Small business survey

A revealing survey of small business owners was released yesterday by U.S. Bank.  The survey was conducted in only 36 states with the over 3200 sample including sole proprietors through businesses with fewer than 100 employees.  Unfortunately the survey also included 3% of businesses with over 100 employees, not my definition of a small business.  

While the survey’s accuracy in reflecting the true composition of all small business owners can be questioned (93% of respondents were white), here are some interesting findings:

·         71% believe that we’re still in a recession

·         69% feel their business is in good or excellent health

·         Which issues are more important today than in the 2008 Presidential election

o   Healthcare/Medicare (65%)

o   Federal Deficit/Debt (64%)

o   Jobs/Unemployment (59%)

o   Energy Costs (56%)

o   Taxes (54%)

It is this last question that I find interesting.  When these same small business owners were then asked what would be the one thing they would do if they were President of the U.S. for one day, here were the top three responses:

·         Lower Taxes/Tax Breaks (20%)

·         Reduce Regulations (17%)

·         Health Insurance Issues (15%)

Obviously there is a disconnect between what these respondents said were their most important issues and what they said they would do as President to help small businesses.  The bottom line is that while these small business owners can identify their concerns, they don’t have good well-thought out responses of how to address those concerns other than the political talking points fed to them daily by Fox News and radio talk shows. 

Lowering taxes and giving tax breaks would seem to be a problem if your major concern was cutting the federal deficit and debt.  While these business owners have been seriously and needlessly frightened at the aspect of Obamacare (60% believed it would have a negative impact on their businesses), they have no clear ideas to offer for doing something about different.

Lastly, regulations weren’t a top concern but yet there were 17% regurgitating the boilerplate anti-regulation call to action.  Good grief.

Worldwide crisis in small business lending

At last week’s annual Small Business Administration’s conference for National Small Business Week, SBA Chief Karen Mills took some questions.  One small business owner said that she received “invaluable support” from one of the SBA’s Small Business Development Centers, which operate in every state.

The lack of credit from banks was a complaint of two small business owners.  The Federal Deposit Insurance Group reports that loan balances to small businesses fell in the first quarter of this year (while loans to big businesses increased).  But it’s even worse for small businesses in other countries.  Headlines say that small business lending from Spain’s crumbling banks is drying up and in England 50 small businesses are failing daily due to lack of lending.

Bank resistance to small business loans and credit has forced countries to look at alternative avenues for access to capital.  China will start allowing small businesses to sell bonds.  Here in the U.S., Congress passed legislation to allow small businesses to seek small private sector investments through crowdfunding.

We don’t know how successful these new alternatives to traditional financial institution lending will be for small businesses.  Crowdfunding is a novel and not understood concept for most small businesses.  So the results of a recent national poll finding that 45% of small business owners not knowing if crowdfunding would be helpful and 53% not thinking it would is no surprise.

However, a few other results of this poll show why crowdfunding and other access to credit avenues for small businesses are important.  Small business owners are still getting most of their lending from a combination of family and friends (71%), personal credit cards (62%) and business credit cards (59%). 

With small businesses creating at least half of the net new jobs in this country, we shouldn’t be letting the vital growth of these real job creators up to the whims of family, friends, and credit card companies.  We need crowdfunding and other alternatives sources of capital if banks won’t or can’t do the job.

Keystone XL Would Raise Gas Prices, Report Finds

The Huffington Post
May 22, 2012

By Lucia Graves

WASHINGTON -- The Natural Resources Defense Council on Tuesday released a report dispelling the myth that the proposed Keystone XL tar sands pipeline would lower gas prices. Rather, the opposite is true, findings show.

On a conference call with reporters on Tuesday, report author and NRDC attorney Anthony Swift called the pipeline's impact on gasoline prices "one of the most misunderstood issues surrounding the proposed Keystone XL," adding that when TransCanada originally proposed the pipeline, they pitched it as a way to increase the cost of oil in the United States, providing increased revenue for Canadian producers. Since then, proponents of the pipeline in the United States have pitched it as a means of decreasing U.S. gasoline prices.

Swift's study examined these two conflicting claims, and findings suggest that the former is the true one. "Our study has found that Keystone XL is likely to both decrease the amount of gasoline in U.S. refineries for domestic markets and increase the cost of producing it, leading to even higher prices at the pump," Swift told reporters.

