Startup America -- Real Tools and Resources to Help Your Business Thrive

Nobody will argue too hard with the commonly held belief that small businesses make up the lifeblood of our economy. Or that government should either encourage their growth or at least eliminate the annoying obstacles that tend to stifle it. But the sticky question is how can government make itself most effective in seeing to it that fledgling startups are able to make that crucial leap to becoming successful companies---or that small businesses can transform themselves into thriving businesses? Traditional thinking might go something like this: target certain entrepreneurs and then use taxpayer dollars to provide direct assistance in the form of subsidies, grants, benefits, or the like. But this approach very often proves as ineffective as it is costly. The Startup America Partnership, sponsored by the Small Business Administration (SBA), is taking a different approach, and the early results look promising. Instead of targeting the entrepreneurs themselves, the program is identifying the resources these entrepreneurs will need and the obstacles they will face. And then instead of solving the problem with taxpayer dollars, the program brings together an alliance of the country's most successful private corporations, universities, and other entities, which can contribute many of these resources and/or reduce many of the obstacles.

So what are some of the details of this program and how can an everyman business owner take advantage of it? Well, first let's see if you qualify. If your company has at least two founders or employees and has been around since 2006, you qualify. Or if your company has been around since 2001 and has at least six founders or employees, you also qualify. So the first thing you will want to do is use this link to apply for your free membership. Once you become a registered member, you get free advertising right away. Your company name, description, logo, and website will immediately be displayed in the organization website's Startup Directory. Your company name and contact information will then be sent to Startup Region leaders in your state, so that they can get in contact with you about local assistance available in your area.

But the most significant benefit you will see is your immediate access to thousands of resources that suddenly become available right at your fingertips. And the list keeps growing all the time. These resources can provide help to your business in any of several areas. And you can discover them and categorize them simply by searching and sorting on the organization website's Resources Section. Here are just a few examples of the types of free or discounted resources you will find available to you:

• Talent recruiting: Need to find the best and the brightest to work for your company? If so, you can get:
  
  
  • Free or discounted recruiting software;
  • Free training seminars, either online or on-site;
  • On-demand access to advisors or library resources
• Planning and accounting: Every business, no matter how small, needs good business planning and accurate accounting. Among the offering in this area are:
  
  
  • Free business planning advice and consultation from experts;
  • Free or discounted payroll management software;
  • Free analytics tools
• Materials:
  
  
  • Big discounts on computers and peripherals;
  • Free computer office software;
  • Free online web conferencing/meeting software;
  • Big discounts on office furniture
• Legal assistance:
  
  
  • Discounted legal counsel services;
  • Free incorporation packages;
  • Free patent or trademark consultation

And this is only the tip of the iceberg. Would you like more free publicity for your company? The Partnership will promote guest blog posts and will provide materials for your website and give you help in managing and promoting your social media accounts. It can also get you free or discounted advertising for your company's website. Do you want to tap the experience and knowledge base of people in your business area? The Partnership's community of high-growth startups will connect you with other entrepreneurs so that you can share experiences and collaborate with them. In addition, the Partnership is continually working with top experts to provide free webinars and training sessions. The schedule of these sessions is continuously being updated. The Partnership also provides a continually-updated list of contests, events, and conferences aimed at helping small companies like yours scale their businesses successfully.

The Startup America Partnership is still fairly young. It was launched in January of 2011 and is still growing. New corporate partners are being added all the time. Is it succeeding? In terms of interest and enthusiasm, the answer is a resounding yes. But in terms of success as measured by how robustly startup companies are growing and how many jobs they are creating, it's still too early to tell. The impact of the program will be more easily measured as the SBA tracks member companies over longer periods of time.  As they do this, they are also tracking which tools and resources are being used the most and which are working the best. In this way, the program itself will continuously improve and so will the member companies.

But to a qualified small or startup business owner, the decision to join seems like a no-brainer. When you consider the cost (zero), the effort to sign up (negligible), and the resources you will gain access to (plenty), it's not hard to see why joining the Startup America Partnership can be the boost that gives your young business the vital growth injection it needs.

Christopher Wallace, Vice President of Sales and Marketing for Amsterdam Printing, has more than 20 years experience in sales and marketing. At Amsterdam Printing, a leading provider of custom pens and other promotional items such as imprinted apparel and customized calendars. Christopher is focused on providing quality marketing materials to small, mid-size and large businesses. He regularly contributes to Promo Marketing Wall blog.

