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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What can the Economic Stimulus Package do for your Small Business?

Well, as you all saw in our last blog, we are really looking at how the stimulus package that President Obama is pushing, and the Senate and House of Representatives are arguing back and forth about, can help the small business owner. All of our clients are small business owners and are acutely effected by the economic recession and need help just as much as the fat cats on Wall Street. (By the way, let's hear it for the President for limiting the income of these executives who are taking the tax payer's money to bail out their incompetence while still lavishing on themselves high salaries, jet planes, multi-million dollar office make-overs, etc.)

In our continuing research in this area, we ran across a very informative article published Saturday in the New York Times. It discusses past tax breaks, as well as potential future tax breaks that are part of the stimulus plan being debated. You can take a look at this article at the NY Times website: Is More Relief Ahead for Small Business? .

What we really liked were two key things:

a) A doubling to $250,000 that a business could immediately write off for purchases of equipment and other business items - rather than having to depreciate it over time. This was part of the 2008 stimulus package.


b) A provision in the new bill being proposed that would permit a business to write off losses from last year against profits from earlier years (up to 5 years back). One could potentially get a refund of past taxes paid.

According to the article: "Ordinarily when a business suffers a net operating loss, it can carry back the loss two years," Ms. Weltman explained. Lawmakers "want to extend that to five years, so if you have a very big loss, you're going to be able to get a refund now. They're trying to let businesses get some money back so they can use it to survive."

We are very pleased to see that some provisions may help the business activities of our clients. As stated in our last blog, we work closely with our clients to put them in pro-active situations over their businesses, rather than being the "effect" of the economic downturn. By learning basic management principals, including effective marketing, dealing properly with patients and clients so they are happy with the service delivered and refer more patients/clients, and implementing effective financial controls in the office, our clients can stay on top of their production and net profit rather than sliding down the slippery slope that many other offices are experiencing.

Let us know what you think of the ideas presented in this article and any other thoughts you have on the economic stimulus package and what it can do for small businesses. This is the topic of our Discussion Forum located at: 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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It's all in the Details

Do you have job descriptions and office policies in your office? If not, the attached article from USA Today shows you why not paying attention to the details of jobs can cause havoc in an office.
Supposedly Small Details Can Matter


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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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