TransCanada did not immediately return a request for comment.

The report found the pipeline will increase U.S. gasoline prices by three mechanisms, most immediately by reducing the amount of gasoline produced in the United States. The pipeline will divert crude oil from Midwestern refineries, which are designed to produce as much gasoline as possible from a barrel of oil, to Texas Gulf refineries, which are designed to produce as much diesel as possible from a barrel of oil. The result in the immediate to short term will be a decline in gasoline production and an increase in diesel, according to the report.

Other findings in the report include that the pipeline will increase the price of crude oil in the Midwest and Rocky Mountains by over $20 a barrel, increasing the cost of Canadian tar sands by as much as $27 billion annually. These higher crude oil costs are expected to lead to deteriorating financial conditions in Rocky Mountain and Midwestern refineries, which could in turn result in decreased production. That's because if Midwestern refineries are forced to pay a higher price for oil, as East Coast refineries already do, they will be forced to respond by reducing their production and further decreasing U.S. gasoline supplies, according to the report.

These findings come as the House and Senate are in conference to hammer out a final version of the transportation bill. A provision in the House version of the bill would approve the pipeline, overriding President Obama’s rejection of the pipeline application in January, but a similar provision has not, as yet, been included in the Senate's version. The president has promised to veto any measure that includes Keystone XL approval.

 http://www.huffingtonpost.com/2012/05/22/report-keystone-xl-gas-prices_n_1536227.html

National Small Business Week

National Small Business Week should be a good time for the National Federation of Independent Business (NFIB) which claims to represent the country’s real job creators.  Unfortunately for the NFIB, exactly who is pulling its strings now has the attention of the national media.  As John Stoehr writes for Reuters (see below), “A close look at its record suggests that the NFIB uses the politically valuable mantle of small business to pursue an agenda that may take its cues from elsewhere.”

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Reuters
May 22, 2012

Who truly speaks for small businesses?

By John Stoehr

Everyone knows that small businesses hate President Obama’s historic healthcare reform law, right? At least that’s what the nation’s leading small-business advocacy group would have you believe.

Joining 26 states, the National Federation of Independent Business challenged the law all the way to the U.S. Supreme Court in March. It claimed the “individual mandate” is unconstitutional and would bankrupt small businesses with unnecessary costs.

Yet while the NFIB claims its multimillion-dollar lawsuit is on behalf of job creators and small businesses everywhere, it’s unclear whether small businesses genuinely support the NFIB position. A close look at its record suggests that the NFIB uses the politically valuable mantle of small business to pursue an agenda that may take its cues from elsewhere.

For one thing, many of its 340,000 members, most of whom employ 20 or fewer workers, have already benefited from the law. According to a March report in the Wall Street Journal, members have seen costs go down thanks to tax credits that were built into the law. Small firms in industries like advertising have also been able to compete with large national companies for talented employees. As one member told the WSJ: “[The NFIB is] doing a very big disservice to their members” by opposing the healthcare law.

For another, the NFIB has a record of lobbying for issues that benefit big businesses, not necessarily small ones. Consider a widespread state tax loophole that lets big-box retailers like Wal-Mart and Home Depot transfer income to out-of-state subsidiaries. This loophole often allows the chain retailers to pay no state income tax, while small businesses do. Yet the NFIB has fought against closing such loopholes.

Moreover, small businesses generally favor some kind of regulation, because such standards often make them more competitive with big companies. The NFIB is opposed to regulation on principle, but it also claims, as many Republicans do, that the threat of regulation on entrepreneurs and job creators – they have a habit of calling it “regulatory uncertainty” – has kept businesses from hiring and thus from stimulating the economy. But observers across the political spectrum say this is a canard. Regulation isn’t preventing businesses from hiring. Poor sales are.

Perhaps it is no surprise that the NFIB fights for issues that the Republican Party as well as big corporations also fight for: deregulation, lower taxes and tort reform. According to the Center for Responsive Politics, the NFIB’s political action committee has raised over $20 million since 1998. In 2010, nearly 94 percent of contributions went to Republicans. This year it’s 98 percent. It spent $9.5 million lobbying against the healthcare reform bill in 2010. And last year, the NFIB received $3.7 million from Crossroads GPS, according to Bloomberg. Crossroads GPS is a non-profit with close ties to Karl Rove, the political adviser of George W. Bush.

