Community lenders get a mini bailout
It’s considerably less than the multi-billion bailout the commercial banking sector received as part of President Obama’s Recovery Act legislation, but battered community banking institutions will gladly take it.
On Monday, Treasury Secretary Tim Geithner pledged $90 million to help 59 Community Development Financial Institutions (CDFIs) in 26 states and Puerto Rico. CDFIs help companies, including many small businesses, in economically distressed urban, rural, and Native communities.
Geithner’s announcement comes on the heels of Federal Reserve Chairman Ben Bernanke’s speech that called for help for CDFIs at the Global Financial Literacy Summit in Washington, DC two weeks prior. Bernanke said, “while community development is a small part of our overall capital and credit markets, the Federal Reserve recognizes that these financial flows are critically important for many low- and moderate-income communities.”
In making his own announcement on CDFIs, Geithner said the increased funding “will help generate capital for small businesses, mortgage loans for homebuyers, and funding for affordable housing projects and other facilities in communities across the country.”
According to a forthcoming CDFI Data Project (“Providing Capital, Building Communities, Creating Impact – Fiscal Year 2007″) there are more than 1,000 CDFIs in the U.S., with a collective $25 billion in assets.
The government’s budget for the CDFI Fund this year is $107 million, a figure President Obama plans to more than double to $243.6 million for 2010.
Mark Pinsky, president and CEO of the Opportunity Finance Network (OFN) – a nationwide network of CDFIs – said while the government funds are appreciated, it represents a minuscule portion of the overall capital.
from MediaFile:
Late Billy Mays leaves infomercial stardom void
Michael Jackson, the recently deceased "King of Pop", was also lauded as a pioneer in celebrity advertising. But many in the marketing industry appeared much more personally upset by a tragedy that was closer to home -- the death on Sunday of Billy Mays, the "King of Infomercials".
Some viewers flee infomercials, which often last almost a half hour, and are filled with brash claims about products that, of course, are always the best inventions on the market for anything from peeling a vegetable or cleaning a house.
But Mays, who made it big in the late ninetes with a stain remover called OxiClean, convinced many viewers to listen by shouting his wares. As a result he became a popular icon and created a close following among marketers who saw him as a valuable pitchman.
"He's on the air more than any other pitch person ... He probably has been in more direct response spots than anybody else," said Sam Catanese, the head of Infomercial Monitoring Service (IMS).
But while he seemed to always yell on the TV, Mays collaborators said he spoke at a normal tone in person and was very sincere, if a bit more energetic than most of us. "He was a sweet dear nice guy. Everybody's going to miss him a lot," said Catanese who last met Mays in San Diego a few weeks ago when he asked for IMS to get involved in his Discovery Channel show PitchMen, which documents Mays' search for marketable inventions.
Mays followed in the footsteps of Ron Popeil, who is seen by marketers as the grandfather of infomercials who turned "late night viewing into a profitable situation" for television networks, said Barry Consulting President Bill Kittel.
Executives said it will be hard for a pitchman to fill Mays shoes and match his fame. "I think he should be recognized," said Catanese.
billy will be truly missed. check out this great rap tribute i found to him!
http://yovia.com/blogs/timlara/2009/06/2 9/rip-billy-mays/
Starbucks and small business
The popularly-held belief that Starbucks kills mom-and-pop shops is a fallacy, says Temple University history professor Bryant Simon.
“In fact, Starbucks created the market for the small coffee shop,” says Bryant, whose new book “Everything but the Coffee: Learning about America from Starbucks” is due to be released in October.
Simon argues that 20 years ago you couldn’t find a “good” cup of coffee anywhere, until Starbucks came along and “created a desire and a taste for specialty coffee” that eventually gave birth to the corner specialty coffee shop.
In his column for TheBigMoney.com (Frappuccinos Work for Mom and Pop), Jonathan Weber argues that the closing of a Starbucks store in Missoula, Montana is no cause for celebration by small coffee houses. “It’s dangerous to assume that what’s bad for the chains is good for the mom-and-pops,” writes Weber, who maintains the loss of jobs from the Starbucks closure will hurt local businesses. “In this economy, a store closure is nothing to cheer about.”
