The Baucus Healthcare Plan: What Small-Business Owners Need to Know

Every day I get in my email inbox something called the “NFIB Smartbrief”. NFIB is the acronym for National Federation of Independent Businesses. This is the organization that champions small businesses throughout the U.S. and in every single state through extensive lobbying efforts. It is an organization totally dedicated to helping the small business owner.  The NFIB Smartbrief contains links to timely articles concerning any important and relevant news that effect small businesses.  It is a great way to stay on top of news that can effect us all as small business owners.

The clients of Silkin Management Group are all small business owners, and it is therefore important to me to stay abreast of the news about the issues that are most relevant to our clients.  As I’m sure any reader knows, the healthcare legislation that is changing daily while winding its way through Congress will significantly effect small businesses. And, as Silkin clients are both small businesses and health care providers, anything having to do with this legislation is important to stay on top of. Today, while reading the Smartbrief, I found a very good article summarizing the latest potential effects that the legislation, in its existing form, will have on small business. I therefore thought it would be of benefit to our readers to provide that article, published on line by U.S. News and World Reports and written by Mathew Bandyk.  The article is reproduced below or you can link to it by clicking here: The Baucus Healthcare Plan.

I hope this article helps you see the latest that is going on with the healthcare legislation.  Comments on this are welcomed by clicking on the comments link at the end of this blog.

Larry Silver
President, Silkin Management Group

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The Baucus Healthcare Plan: What Small-Business Owners Need to Know

What business owners should look out for as healthcare reform moves ahead

By Matthew Bandyk

In the battle to pass some form of healthcare reform, small business is a major player.  Earlier this year, Congress proposed reform bills that would put in place heavy fines on businesses that fail to provide healthcare for their employees, with the exception of those that have just a few employees. Small-business political associations in Washington quickly denounced these provisions as too burdensome for too many businesses. Now, what's on the table for healthcare reform has changed. In early September, the SenateFinance Committee put forth a new healthcare bill that removes those penalties on businesses. Instead, it offers carrots to employers that provide healthcare, while keeping a few sticks. The bill, associated with its main sponsor, Democratic Sen. Max Baucus of Montana, seeks to expand insurance coverage through the creation of nonprofit insurance exchanges at the state level. These exchanges, under recent amendments Baucus accepted, will be open to small businesses with up to 100 employees.

Although the Senate is currently debating numerous amendments to the bill, many of the most relevant pieces that apply to small business don't seem to be points of contention. One thing is for sure: Many elements of the bill will have a profound impact on how employers seek out and pay for insurance for their employees.  4 Conundrums That Impede HealthcareReform.

Here are, from the perspective of small-business owners, some of the most important pieces of the current plan to reform healthcare.

Tax credits.

The new carrots in the bill are in the form of tax credits for employers that provide their employees health insurance. But not every employer can cash in on these incentives. Only businesses with 25 or fewer employees would qualify. However, about 92 percent of small businesses with employees fall into this category, according to the SBA. There's one further qualification: The average wage of all of the business's employees must be no greater than $40,000. Most business owners will want to pay attention to how much these credits could save them, and when. In 2011 and 2012, the bill would allow employers to deduct from their taxes an amount equal to the dollar amount the employer contributes for each employee's coverage, multiplied by a certain percentage. This percentage would be based on the amount of the employee's total premium contributed by the employer, or the average premium in the employer's state.

Starting in 2013, the state insurance exchanges kick in, and the credit applies only to businesses that purchase insurance through those exchanges. So would these write-offs revolutionize the way small businesses provide employee healthcare? Bill Rys, tax counsel for the National Federation of Independent Businesses, says expectations shouldn't be too high. The size and length of the credit—just four years—aren't high enough for businesses that are strapped for cash to suddenly consider buying healthcare. But the credit could make a difference for business owners "on the cusp"—those unsure if they can afford employee coverage. "It does provide some immediate cost relief," he says. The relief is especially large for the smallest businesses.