Given the partisan affiliations and positions, it’s unsurprising that other groups who claim to speak for small business, such as Family Values at Work, cast a gimlet-eye at the NFIB. So do small-business owners and small-business advocacy groups. Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, called the NFIB a “small-business pretender” and “lapdog” of the U.S. Chamber of Commerce. In April, J. Kelly Conklin, a New Jersey cabinetmaker, wrote in the Hill: “Whether we’re talking about health care or taxes (or both at the same time), NFIB always seems to side with the big fellas – big insurance, big banking, big business – not little guys like me. Why? I don’t know.”

Perhaps few do.

What’s more certain is that calling yourself a small-business group while serving the interests of big business has political advantages.

A Gallup poll showed most Americans trust small business to create jobs, more than they do large corporations or the U.S. Congress. That kind of public opinion explains why the major parties can’t agree on anything unless it has something to do with small business.

And it explains why the NFIB, in speaking for small business, hopes to be seen as speaking for the American people – even though, if the Supreme Court overturns the healthcare law, it’s the American people and their trusted small business who may suffer most.

http://blogs.reuters.com/great-debate/2012/05/22/who-truly-speaks-for-small-businesses/

Obamacare achieving its goal, slowly but surely

Small business owners are optimistic about their future says a recently released Bank of America survey.  That’s the good news.  The bad news is that small business owners are concerned about losing qualified employees to larger businesses because of benefits. 

According to the survey 18% said that providing competitive healthcare and retirement benefits is their number 1 challenge to keeping good employees.  Yet only 44% of the small businesses offered benefit packages. 

The obvious reason for small business owners not to offer healthcare and retirement programs is cost.  Reducing the cost of health insurance for small businesses was our goal for supporting national healthcare reform.  One of the provisions in Obamacare (Affordable Care Act) to reduce the costs was the health insurance tax credits.

Businesses with fewer than 25 employees, average employee pay of less than $50,000 and the employer paying at least 50% of the premiums qualified for the tax credits.  In 2010, 228,000 small business owners claimed the tax credits (up to 35% of the premium paid by the employer) and the White House gives a low-ball estimate of 360,000 taking advantage of the tax credits in 2011.  The actual number for 2011 will end up much higher since small businesses often file for tax deadline extensions, amend their taxes later or take the credits in subsequent years. 

Should more small businesses be using the healthcare tax credits?  Of course.  There are millions of small businesses that are eligible as pointed out by the Government Accountability Office yesterday when it criticized the healthcare law saying the tax credits were too small to encourage employers to offer health insurance.

But the health care tax credits in Obamacare are only one of the features that will make small business health insurance more affordable.  There’s also the requirement that at least 85% of the premiums be used for medical costs or rebates are due.  Small business owners will receive $377 million in these rebates this year because of this medical loss ratio provision.

There are many other benefits for small businesses in Obamacare that will result in keeping down or reducing premiums which I outlined back in April in an opinion editorial in The Hill.

But the GAO report not surprisingly spawned attacks by Obmacare critics.  After the report was released, a joint statement by House Small Business Committee Chairman Sam Graves and Sen. Olympia Snowe said “the healthcare reform law is simply bad policy that is holding small businesses back and therefore should be repealed.”  The statement continued, “this GAO report confirms that many small firms haven’t claimed the tax credit because it is too complex and its temporary nature didn’t provide a significant solution to their long term compliance problems — a regrettable, but all too foreseeable conclusion.”

Senator Orrin Hatch also jumped on calling Obamacare, “confusing, expensive, and burdensome for the families and businesses that have to comply with it.”

But the GAO report said that the tax credits are too small, not that they were confusing, complex, temporary, burdensome or holding anyone back.  The critics are making those complaints up. 

My CPA told me that the tax credits are actually much easier to calculate than other government tax credit programs.  And the healthcare tax credits certainly aren’t a burden or expensive for small businesses whether they use them or not. 

What the GAO report actually means is that the tax credits should be higher in order to encourage more small businesses to offer healthcare.  But one thing cannot be denied.  These tax credits under Obamacare have in fact already made health insurance more affordable for hundreds of thousands of small businesses.  That was the goal. 

Failed economic experiments

In the past 12 years we have witnessed two of the biggest failed experiments in how to improve the economy of countries.

The first experiment was here in our country. In the 2000s we went on a tax-cutting spree for the wealthiest Americans, allowed multinational corporations to drastically cut their income taxes through offshore tax havens and other loopholes, and allowed Wall Street to pursue financial gain with little regulation.

