training and development as cited cash bonuses. And a whopping 98 percent said that working with strong coaches and mentors was important to their careers.

If these challenges are throwing huge corporations for a loop, how do you think they’ll affect your business? Don’t worry — there’s some good news for small businesses in this survey. One of the key changes the CEOs mentioned is that their businesses are becoming flatter and less hierarchical. And while that’s a huge change for big corporations, for small companies, it’s business as usual.

Take advantage of your flatter structure to empower your employees. Let them know more about your business’s profits (and at least think about sharing them), provide coaching and mentoring (easy to do when you work closely together), and ensure they get the proper training to help them — and your company — grow.


Follow Rieva on Twitter @Rieva and read more of her insights on
SmallBizDaily.com.

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