Businesses with fewer than 10 employees and less than $20,000 in average wages get to keep the tax credit in full. For larger businesses, it begins to phase out starting in 2013.  But there are also some potential problems. If a business owner starts paying employees more and the average wage surpasses the $40,000 mark, the business could no longer be eligible for the credit. That wage requirement could make employers reluctant to give out raises. Rys says that this is a real concern, but he's not too worried. There isn't much incentive for employers to keep average wages down for the same reason that the tax credits won't have small businesses rushing out to buy health insurance. The length of the credits is just too short. "The concern would be greater if the credit were longer, but the credit is for only two years before the exchange starts," Rys says.

Tax penalties.

Although no employer will be automatically punished for not providing coverage, there are still some fines in the bill that apply to firms with 50 or more employees—only 4 percent of all businesses that hire. But for businesses included in that 4 percent, the tax penalties can be hefty. That's because the bill provides subsidies for individuals and families who make up to 300 percent of the federal poverty level to help them buy insurance through the state health exchanges. Employers that don't provide coverage will have to pay a tax penalty for each employee who receives these subsidies. This has been dubbed the "free rider" provision because it is intended to deter employers from "free riding" off the new health insurance exchanges. The penalty is either the average cost of subsidies that year multiplied by the number of employees receiving subsidies or $400 per employee—whichever number is lower. But business owners won't be told what they owe. They'll have to crunch the numbers themselves to determine if they owe the full amount or the minimum, says Judith Solomon, senior fellow at the Center on Budget and Policy Priorities. There are many administrative burdens that could come with this provision. For example, a business owner would have to keep track of which employees qualify for subsidies, if they suddenly become qualified, or if they drop out of the exchange altogether. Some business that want to avoid the penalty can expect disputes with the tax man—it will be up to them to inform the IRS that some former  employees who received health insurance subsidies were laid off or no longer work there, says Solomon.

Another complicating factor of the "free rider" provision for employers is that it might make them think twice about whom they hire. "It does distort the hiring decisions in the direction of employers who don't need coverage," says Solomon. A business owner might be inclined to look for potential employees who already get health insurance through their spouse, for example, in order to avoid dealing with the tax penalty. Choosing to hire or not hire someone on that basis could land a business owner in legal trouble.

Insurance taxes.

One of the most controversial aspects of the Baucus bill is that, if passed, it would be partially funded by an excise tax on health insurance companies. In 2013, a 35 percent tax would kick in on insurance policies in which premiums are above $8,000 for single people and above $21,000 for families. It might not seem as if a tax on insurance companies would have much to do with small businesses, especially considering that few small businesses have the type of gold-plated, "Cadillac" health insurance plans to which the tax applies. But Keith Ashmus, the chair of the National Small Business Association, says these taxes could be passed down to all employer health insurance plans—not just the gold-plated ones—in the form of higher premiums. "The tax will be part of the entire cost structure of the insurer," he says. "[So] the trigger will be a high-cost plan by company Y, but the impact will be felt by everyone." The good news is that as the Senate has negotiated aspects of the bill this week, Baucus appears to be willing to ease the impact of the excise tax—but not eliminate it.

Your Most Valuable Asset as a Small Business Owner

We are all striving to figure out the most efficient ways to operate our businesses during this economic recession. President Obama's speech attempted to give us some hope, some light at the end of the tunnel while still communicating the cold reality of what we are dealing with economically in the country and world today. Ben S. Bernanke, Chairman of the Federal Reserve also spoke to Congress and relayed his assessment of our economic future. (For a complete review of his report to Congress, view this article from the New York Times).

The theme I've presented in my various blogs over the last few weeks is for us, as small business owners, to be as educated as possible on business management technology so that we can be proactive in our approach and handling of our businesses. Yes, the economy is rough and therefore, in order to do well, it will take all businesses being smarter, more educated and more adept in how they apply management systems and actions to their activities.

This made me think - what is our most valuable asset as a small business owner? If you are a doctor, which most of our clients are, what, besides your professional training, keeps your office productive, viable, and a pleasant place to work? I think that a primary answer to that question is: YOUR STAFF. If you have well trained and happy staff, your office/business should do well. That has been proven over and over through the training we have done with over 4000 offices. In the next few blogs I'll discuss some of the things you can do with your staff to accomplish this.

Recognize Your Staff

A recent Gallup Poll found that almost two out of three people receive no workplace
recognition in a given year. This underscores a recent finding from the U.S. Department of Labor that the number one reason people leave their jobs has nothing to do with pay or promotions: they leave because they "don't feel appreciated."