All this was done because our federal government bought into the proposition that if we just let the rich and big corporations have more after-tax income and got out of the way of the financial institutions, our nation’s free-market economy would take off and worries about job creation would be a thing of the past.

But instead we had the worst job creation record since 1939 and the birth of the Great Recession that spread around the world.

The Great Recession gave birth to the second experiment in Europe.

Many in the U.S. proposed that the path to recovery required massive cuts in government spending to cut the nation’s deficit in order for the business community to have the confidence to create jobs. Fortunately we mostly went with a government spending stimulus plan (even if it was too little) to grow and save jobs. But while the result has been consistent private sector job growth for over two years, the recovery hasn’t been robust enough possibly because state and local governments chose the austerity path and cut jobs.

In Europe it was a different story. Most nations chose the debt-cutting austerity path to recovery from the Great Recession. They slashed government spending by eliminating jobs and benefits for their citizens.

But businesses did not reward these countries with job creation even with smaller governments and less social programs. What the European countries got instead was less money flowing through their economies and worsening financial conditions. Their citizens turned on their governments and some of the governments have even turned on each other.

We’ve seen street protests and riots over economic conditions. Greece is near bankruptcy and its government is in crisis. France just threw out an incumbent president for the Socialist Party challenger. The economies of Britain, Italy and Spain are not recovering. The stability of the whole European Union and the euro are possibly in jeopardy and fingers are being pointed.

With this “improve the economy through austerity”experiment thoroughly failing, the European leaders at Camp David over the weekend shifted gears to support more pro-growth policies. Only Germany still thinks that austerity is still the best medicine but it too has seen the results.

The European countries are finally learning what small businesses instinctively know. Consumer demand is what drives job growth and consumers can’t spend if they don’t have the money. And when job growth is sustained, it produces more government revenue that can eventually be used to deal with the deficit when times are better.

Let’s hope that it’s not too late to turn the economy of Europe around with a growth strategy that has been successful here.

And let’s also hope that the “austerity first/don’t tax the wealthy and big corporations/deregulate Wall Street” politicians here can set their partisanship aside and learn from both of these failed experiments.

Minority Business Forum

University of South Carolina

Workshops & Conferences

Minority Business Forum

Date: June 5, 2012 Register Now Download Brochure

Time: 8:00 a.m. - 4:30 p.m. Location: 8th floor, Darla Moore School of Business Cost: $95

Driving Growth in Challenging Times This conference is designed for small- to medium-sized businesses that have made it through the start-up period and are poised to grow. The forum will feature business experts and faculty who will share growth strategies specifically for minority business owners. This is not a “tips and techniques” workshop, rather a focus on approaches that will help business owners move their businesses forward and generate additional sales. The day begins with networking at breakfast, proceeds through table topics over lunch, and concludes with a panel of experts who will answer questions about driving growth. Featured Speakers: • David Crockett, associate professor of marketing • John Stern, adjunct professor of management • Kiosha Gregg, of Kiosha Gregg Digital Media Consultancy • Jerry Ellison, of JBE, Inc. • Terris Riley, of New Venue Technologies • Succeed by using various marketing strategies designed for small businesses. • Position your company for growth by gaining strategic insights into human resources, taxation, legal and banking considerations. • Acquire and manage government contracts to give your business the necessary resources to extend your reach without exceeding your ability to deliver. • Advertising, social media, marketing and branding experts will update you on the latest trends and issues for small businesses. You will learn how to position your brand to be at the forefront of the public’s mind. You will gain insights about traditional advertising and social media, such as how to maximize low-cost campaigns to convert prospects into customers. Presenters will offer information about return on investment decisions and how to scale your business, as well as approaches for infrastructure decisions. Also covered will be human relations, information technology and “cloud computing,” as well as organizational and structural considerations for small businesses. FOR MORE INFORMATION: Marc Himes 803.206.7398 marc.himes@moore.sc.edu

Top of Form

More calls for tougher regs on big banks

JPMorphing.  NYT editorial:  “JPMorgan Chase's whopping multibillion-dollar trading loss has revived calls for a tougher version of the Volcker Rule, but Jamie Dimon isn't dropping his campaign against regulation.”