A Slate article from 2007, titled “Don’t Fear Starbucks,” details the saga of a small Los Angeles-based coffee chain that discovered the intrusion of Starbucks was actually the best thing for its business.
Yet the perception of Starbucks driving out small businesses endures, as evidenced by a 2006 lawsuit against them by another Seattle-based coffee shop that claimed Starbucks “illegally maintains its monopoly by barring other coffeehouses from prime downtown high-rises in Seattle and Bellevue through exclusive leases with property owners.”
Belvi Coffee owner Penny Stafford, who launched the suit, claimed Starbucks ran her and other local shops out of business by “buying coffee sellers and flooding neighborhoods with new Starbucks stores that even cannibalized the sales of existing Starbucks shops.”
care about what their customers want? don’t you know the basis of economics?
profit.
What the Tesla founders’ feud can teach entrepreneurs
High-powered electric-car startup Tesla Motors has hit a speed bump with the filing of a lawsuit by former CEO and founder Martin Eberhard.
The libel suit, filed on May 26 in San Mateo County, Calif. Superior Court, alleges current CEO Elon Musk falsely portrayed himself as the founder of the company and orchestrated Eberhard’s ouster as original CEO in 2007. In the lengthy 22-page document, Eberhard accuses Musk and Tesla of, among other things, libel, slander, breach of contract, negligence and failure to pay wages. The suit doesn’t even refer to Musk as a co-founder, but simply as one of “various investors,” who joined the Tesla board in April 2004.
Eberhard’s suit claims that from the moment he came on board, Musk “began a campaign to appropriate control of Tesla Motors and Eberhard’s legacy as the company’s founder and visionary.” The suit further alleges that Musk “began a pattern and practice of defaming and disparaging Eberhard in various widely distributed media outlets,” a few of which included The New York Times, Newsweek, USA Today and NPR.
Musk has responded to the accusations in a lengthy blog posting on Tesla’s corporate website. According to Musk, the posting is an attempt to “correct several misconceptions propagated by Eberhard that are now being reported as truth.”
While claiming he was “pushed out of the company he founded,” Eberhard agreed to leave because he felt it was “in the best interest of Tesla” and that he hoped his “vision for the company would be realized and his spirit would continue even in his absence.” Something Eberhard now feels never happened.
In a further bizarre twist, Eberhard accuses Tesla of giving his own personal Roadster – the second model off the production line and one valued “as high as several million dollars because of its historical value” – to one of Musk’s friends. His suit claims when Eberhard eventually received his own Roadster, it had been “smashed into the back of a truck.”
I’m excited about electric cars news but tired of hearing about Tesla Motors- until they start producing cheaper models. For electric cars to be serious contenders, they need to be mid-priced economy vehicles that most households can by with tax incentives etc. According to new reports, up to 1/3 of cars buyers want to go electric- which would reduce oil dependency, green house emissions, foreign oil dependency, health care costs, and create jobs. For more information about electric cars, I suggest checking out the website http://www.twocentspermile.com or http://www.bit.ly/2centspermile
from The Great Debate:
Starting a trade war with “Buy America”
–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-
When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with important economic partners. Now China and Canada are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector. Other countries may follow suit.
This week China reported that the government now requires stimulus projects to use domestic suppliers when possible, even though in February it promised to treat foreign companies equally. The Chinese $585 billion stimulus package has resulted in a World Bank growth forecast of 7.2% for China this year, far above other industrialized countries.
And on June 6 the delegates at the Federation of Canadian Municipalities passed a resolution calling on “local infrastructure projects, including environmental projects such as water and wastewater treatment projects, [to] procure goods and materials required for the projects only from companies whose countries of origin do not impose trade restrictions against goods and materials manufactured in Canada.”