Deserved

A large amount of our delivery to practice owners has to do with staff training and staff correction, both of which are vital. However, acknowledging a job well done is just as important. Recognizing a staff member's great work is motivation for the person to continue doing great work. The survey findings mentioned above demonstrate that some praise can go a long way. The recognition, of course, should always be well deserved. Simply having an "Employee of the Month" award in order to keep people motivated won't work if the awards are not deserved. It's up to the managers to execute the awards programs based on real production and contribution.

Individualized

It's a good idea to survey staff to find out what sort of recognition and/or awards they want. And whenever possible, individualize these: not everyone wants to be acknowledged in front of the group. Some will be happy with a written "thank you" or certificate that they can display in their work area. Others may want something tangible, like maybe a gift certificate to a restaurant or clothing store. When you individualize the recognition, you make a staff member feel even more appreciated.

Specific

Also, be specific. Don't just say. "Good Job!" Telling the staff member what they did that was a great job will not only mean a lot more, but it's information the person can use when doing work in the future. And finally, make sure that the information concerning an employee's awards or recognition goes into his or her personnel file.

These tips will go a long way in making your staff happy, productive and wanting to stay with you. Staff turnover can be very costly. The additional costs of finding and training staff are not what anyone needs at this time. Apply the above ideas and you'll have less staff turnover and save valuable time and money.

If you have any ideas you would like to share regarding this, we'd love to hear from you. Our discussion forum can be found at the Silkin Facebook Page.

Larry Silver
President, Silkin

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More on Preventing Embezzlement

As I discussed in my last blog, an article I recently read in the Wall Street Journal - "Small Businesses Face More Fraud in Downturn" went over how small businesses are experiencing more embezzlement than they have in the past due to the down economy. Apparently some people who are having financial problems are resorting to embezzling their employers through various nefarious means. In the last blog I went over some of the tips we have given to our clients over the years to help prevent embezzlement. I covered the area of handling cash payments - a primary area that money gets stolen in a health care office. In this blog I'll offer up some more management actions you can take to safeguard your office from this type of theft. We've seen many of our new clients have this problem but when we teach them the management techniques outlined this blog and our previous blog, this problem disappears.

The following procedures are recommended by an accountant and should be part of your normal routine as safeguards against embezzlement.

Accounts Receivables and Statements:
Review your accounts receivable aging report monthly. Look for changes from the last month's report that don't make sense. Scrutinize any balance over sixty days old as its existence normally does not make sense and minimally means a dropped ball by someone if not hanky-panky on collections.

Have a written policy that no balance write-offs or account adjustments are permitted without written Doctor approval. If possible, consider a 'lock-out' (in your computer software) to allow ONLY the owner the ability to write-off balances.
Spot check day-sheets against patient/client charts, ledger cards (or patient/client account records) and the schedule book at least once a quarter, looking for any discrepancies. That you do this - sporadically - should be overtly promoted to the staff.

Routinely check with visiting patients/clients who have balances over thirty days old - and with past-due patients/clients you are calling - to ensure they've received a statement from you. The idea here is to look for incidents of the collections person throwing statements out versus mailing them in order to cover a payment embezzlement. Become suspicious if you find you are all of a sudden paying a lot of refund checks to patients/clients.

Accounts Payables and Purchasing:
Ensure all expenditures are authorized (via written request) and documented.

Safeguarding Records and Miscellaneous:
If using paper day-sheets, then remove these day-sheets from the office each quarter, and store them at home or in a safe deposit box.
Always change the locks immediately when a key-holding employee leaves employment.
The last thing to remember is to assume that if someone can rip you off, they will - and take steps to prevent it; and if your antenna goes up on some circumstance, you carefully check into it.

If you implement the above steps and the steps given in our last blog, you will reduce your chances of embezzlement to nearly zero.

Again, as mentioned many times in my blogs, one does not have to be the adverse effect of the economy if one is trained in basic management skill. The area of embezzlement is a good example of that. Someone who does not know the basic techniques of preventing this type of crime could just "chalk it up" to the economy, the recession, etc. Although it may be true that tough economic times may cause more people to attempt embezzlement, it is also true that if one has some basic management systems in place, you don't have to end up being a victim of such an attempted crime.