Banking needs more than the Volcker rule, it needs more Volckers, argues W. Post's Harold Meyerson: "Rumpled and unglamorous, Volcker personified banking before big money gave it glitz. He implicitly threatened to drag it back to the days when Wall Streeters occasionally had to hail their own cabs ... if Dimon’s bank and others like it are not to periodically blow themselves up — taking the economy down with them — they’ll have to be made smaller, safer and less dashing."

The Federsal Reserve bows to big banks today, China tomorrow

Yesterday’s JPMorgan shareholders meeting was “pretty tense”, according to Lisa Lindsley who attended the meeting in Tampa.  Lindsley is the director of capital strategies at the American Federation of State, County and Municipal Employees pension plan. 

In a radio interview with me yesterday Lindsley said that it was obvious that the JPMorgan people clearly wanted to get the meeting over quickly.  Jamie Dimon, the CEO and chairman of the Board of JPMorgan, rushed almost unintelligibly through his prepared remarks regarding the recently acknowledged $2 billion plus loss at his company. 

The pressure on Dimon showed when he was directly asked at the meeting about his and JPMorgan’s lobbying against the Volcker Rule that might have prevented the risky trading that led to the $2 billion loss.  According to Lindsley, Dimon was quite condescending telling the person that he would send him his shareholder letters from the past few years that the commenter obviously hadn’t read or he would understand. 

On another important issue, Lindsley’s union had filed a proposal last fall for JPMorgan to have an independent board chairman.  If the shareholders agreed with the proposal, Dimon would have to give up either the chairmanship of the board or CEO position.  That proposal was voted down 60%-40%.

But in addition to these duel positions held by Dimon, he also serves as a director at the Federal Reserve of New York.  Senatorial candidate Elizabeth Warren and Vermont Senator Bernie Sanders have both called on Dimon to resign from the New York Fed.  At yesterday’s meeting one commentator addressed that issue.  He said that as a director of the Federal Reserve of New York and JPMorgan board chairman, Dimon was his own boss and his own regulator….that’s pretty sweet.

Dimon’s response was that the New York Fed is only advisory and doesn’t make policy decisions. 

But isn’t that the point.  He is advising the Fed that makes the regulations to carry out the Dodd-Frank Financial Reform Act including the Volcker rule that Dimon has lobbied against.  Clearly Dimon and his company are only interested in promoting their own profit, not what is in the best interest of the country. 

And I’m willing to bet that another bad Federal Reserve decision recently was also recommend by Dimon.  Chinese government-owned banks have been approved to do business in the U.S.  As I mentioned in my blog last Friday, China already owns much of our nation’s debt and its businesses are bidding successfully for public project works here.  Add to that China holding the loans and lines of credit to our country’s small businesses because our domestic banks won’t lend is a recipe for a perilous future for America.

So why did the Fed open the doors to China’s banks?  Because our big banks want China to give them more access to investing in Chinese banks in order to gain access to China’s consumers.  It was a tradeoff that Scott Talbott, head lobbyist for the Financial Services Roundtable, said would “benefit the U.S.” 

This isn’t about benefitting our country.  It is about benefitting the profit greed of the big banks like JPMorgan, their CEOs and shareholders.  There doesn’t appear to have been any calculation by the Fed about the other potential impacts on our economy by having the Chinese government being able to undercut our local community banks and call loans and credit lines of our small businesses whenever they want for whatever reason.  And with China now ready to become a player in U.S. banking, how soon will they be influencing other Federal Reserve decisions?

The long-term consequence of the Fed’s decision to allow China to put its nose under our private financial institutions’ tent has enormous risks for our country.  But what the hell, at least JPMorgan and its ilk can make some good short-term profits and bonuses.

More heads should roll and not just at JPMorgan

It’s hard to believe that just over two years ago I spoke at a press conference at the U.S. Capitol along with Senators Dick Durbin, Jack Reed and Michael Bennet calling for the Senate to pass financial reform legislation to protect small businesses and the public from Wall Street causing another Great Recession.  The passage of the Dodd-Frank Act is the background for the current controversy involving JPMorgan.

Today we might hear of more JPMorgan senior executives losing their jobs over that big bank’s $2 billion and growing loss.  Maybe its CEO Jamie Dimon will accept responsibility and offer his own resignation.  According to former and current JPMorgan employees, the decisions to engage in the highly risky and self-destructive trading that Dimon has called “sloppy", “stupid” and “bad judgment”, were approved by Dimon himself.