The tragic losers of “Buy America” are free trade agreements and potential job growth in the American economy. Seductively, "Buy America" promises workers they can have it all — cheap goods from China, oil from Canada, as well as protection from global competition. But real life just doesn't work that way. In reality, "Buy America" is shorthand for fewer jobs as other countries retaliate.
Many markets no longer have national boundaries but global reaches. America sits at the center of global markets for technology, equipment manufacturing, finance, banking, fashion, and advertising — to name but a few. When international markets expand, America grows. When barriers are erected to trade, jobs — and also wages —shrink.
Betting the farm on your customers
Organic dairy farmer Dante Hesse is hoping the customers who lap up his milk by the quart at local New York farmers’ markets will also invest in his future.
What started as a series of “low key” one-on-one conversations with customers at local farmers’ markets near his Ghent, New York farm, has escalated into a serious attempt to raise $850,000 – in as little as $1,000 increments – directly from his dairy-loving consumers.
“I learned pretty quickly that there was a lot of interest, but I also needed to find some council who could tell me how to do this legally,” said Hesse, who founded Milk Thistle organic dairy farm with his wife, Kristin, three years ago. He intends to use the bulk of the money to build an onsite processing plant that will help him ramp up production and diversify into making other milk-based products like yogurt, butter and ice cream.
“If it has to be 850 people at $1,000 each then that’s what we’ll have to do and I think we could get it,” said Hesse.
Hesse knows the math behind the milk and feels if he’s properly capitalized, he can move into more “value-added” products like butter, yogurt and ice cream, where the gross margins are 20-30 percent higher.
According to the Organic Trade Association, sales of organic milk in 2007 totaled more than $1.3 billion in the United States. While organic accounts for just 3 percent of the U.S.’s total milk sales, it has been growing at an annual average rate of more than 20 percent over the past decade (last year it dipped to 10 percent).
A smart out of the box thinking entrepreneur, what a clever idea to use your products to build trust in the business and to raise cash.
A “silver lining” for entrepreneurs?
A new study shows that bear markets and recessions can actually be good times to start a new company.
The report, produced by U.S.-based entrepreneurial think-tank the Kauffman Foundation, suggests that despite the widespread pain felt during tough economic times, an “entrepreneurial silver lining” can encourage long-term business growth and job creation.
In fact, the authors of the report found that more than 50 percent of the companies on this year’s Fortune 500 list and just under half of those on Inc.’s 2008 list of fastest-growing companies were started during a recession or bear market.
But why do startups appear to fare better during tough economic times?
One explanation is that recessions and bear markets actually present valuable business opportunities for entrepreneurs, who tend to be influenced more by their own instincts than by the economic climate at large.
“A downturn might actually act as an extra spur to founding a new company, if the founders perceive that their prospective competition might be weakened,” the report states.
Rising unemployment during a recession also frees up a bigger portion of the workforce, leaving more people (some with generous severance payments) to start new businesses and more potential employees to be snapped up by new companies.
I think this is very true and we’ve been experiencing this ourselves. Whilst no-one likes a recession we’ve managed solid growth throughout it, small businesses can be very agile and tend to be more resource conscious anyway so can survive very well.
from Trading Places:
A time for change – part II
Last December, Reuters reported how one innovative New Yorker's desperate search to find a job had paid off big. Joshua Persky, known to many as the "Sandwich Board Guy," found employment at accounting firm Weiser LLP in midtown Manhattan. Persky, who wrote for Trading Places about his search for work last year, explains how he ended up leaving Weiser to start his own business:
When I received the offer from Weiser, my wife and I were ecstatic. I had been unemployed for 10 months. We had quite a sincere Thanksgiving celebration in Omaha where she was living with our children, but they decided to remain in Omaha to finish out the school year. It was difficult to leave my family, but I returned to New York to get my feet on the ground and focus on my new job as Senior Manager, Valuation & Corporate Finance.