If you have any ideas you would like to share regarding this, we'd love to hear from you. Our discussion forum can be found at the Silkin Facebook Page.


Larry Silver
President, Silkin

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EMBEZZLEMENT IS INCREASING DURING THESE TOUGH ECONOMIC TIMES

Minimize the Risk

An article I recently read in the Wall Street Journal Small Businesses Face More Fraud in Downturn pointed out how, during this recessionary time with people having serious financial troubles, small businesses are experiencing more embezzlement than they have in the past. This brought to mind some tips we have given to our clients over the years to help prevent embezzlement. We've seen many of our new clients have this problem but when we teach them the management techniques I'll outline in my next few blogs, this problem disappears.

As I've gone over in my recent blogs, one does not have to be the adverse effect of the economy if one is trained in basic management skill. The area of embezzlement is a good example of that. Someone who does not know the basic techniques of preventing this type of crime could just "chalk it up" to the economy, the recession, etc. Although it may be true that tough economic times may cause more people to attempt embezzlement, it is also true that if one has some basic management systems in place, you don't have to end up being a victim of such an attempted crime.

The following procedures are recommended by an accountant and should be part of your normal routine as safeguards against embezzlement. Today I'll cover the handling of cash. In my next blog, I'll discuss several other areas to set up safeguards.

Cash Handling:

1. Have firm office policy that every patient/client gets a receipt whether they pay or not.
2. Cash handling and cash record-keeping duties need to be segregated. Have one person collect patient/client portions over the counter and another person post balances. Have a third person do bank deposits. As owner, play an active role in monitoring sales and cash if you have too few employees to fully separate the duties for handling cash and collections.
3. Each month, compare the amount of your collections that was cash to previous months. There will be some fluctuation, of course, but if it goes low one period, it is suspicious.
4. Start a patient/client sign-in sheet where patients/clients simply sign-in. Compare this on a daily basis to an over-the-counter-collections report (and day-sheet or equivalent), looking for inconsistencies such as patients/clients who are on the sign-in sheet but not listed on the day-sheet report. Spot check by phone call to patients/clients who are reported to not have paid a portion due that day. This can be done as a "quality control" call to the patient/clients. Of the questions asked one might be something like, "It's our policy that all patients/clients who pay any cash on the day of service receive a receipt. Did you receive a receipt today for any cash paid?" Implement this policy in writing and DO IT. This will make it far more dangerous to attempt embezzlement.
5. Have a written policy to conduct unannounced checks of petty cash and other cash accounts on a regular (bi-weekly or monthly) basis. Conduct these checks without fail.

If you implement the above steps, you will reduce your chances of embezzlement to nearly zero in the area of cash payments. If you have any ideas you would like to share regarding this, we'd love to hear from you. Our discussion forum can be found at: Silkin Facebook Page.


Larry Silver
President, Silkin

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Three out of four small businesses disapprove of the stimulus package.

We've been discussing over the last week that the stimulus package, including the Tarp bill from last year, does not seem to be very beneficial to our small business clients and all small businesses. Today we ran across this blog from the Dallas Morning News Survey: Many small business owners favor tax cuts over asset plan that revealed a survey done by a payroll service that confirms again what we've been discussing.

According to the survey by Surepayroll, "Nearly three-quarters of the survey respondents disapproved of TARP" - in fact only 3 percent thought it was effective at all. And, per the survey, almost 75% percent of the small business owners surveyed felt that the stimulus bill was not going to be useful to them. There were several comments on this blog that were interesting as well.

This information just further validates what we've been saying all along - that no business, especially small businesses, should expect much help from the government to stimulate their business in the short term through this recession, and that we all should attempt to be as self sufficient as possible in handling our own affairs. Business knowledge and acumen is the key. Don't get me wrong - we are not trying to hide our head in the sand and pretend that it is not rough out there. It is. Many people are out of work and those who are not are spending less money. But people are out there spending money and it is up to each of us, as small business owners, to be smart enough and self sufficient enough to not buckle under.