But JPMorgan shouldn’t be alone in cleaning house.  Contrary to what Eric Gehrnstrom, a senior adviser to the Mitt Romney campaign, said on NBC’s TODAY this morning, the proprietary trading that is costing JPMorgan billions is not just a loss to the shareholders of that bank and therefore no taxpayer money was at risk. 

Proprietary trading was intimately involved in creating the financial meltdown that caused the Great Recession.  It was the first domino to fall.  When the banks were facing insolvency and shutting down because of their greedy gambling with their own money, the whole economy teetered on collapse forcing Congress to bail them out with taxpayer dollars. 

These big banks aren’t the small, community banks we know on Main Street.  These financial giants turned into investment gambling houses through their proprietary trading.  And they weren’t doing this to help the nation’s economy.  This was all about satisfying the greed of their CEO’s, traders and stockholders at the public’s expense.

That’s why the Volcker Rule was put into that financial reform Congress passed in 2010 to prevent another Great Recession by severely limiting proprietary trading by banks.  But that rule, along with other needed regulations passed over two years ago, still is not in effect because hordes of bank lobbyists descended on the regulators and Congress to water down the reform.

It appears that the regulators responsible for writing the rules intended by Congress have forgotten that they are public employees.  We pay their salaries to do their jobs protecting us, not the big banks.  And the bank regulators charged with overseeing JPMorgan and the other big banks obviously aren’t doing their jobs in protecting us.  According to JPMorgan insiders the current proprietary debacle has been building since 2007.

If we expect accountability at JPMorgan, we should also demand accountability from the government employees who have kowtowed to the wealthy and powerful.  The regulators at the Federal Reserve, Treasury Department and the Commodity Futures Trading Commission who have been intimately involved in overseeing JPMorgan and “negotiating” with the big banks to loosen needed regulations passed by Congress should be re-assigned or terminated. 

Now, I am supportive of government employees.  They shouldn’t be laid off or not receive proper compensation just because we don’t make multinational corporations and the wealthy pay their fair share of taxes.  Government employees are an important part of our economy spending their money with locally-owned businesses.

But I also expect these employees to work for us, not work for the big banks in hopes of a better private-sector paycheck tomorrow.

Just as heads rolling at JPMorgan will send a warning to the other big banks about irresponsible proprietary trading, some deserved-house cleaning at our regulatory agencies will send a clear message to all who we have entrusted to protect us and our economy.

The Chinese are now truly coming

Everyone knows that China holds much of our government debt.  While that might sound ominous, the reality is that China needs the U.S. economy to be successful if it wants to keep getting paid on their investment. It’s not like China can simply take over our federal government if we don’t pay them.  Our economy might be in shambles but we’d still be running it.

But while the Chinese can’t take over our government to collect on a bad debt, the same is not true for private loan defaults.

The Wall Street Journal reports that Chinese government-backed banks are coming to the U.S.  The Federal Reserve has approved three such Chinese lenders that will enter the commercial lending market.  Look for the Chinese banks to acquire some U.S. banks in this process.

While I’m all for more access to capital for small businesses, I am concerned about a rapidly growing Chinese government “private” business presence in the U.S.  Locally-owned businesses are already losing out to Chinese companies in public project bidding competitions.  With the Chinese controlling business loans and lines of credit, we are on a slippery slope to a world few of us envisioned for our future.

South Carolina is one of the best places to set up and run a small business

Health, Safety and Environmental Regulations rated extremely business-friendly by local small entrepreneurs

South Carolina female business owners more optimistic about their financial future than their male counterparts.

South Carolina small business owners give lowest ratings to state and local governments’ training and networking programs.

Columbia, SC- May 9, 2012—South Carolina ranked among the top small business-friendly states according to a survey undertaken by Thumbtack.com in partnership with the Kauffman Foundation.  Thumbtack.com connects service professionals in its 275,000 small business network with prospective customers.  Over 6,000 small business owners, most with less than five employees, in the Thumbtack.com database responded to the survey.

South Carolina businesses responding gave the state a B+ grade for overall friendliness.  In particular, South Carolina earned an A+ grade for the business friendliness on health, safety and environmental regulations. The cost of hiring a new employee also received an A+ and the ease of starting a new business was given an A-.