Election Year Spurs Small Business Giveaways

The struggling U.S. economy during an election year means many politicians are crafting policy aimed at small businesses in the hopes of scoring points with voters; however, statistics from the Joint Committee on Taxation and the Tax Policy Center reveal these measures really don’t help. The estimated cost to government for the Small Business Tax Cut proposal is $46 billion, and experts say most benefits will go to those earning $1 million or more and will not help create any jobs. Economist Bruce Bartlett argues that money would be better spent on infrastructure, and politicians can spin it by saying infrastructure helps small businesses, too. For more on this continue reading the following article from Economist’s View.

Bruce Bartlett:

Do Small Businesses Create Jobs?, by Bruce Bartlett, Commentary, NY Times: ... Congress is, of course, always keen to find ways of aiding small businesses, which are akin to mom and apple pie in its eyes. Just recently, it approved the JOBS Act, which is intended to ease access to credit by “emerging growth” companies. Congressional Republicans are anxious to enact a new tax cut for small businesses, as well. The Small Business Tax Cut Act, which was reported out by the House Ways and Means Committee on April 10, would give a one-year, 20 percent tax cut to every business with 500 or fewer employees.

The Joint Committee on Taxation estimates that it will reduce federal revenues by $46 billion. The committee report offered virtually no rationale for the legislation other than that small businesses are good and deserve a tax cut, period. The linkage between a small business’s tax burden and job creation, however, is tenuous at best. ...

The Tax Policy Center estimates that the benefits would accrue overwhelming to the wealthy, with 49 percent of the total tax cut going to those making more than $1 million.

There may be policies that would increase the number of business start-ups and aid employment this way. But an across-the-board tax cut for every small business, defined only in terms of employment, is nothing but an election-year giveaway unlikely to create any jobs whatsoever.

Instead, let's use the $46 billion this would cost (and mostly waste in terms of job creation) to build infrastructure. If it helps to sell it, make it infrastructure that would be useful to small businesses -- it can probably be argued that most infrastructure projects would help small businesses in one way or the other. This way, even apart from the better prospects for job creation from infrastructure spending, at least we'll have something to show for the money when all is said and done.

This blog post was republished with permission from Economist's View.

Small Businesses Struggle, Labor Stats Sink

Analysts are drawing a connection between new Bureau of Labor Statistics numbers and a job market that appears ready for a double dip. Comparing the number of jobs generated by small businesses and start-ups during the last recession in 2001, statistics confirm that more jobs are being lost now as small businesses struggle to open or stay open. A survey conducted by the National Federation of Independent Businesses indicates that earnings trends for small business owners are in the negative and unlikely to recover as consumers slow spending. For more on this continue reading the following article from Money Morning.

After showing some improvement over the past year, the U.S. job market is now beginning a double-dip.

The reason is simple: The number of start-up businesses has hit its lowest level since at least the early 1990s.

Indeed, small businesses are the main drivers of job growth and no amount of stimulus can compensate for their absence.

For instance, between the recession that ended in late 2001 and the start of the most recent recession in late 2007, businesses that employed fewer than 500 workers added nearly 7 million employees, according to ADP payroll services. Larger businesses cut nearly 1 million employees in that period.

However, in the 12 months through March of last year, just 505,473 new businesses started up in the United States, according to the Bureau of Labor Statistics (BLS). That's the smallest number since the BLS began tracking the data in the early 1990s.

That's not all.

Businesses with fewer than 50 employees added just 27,000 jobs in May, compared to 84,000 in April and more than 100,000 in December and January.

So it's not surprising that the national unemployment rate in April climbed for the first time in six months to 9%. And after falling as low as 8.8% in March, the unemployment rate rose even higher in May, to 9.1%. Employers added just 54,000 workers in May - the smallest number in eight months.

Much has been made of the fact that many larger businesses say they plan to increase hiring during the months ahead, but that tide is beginning to turn. Optimism among U.S. chief executive officers in the second quarter actually fell from a record high in the first quarter, according to the Business Roundtable's economic outlook index.

The index decreased to 109.9 for the April-June period from a record high 113 reading in the previous three months. The Business Roundtable is an association of executives of corporations representing a combined workforce of more than 13 million employees and almost $6 trillion in annual revenue.

But what's worse is that small businesses are even more disillusioned.