I mentioned in our last blog that I had interviewed one of our consultants regarding the economy and how it was effecting his clients and how he was helping them to get pro-active about it. He told me that "when 'the economy' became an issue, my clients commonly mentioned that it was noticeably tougher. But together we looked at the existing statistics and trends, spotted where the situations were, applied the appropriate actions, and got on with it. This has been a continual process, and for the most part 'the economy' is now rarely mentioned; it’s now simply a matter of doing what we know how to do. The fact is I rarely discuss 'the economy' when talking with my clients now. We know there is a situation in the environment, and it’s something we have to deal with and be better than, but we know that 'the economy' is not cause over their businesses. We just talk about ways to be more causative in developing the respective business."

This approach is working well with our clients who are growing at an average of around 10% or more while many of their colleagues are contracting at a similar or greater rate. Knowledge is the key. If you know the technology of how to do something, whether that is a medical procedure or a business procedure, you can be at cause over it. I'm a businessman and have not been trained to fill a cavity. Nobody would expect me to do so. But how about the dentist or the vet or optometrist or the M.D. or lawyer or builder who have never been trained to run a business but have a business to run? Without training in business management they will have a tough time in these tough times. That's why we train our clients in the basics of management and that's why they are generally succeeding in this environment.

Again, continuing our recent blogs and discussion forums, we'd love your thoughts on this continuing discussion. Please visit our discussion forum which can be found at: Silkin Group Facebook Page.

Larry Silver
President, Silkin


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Turning the Shockwave of Gloomy Economic Predictions into a Carrierwave for Expansion

As part of our continued monitoring of how the economic stimulus plan will effect small businesses, we ran across this excellent article in the Miami Herald. Stimulus plan little help for small firms.

As you can see, two economists again point out how little there is in terms of incentives for small businesses during this recessionary time. There's been lots of talking heads on TV spouting forth either the greatness or faults of President Obama's plan to stimulate the economy. It seems that it is a great plan if you are a Democrat and a lousy plan if you are a Republican. We'd prefer to view it from the point of view of the clients and business owners we deal with which are small businesses and private practice health care offices. Choosing a side based upon political party, we feel, is worthless. Deciding based upon the facts to hand is a much better means of evaluation in our opinion.

We certainly hope that the plan ends up helping our clients but, if it does, it seems that it will happen in a more indirect way, rather than by providing direct incentives. According to the article linked above, Raymond Keating, chief economist with the Small Business & Entrepreneurship Council, is also dubious about how much help the plan will give to small companies.

''I think we clearly need a different type of package,'' said Keating, whose Washington-based group also advocates for small business. ``We need incentives in the private sector for people to take risks and expand business. Unfortunately, there's very little of that in this package.''

Mr.Dunkelberg, an economist for the NFIB points out that ''the guy whose job is not at risk has been scared into not spending.'' He feels that when those consumers and businesses start spending, the economy may start to turn around. That would be the indirect benefit to small businesses of the incentives in the stimulus plan.

We prefer to take it one step further, and that is to train and mentor our clients in business management skills so that they are in no way dependent on the stimulus plan working or not. If it works, so much the better but if it doesn't do what is expected, they will still be doing much better than the general economy is doing.

In fact I recently interviewed one of our consultants who works with dozens of clients on a weekly basis. I wanted to know, first hand, how the economy was effecting his clients and how he was helping them through it. I'll share some of that interview with you today. I asked him, "How has the economic crisis affected your clients?" Here is his response:

"The economic crisis has increased the apparent degree of counter-effort that my clients must deal with as they move on with their businesses. The biggest counter-effort that my clients have had to deal with has been the subjective agreement by many people that these are dangerous and dire times. That, of course, is the message that's been promoted strongly by the government and media. What I've emphasized with my clients is to simply not go into agreement with the doom and gloom of that message and that has proven to be successful. There are, obviously, certain phenomena occurring in the economic environment. My clients have for the most part reacted by realizing they needed to sharpen their tools and get better, be more creative and more causative in their planning, management and execution. Those clients are bouncing back from the initial shock wave of the economic downturn, and are continuing to flourish.

Some clients have been hit harder than others. For example, a dentist in a small town was hit particularly hard when the biggest employer in town closed its doors. That of course affected a lot of people in the town and their insurance coverage; there were a lot of cancellations in the client's practice. That was a shock. But my client recovered with some wise re-structuring, better financial planning, and increased promotion.