Small businesses generally viewed state and local government regulations as very friendly giving them a solid A. Employment, labor and hiring regulations were given an A. Land use and zoning regulations were given an A-.

A B+ was given to state and local licensing that included licensing forms, requirements and fees.  Even the tax code and tax-related regulations were rated as a B.

“In spite of all the controversy about regulations these results indicate that there is little concern about them in our state,” said Frank Knapp, Jr., president and CEO of the South Carolina Small Business Chamber of Commerce, who pointed out that this finding was in line with other national surveys.

“What really brought South Carolina’s overall small-business friendliness score down was something surprising—training and networking.  Both received a C+.  We either don’t have enough of these opportunities or we aren’t doing a good job of getting the word out about them or both.  We obviously have a problem that needs to be addressed.”

Another unexpected finding of the survey shows that women-owned small businesses in South Carolina were significantly more optimistic about their financial future than their male counterparts. Female entrepreneurs were 15% more likely than male entrepreneurs to rate their companies' financial situation as likely to improve over the coming year.

For more information on the survey visit www.thumbtack.com/sc

Crowdfunding to the rescue for small investors

The Great Recession has apparently changed the way individual Americans view investing.  Buying stocks is no longer seen as safe for long or short-term investment and trading is way down.  Credit Suisse Trading Strategy reports that daily trading in American stocks continues to fall and is down almost 50% from the peak in 2008.

The lesson learned from the Great Recession is that Wall Street cannot be trusted.  While the market might be reaching new highs, it is doing it without individual investors who, unlike high-speed traders, can feel that something is wrong.

You would think that with this stock market crisis the financial institutions would welcome regulations to inspire investor confidence.  But instead of looking at Dodd-Frank—the financial reform passed to protect our economy from the practices that collapsed the market—as their vehicle to return to pre-Great Recession trading volume, Wall Street is doing everything it can to undercut and roll back the new rules.

And while the experienced Wall Street investors are walking away from trading, mom and pop small investors are looking for something else entirely.  Fortunately, Congress has recently opened the door to a dramatically different type of equity investment. Investments that Americans know the country needs—investments in their own communities.

Soon all of us will be able to invest, not in some faceless symbol on our computer screen, but in a tangible business we can see, touch and even taste in some cases. 

The new crowdfunding Security and Exchange Commission (SEC) rules will allow small, long-term investments in businesses not only in your community but in every community.   It is this sense of community that will give regular Americans more investment confidence.

Last Friday the American Sustainable Business Council held a webinar on crowdfunding, “Crowdfunding is the law, now what?” 

The webinar featured Andy Green, Legislative Counsel to Senator Jeff Merkley (OR) who was the prime sponsor of the crowdfunding provisions signed into law.  Also participating was Jenny Kassan, who launched the equity crowdfunding effort in 2010 with a petition to the SEC, and Mary Rick, a crowdfunding consultant and former director of the crowdfunding portal The Hoop Fund.

Get up to speed on this exciting new small investment opportunity and vehicle for small businesses to have more access to capital.  You can listen to the audio of the webinar here.  Be patient in opening the link since it is a large file.

Trading in stocks down

The U.S. stock market is in crisis.  Small investors continue to get out of stocks.  Read about the problem and one possible explanation in the stories below.  Tomorrow I’ll talk about an alternative for small investors.

New York Times
May 7, 2012
Stock Trading Is Still Falling After ’08 Crisis
By NATHANIEL POPPER

Even though American stocks have doubled in price in the last three years, investors and traders large and small keep giving the market the cold shoulder.

Trading in the United States stock market has not only failed to recover since the 2008 financial crisis, it has continued to fall. In April, the average daily trades in American stocks on all exchanges stood at nearly half of its peak in 2008: 6.5 billion compared with 12.1 billion, according to Credit Suisse Trading Strategy.   Read more.

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Myrtle Beach Sun News
May 6, 2012

Some rules to prevent another stock market collapse yet to be enforced

Regulations to prevent collapse have yet to take effect, could be watered down

By Kevin G. Hall - McClatchy Newspapers

WASHINGTON -- Almost four years after America’s financial near-collapse, regulators are now empowered to police financial markets as never before. Yet some of the most important rules to curb Wall Street’s bad behavior have yet to take effect – and could be watered down. Historians likely will view Barack Obama’s presidency through the prism of the worst financial crisis since the Great Depression. Like that period in the 1930s, the legislative and regulatory response to this crisis is sure to influence the U.S. economy for decades. . . .