When I started working in December, I was treated to a second round of viral publicity and became a feel-good “Happy Ending Holiday Story.” Whereas before I had been the “Face of the American Economy”, a “Sign of the Times” and the “Sandwich Board Guy,” suddenly I was an inspirational and extreme job hunter who could give expert job hunting advice – and I did:
Be creative. Be open to change. Get professional help. Redo your resume. Figure out your brand and sell it. Don’t give up. Get your family on board. Be patient. Lower your expenses as much as possible. Do what you need to do to keep your spirits up (exercise, eat right, meditate and/or pray). Don’t lose hope!
It has been quite a challenge living 1,300 miles away from my wife and children. I visited them several times on weekends. They visited me during spring break and are with me now for a few weeks.
Then the group at the accounting firm where I was working underwent a restructuring. Now I’m taking my career to the next level by working for myself. Things are very different for me now than when I left my previous job and walked straight into the global economic crisis. I think the worst of the Great Recession is over, I have a much expanded network and some exciting opportunities on my plate.
Smart tips. Don’t ever give up!
Eventually, waiting longer means you may appreciate the job you get even more than it comes to you so easy, almost as a free shopping coupon.
VCs more risk averse as recession bites: survey
It’s no secret that venture capital firms are tightening their belts in order to weather the current economic downturn, but a new survey depicts a larger realignment at work in the industry.
This year’s Global Venture Capital Survey, a joint report produced by Deloitte and national venture capital associations around the world, shows that in addition to reducing their overall investments during the past year, VC firms have also shifted their efforts to focus on later-stage investments.
According to the report, more VCs may be avoiding early-stage investments because acquisitions now take longer to finalize and IPOs are few and far between in the current economic climate. This means it can be tough for VC firms to plot a quick exit strategy.
In addition, the survey found that more VC firms around the globe are investing abroad. Of the survey’s 725 respondents, more than 50 percent said they have investments outside their home countries. While such a trend has been afoot for some time now, the survey shows the recession hasn’t put a damper on the globalization of the industry.
For more details, see the full report below.
This is typical behavior for the VC community — to focus on later stage deals when the economy goes south. Yet, the irony is that VCs are supposed to finance innovation. If there is any time to invest, how about when valuations are low and there are many smart entrepreneurs who need just a little bit of capital?
Google service helps small businesses
Web-challenged small business owners, take note. Google unfurled the latest in its long line of freebie services last week, this time offering a so-called “dashboard” aimed squarely at local businesses suffering from a weak online presence and lack of web know-how.
The new service gives business owners a simple, if limited, way to track information about their customers. Drawing on its map and search data, Google produces metrics such as what zip code your customers are coming from and what words they’re searching for to find your business. Owners can use such information to help them make business decisions on, say, where to open up a second store or how to fine-tune the products or services they offer.
Google will likely use the information provided by small business owners to try to sell ads to them, but, still, the service is a novel idea that’s bound to appeal to many small companies, particularly those looking to expand locally.
Signing up for the service at Google’s “Local Business Center” also allows any business with a brick-and-mortar store or office to customize how their company is listed on Google’s search and map services. For example, a mom-and-pop eatery can beef up their listing to include a menu, hours of operation and pictures and video of what’s on offer. A business can also try to attract new customers by hawking printable promotional coupons on their listing.
Of course, for those small businesses looking to grow their online presence in a big way there’s no substitute for having a bona fide website. But for those just coming to grips with the marketing possibilities of the web, Google’s new service could just be the fast, cheap and easy introduction they need.
Google is not the only option. Small businesses willing to shell out a few dollars might try Wordtracker, a service that helps companies identify popular keywords and phrases that can help drive people to their website or listing through internet searches.
For those firms looking for a wider array of data, Webtrends could be the granddaddy of them all (note: Reuters is a client), especially if your company already has a website. The service allows you to track everything from what referrals you are getting from search engines to navigational trends between pages on your site and advertising results.
I own a small business in childcare due to all the job losses there’s no relief that I see coming. My capacity was 42 children and now it’s down to 13 children I can barely keep the doors open. I’m on my computer everyday trying to find assistance, but therefore ther’s none forthe child care providers.