Another client is in the construction/remodeling industry. That sector has had its downturn, and there were a lot less leads available for his area of expertise. But, with the help of his marketing staff he has recovered very well by promoting to former clients who can use his services, expanding into other niches, and, overall, expanding his promotional activities. Unlike many others in his field, he is very busy and productive.

Most of my clients felt the shock wave of economic changes, but because they had their management and organizational basics in, they have moved right over that 'bump,' and, with a sharper focus perhaps, have continued to expand their businesses and create their own futures."

That's the kind of results we like to achieve with all of our clients and that we'd
encourage all small business owners to attain. Don't go into agreement with the "doom and gloom" naysayers. Yes, there's tough times out there - anyone would be a fool to deny that. But one can either agree with it and become the adverse effect of it, or one can be smart and figure out ways through it to keep expanding. The latter is our approach.

We'd love your thoughts on this continuing discussion. Please visit our discussion forum which can be found at: Silkin Group Facebook Page.

Larry Silver

President, Silkin


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Not Much Help for Small Businesses

We've been continuing to go over the ramifications, both positive and negative on what the economic stimulus bill will or won't do for small businesses. The bill, now having been passed in both the House and Senate is being put into a form for President Obama to sign. Following up on my research from yesterday's blog, I came across another article more fully detailing what the bill proposes and how it will effect small businesses.

Joyce Rosenberg wrote a very good summary on her blog that went out on AP.

The main offering for small businesses in the bill is the allowance to take a much larger deduction upfront for what you spend on new equipment. That's nice, if you have the money to spend! What our legislators seem to be missing is that most businesses don't have the money to spend on new equipment and are unable to get loans for such equipment because the banks have tightened credit up so much that they aren't lending to people who really need loans. A classic "Catch 22".

So, what can you do? For starters, don't be dependent on a "bailout" by anyone, especially the government. Since none of us are Wall Street bankers, we won't be getting any cash handouts. Our future lies in our hands, and knowledge is power. Take the time to learn what you were not taught in professional school. Most of our clients are professionally trained - i.e. doctors, lawyers, builders, etc. Although they were trained extremely well in their profession, they were not trained at all in business management. Knowing how to properly manage your professional business is the key to not only surviving, but doing well in these recessionary times. Make sure you know how to hire and train staff, how to market your services, how to implement proper job descriptions and office policies in your office, how to implement quality control oversight and how to properly control your finances.
These abilities are what will ensure your survival much more than any government piece of legislation. Although we certainly hope that the economic stimulus bill produces the results nationwide that the President is suggesting, we feel that none of us should plan the survival of our businesses around that. We feel that the most effective guarantee of business survival is business management knowledge and
that's what we recommend.

Let us know your feedback at our discussion forum which can be found at Silkin Group Facebook Page.

Larry Silver
President, Silkin


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The Big Squeeze on Small Business

We've been discussing in our blogs and forums the economic stimulus package and how it will affect small businesses. Once again, I ran across an article lamenting how little help the Stimulus actually offers small business.

The Stimulus passed through the Senate. The Obama Administration and the Senate gave small business small attention in the area of economic support. Dean Zerbe commented in his blog on the Stimulus, “So at the end of the day less than a penny of each dollar of the stimulus will go to help small businesses, which creates 75% of the new jobs in this economy.”

Okay, so what does that mean for small business? Well, Mr. Zerbe thinks Washington has an “anti-small business mindset”; that there are some obvious ways the stimulus bill could have helped small business, including zeroing out capital gains taxes for new investments, which is something that President Obama proposed during his campaign. None of these ideas were included in the Bill.

But lets’ not say that small business is being completely ignored in Washington. The IRS is paying plenty of attention to small business in form of penalties and the canceling of incentives for research and development.

Rather than focusing on the economic crisis and what Washington isn’t doing for small business, we advise our clients to focus on knowledge; good old fashioned know-how with a “fasten your seat belt – we could be in for a rough ride” type of attitude. An aggressive no-nonsense approach to the day-to-day handling of our business affairs is the order of the day. It would be amazing and fantastic if small business could have more than a 1/100th of the dollars earmarked for the Stimulus package; but are we really going to sit around and wait for it? By all means, stay abreast of current events and let our voices be heard in Washington, but let’s not wait for those dollars to come our way. All of this data is not encouraging. The best way to not be the adverse effect of this economic scene is to be as knowledgeable and well trained as possible in business management skills. That's what we impart to our clients. At the same time, everyone needs to know what the government's Stimulus packages are providing and how they will or will not help them as small business owners. Continuing our recent blogs and discussion forums, we would love to have your feedback and thoughts on all of this.