“The regulatory framework has changed, but the attitude of financial services companies hasn’t. It’s been one constant pushback after another since Dodd-Frank was put on the books,” complained Travis Plunkett, director of regulatory affairs for the Consumer Federation of America. “In some cases the securities and financial services industries have won rollbacks that pushed back to well before the financial crisis.”  Read more.

Small business delivers again

While the latest job numbers released today aren’t as good as they were earlier this year, the country is still adding private sector jobs.  And small businesses are once again leading the way.

According to the ADP National Employment Report businesses with 1-49 employees accounted for 48.7% of the new jobs.  That compares to businesses with 500 or more employees creating only 3.3% of the new jobs in April. 

We’ve been outperforming big businesses in job creation all year.  In March small 1-49 employee businesses created 47.8% of the new jobs compared to only 10.9% for the over 499 employee crowd.  In February it was 50% to 9.3% and in January it was 56% to less than 2%.

Come on U.S. Chamber.   Quit the phony whining about taxes and regulations and get your big boys investing in jobs in this country instead of hiring K Street lobbyists.

NFIB's free-market failure

All during the debate on healthcare reform both before Obamacare and after some business organizations, including the National Federation of Independent Business (NFIB), argued for a “free-market” approach.  One favorite proposal was to allow insurance to be sold to individuals across state lines which would require that states to give up their authority to mandate benefits for every plan being sold in their states.  The only mandated benefits would come from the state where the insurance company was domiciled.

If we just let individuals buy insurance across state lines, the NFIB told us, we would see more competition, less state mandates and lower premiums.

This free-market rhetoric and promise of less-costly individual health insurance was so convincing that five states passed laws to allow their citizens to buy insurance across state lines as long as the offering insurance company was licensed in their states.

So how is this free-market healthcare reform going?  Apparently not so well. 

Since Georgia passed its law last year to allow it, not one health insurance company is marketing a plan from another state.  Not one!

“I’m really surprised because it was such a bumper sticker issue by Republicans saying if we could get across state line selling, we could reduce the cost of health care,” said Georgia Insurance Commissioner Ralph Hudgens.  “We’re dumbfounded.  We are absolutely dumbfounded.”

Kyle Jackson is the director of the NFIB in Georgia.  “It’s frustrating,” he said of the failure of the free-market reform his organization advocated.  “You can’t force the insurance companies to write these policies.” 

Welcome to the real, not fictional, healthcare free market, Mr. Jackson. 

May Day

Today workers from around the world will be celebrating International Workers Day.  May Day is a traditional day for unions to educate the public about the rights of workers.

My late father was a union member in Western Pennsylvania where he worked for a power company climbing utility poles most of his life.  His union job enabled him and my mother to own a house and pay the tuition for me to get an undergraduate degree and my sister a nursing degree.  He didn’t wear his union membership on his sleeve but there is no doubt that it played an important part of giving my family a good middle class life.

With this background you can hopefully understand why this head of a small business organization in South Carolina doesn’t join the chorus of anti-union rhetoric.  In fact, from my perspective many of our South Carolina political and economic leaders are schizophrenics when it comes to unions.

We are continuously told from the Governor on down that unions are bad for economic development and must be beaten down at all cost.  The public disparaging remarks about unions and their members  as well as the chest-thumping about South Carolina having so few union members has become boiler plate information in official speeches and big business recruiting material.

But as soon as these same public officials and economic developers start selling our state for big business recruiting purposes, one of the first South Carolina assets they brag about is the Port of Charleston, where its totally unionized labor force handles most of the commerce moving in and out of our state.  The Port is absolutely a critical piece of South Carolina’s economy and you won’t hear any complaints about its productivity.  It’s the shining star in our ability to compete globally.

The unionized Charleston Port has been recognized as having the highest productivity record anywhere in North America and ranks amongst the top five ports in the world according to Kenneth Riley, president of the International Longshoremen’s Association (ILA) Local 1422 in Charleston.  But you won’t hear union detractors giving the ILA and its 1500 members any of the credit.

So our state bashes unions yet brags about our efficient Port, which cannot operate without its union workers. 

We often hear that people suffering from schizophrenia can have their bad behavior controlled through medication.  South Carolina needs a big supply of those meds.  And we can bring them in through the unionized Port of Charleston.