In fact, a national survey of small business owners, released yesterday (Tuesday), showed declining optimism among owners of small businesses - the third straight monthly drop. That survey was conducted by the National Federation of Independent Businesses and polled 733 small businesses across the country.

"Only the big banks and the big manufacturers are winning," the NFIB said. "Earnings trends for small business are distressingly negative and the recovery is two years old."

Indeed, the biggest reason for the pessimism among small businesses is that U.S. consumers - who have been battered by tumbling home prices, tight credit, and exorbitant gas prices - aren't spending enough. Retail sales fell 0.2% last month, the U.S. Commerce Department said yesterday.

Of course, Money Morning Contributing Editor Martin Hutchinson has another explanation. He blames the worsening job picture on Washington's faulty policies.

"Washington's fiscal stimulus - including the government dumping nearly $1 trillion into such unproductive pursuits as ‘new energy' projects and state employee labor union contracts -- has generated massive budget deficits and given banks no incentive to play its key job-creation role by lending to small businesses," said Hutchinson. "Instead, the stimulus has provided temporary jobs with the government -- and those jobs are now disappearing as Washington's money runs out."

This article was republished with permission from Money Morning.

Home Equity Distress Hurting Small Businesses

Many small business owners have had a rough time during this recession. Not only do they face lower sales but home equity loans, that were once a crutch against cash shortfalls, have become increasingly difficult to come by. Tim Iacono from The Mess That Greenspan Made discusses how falling home values have forced small business owners to seek alternative routes for funding.

Of all the dumb things that people did with their home equity money a few years ago when the housing bubble was fully inflated, buying a Hummer H2 was, by far, the dumbest.

Spectacularly stupid home renovations (like adding a separate room to your house for your cat) would probably come in second and big screen TVs, elective surgery, and lavish vacations would be a bit further down the list.

But, some of the more interesting uses for the money "extracted" via home equity loans, from a historical perspective at least, were those individuals who used these funds to start businesses.

Naturally, if you borrowed against your house at the peak of the housing bubble to start up a home improvement business, that decision probably hasn't panned out all that well given the dearth of new granite countertop installations these days but, if, for example, you always wanted to ditch the cubicle life and run a used book store, then maybe that decision would have met with some degree of success.

What's funny about this now bygone era, what was surely a "once-in-a-lifetime business funding opportunity", is that it was exactly opposite the time honored relationship between small businesses and home equity going back decades.

It used to be that borrowing against your home was not only uncommon, but a clear sign of distress in one's personal finances, as in "Poor Ted and Alice down the street had to take out a second mortgage to keep their business afloat".

Earlier in this decade, people sat around, perplexed, trying to decide what to do with all that home equity that was just sitting there, waiting to be "tapped" as homeowners were constantly reminded by the likes of Citibank, and many of those who didn't see the point in buying a hideous gas guzzler or adding a wing on to their house took the plunge and struck out on their own.

Running your own business is, after all, the American dream.

But, as they are finding out today, running a small business is tough during a recession, a point that is made clear in this LA Times story about a number of individuals in Southern California, including the Arnolds below, who have made some major lifestyle adjustments recently.

In better economic times, Santa Clarita mortgage broker Fred Arnold relied on a home equity line of credit if his cash flow was uneven and he needed to cover payroll.

But when home sales crumbled last fall, there was no such backstop for the business. His home was still worth more than the mortgage, but his bank was retrenching and had shut down the credit line. So Arnold sold his house, used some of the proceeds to keep his business afloat and bought a smaller home.

"I thought about cashing out my retirement money and the college savings for the kids, but that wasn't the way to go," Arnold said.

He and his wife are happy in the smaller home, Arnold added, and his home loan business is on more solid ground, thanks to a recent wave of refinancings.

It seems that the Arnolds are the exception to the rule when it comes to home equity financing of small business operations these days and the piece goes on to talk about a wave of small business failures as a result of declining home prices and tighter lending standards.

This is yet one more striking example of how radically things have changed in the U.S. over that last few decades when it comes to the public's attitude toward debt.

Instead of home equity being an infrequently tapped source of funds to "rescue" small businesses during economic downturns, it has now become a source of small business distress as owners had come to rely on this funding for the the normal conduct of business, a source of funds that was anything but guaranteed.

Digging out from the easy-money era takes new twists and turns almost every day.

This post can also be viewed on themessthatgreenspanmade.blogspot.com.