Our discussion forum can be found at the Silkin Group Facebook Page.


Larry Silver
President, Silkin




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Small Business Owners: Are you surviving the Economic Crisis?

Alright folks! We’ve been hearing the hubbub in the news that help is on its way for the recovery from the economic crisis in the form of the stimulus. The question is – will it be enough for small business? As I'm sure everyone reading this knows, the contents of the new economic stimulus bill is being argued back and forth in both the House of Representatives and the Senate. In fact, a joint committee is now working on a final bill that President Obama is pushing on a daily, sometimes hourly basis to get done.

We all know that this bill and the past "TARP" bill have enormous amounts of money to both help and bailout some of our major financial institutions on Wall Street and elsewhere. But what about small businesses? I was looking for information on this topic and ran across Keith Girard’s latest blog, “Small Business Stimulus Bill: Is "Half a Loaf" Enough?”

According to the blog, “Already, it seems, some groups are sowing the seeds of disappointment.”

If you are in small business, then you know that small businesses and startups create a huge percentage of new jobs. Mr. Girard’s position is that “in order to create new jobs, small businesses need access to capital”. Currently, access to capital in the form of small business loans are down. He says, “The SBA says it is racking up mounting losses from loans made through its lending programs, as small firms struggle to make payments or go out of business. Loan losses more than doubled last year, topping out at $1.3 billion compared with $504 million in 2007 and $276 million in 2005…The net result is a vicious cycle. As banks tighten credit, small businesses become strapped for capital and cut back or go under, forcing bad small business loans to pile up on balance sheets, which the banks use to invoke even tighter standards.”

The lack of access to capital is creating a situation for those managing small businesses wherein not only can they not make payments on funds already borrowed, they cannot borrow more; and they are downsizing adding to the highest unemployment rate some have ever seen.

The current actions taken by President Obama and Congress may be just “half a loaf”. Is it better than nothing? What can we, as small business owners and managers do to counteract the effects of the economy?

Here at Silkin Management Group, our clients are mostly sole practice owners and very much a part of the small business community. We have rallied our clients to out-create the economic downturn and its effects by consulting them on savvy financial strategy and sound management principles to steer them through this storm. Our viewpoint is that it's up to each of us to respond to the challenges present in today's economic climate armed with knowledge and carefully planned actions that are conducive to long-term survival. Now is the time to roll up our sleeves and get to it! Congress can pass bills intended to give the economy a shot in the arm, but aren't we cause over our own future? Let's not wait for others to act on our behalf.

It’s a tough market out there and getting tougher. What actions are you taking to survive in these times? This is the topic of our Discussion Forum located at Silkin Management Group Facebook Page. We look forward to hearing from you.


Larry Silver
President
Silkin Management Group


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Lessons from the Family Business

The use of family as employees in your practice may portend more stability in this economy per this New York Times article.

NY Times, Resilient in Hard Times: The Family Business

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Massive job losses: What's left to cut?

There's not much more room for job cuts by small businesses, according to this article in CNN Money.

Money CNN: Massive job losses: What's left to cut?


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America's Small Businesses Struggling

"While the financial difficulties facing large companies and the related job cuts make the headlines, America's small businesses are also struggling with the current economic environment," a recent Wells Fargo/Gallup Small Business Index report noted.


http://www.hispanicbusiness.com/entrepreneur/2009/126weak_economy_strangling_small_businesses.htm


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Help for Small Businesses

President Obama's team is looking at helping small businesses, which would include health care practices, through small business tax breaks. This could be great news for small businesses during these tough economic times.

Baltimore Sun - Don't Derail Little Engine

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Small business sentiment falls in December, profits tumble

Sentiment for small business success is the 2nd worst in 35 years.
Owners of small businesses, which would include health care private
practices, are not optimistic about the economy at this point in time.
This can certainly effect attracting new patients and will require good
business acumen by all private practice owners.

http://www.reuters.com/article/ousiv/idUSTRE50C31Q20090113

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