March 25, 2023

You’re the Boss Blog: This Week in Small Business: The Silly Money Ratio


A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

Small-Business Must-Reads

Matthew Yglesias explains how not-in-my-backyard stupidity is blocking an opportunity for small-business growth. A dongle joke at a tech conference spirals way out of control. Bryan A. Garner provides a comprehensive “bizspeak” blacklist that bans phrases like “mission critical” and “ducks in a row.” A company that manufactures a handheld vaporizer is just one in a wave of start-ups taking advantage of relaxed marijuana laws. Opportunities in the wedding, adoption and divorce industries are only a few reasons Bill Murphy Jr. believes smart entrepreneurs should care about gay marriage.

The Economy: Reconciling Budgets

The president signs a stopgap funding bill, and the Senate and House must now reconcile their budgets. The stock market closes at a record high, but the silly money ratio hits its highest level since 2007. Economic growth is revised upward, home prices rise the most since mid-2006 and orders for durable goods increase. Weekly mortgage applications go up, but consumer confidence falls.

People: Office Jokes

A group of former employees from the outsourcing firm oDesk raise $4.5 million to finance a rival start-up. Observers offer 5 musts for hiring great employees and 10 perks most American workers don’t get. The federal government spends more money each year on disabled former workers than it spends on food stamps and welfare combined. A Powerball winner and bodega owner could have a rocky road ahead. Christy Schutz says “office jokes” are one of the things she misses about working in an office. This infographic lists reasons not to get an M.B.A. And will the “Office Brothers” help save this small business?

Retail: Just Looking?

A store combats “showrooming” with a $5 just-looking fee. Lululemon is making its customers “bend over to verify sheerness” before issuing a refund. Wal-Mart plans to test online delivery lockers in its stores. Bob Phibbs explains how using the personality styles of your customers will help you make more retail sales. Robert Moskowitz offers a few good tips for keeping your business safe from repeat robberies. Restaurant sales rise as tax refunds catch up, but a study finds that deals and discounts are no longer driving restaurant traffic. A few top eateries are warming to British-style tea. A start-up plans to do away with the payment process in restaurants so diners can eat and leave.

On the Road: Power Up

American Airlines decides to let customers without bags board first, and airline passengers may soon be able to use electronics during takeoff and landing.

Management: Brain Training

Business and labor groups reach agreement on immigration. A study indicates that American companies and entrepreneurs enjoy one of the most business-friendly climates in the world, but small-business owners are still frustrated by lawmakers in Washington. Business leaders say small businesses need advisory boards. Alisha Webb suggests five things entrepreneurs can learn from Coca-Cola. Studies indicate that “brain training” can make you a smarter owner. Kevin D. Johnson explains why ignorance can be bliss in business. Glenn Muske says you should stay visible by using marketing, media and mingling. A study suggests women make better decisions than men. Three thoughts promise to make you happier, and five people are put forth as small-business committee staff members who every small-business owner should know.

Health Care: A Bonanza for Start-Ups

A survey reveals that 83 percent of large and mid-size employers offer workers some incentive to participate in health-related programs, while another report finds that most companies plan to impose consequences on employees who don’t try to improve their health. Employers who seek to reduce their exposure under the Affordable Care Act’s “play or pay” mandate in 2014 by reducing their employees’ hours may risk penalties. Hamish McKenzie says Obamacare is a bonanza for start-ups. The health care law may have created 111 million hours of paperwork, but Magic Johnson says it’s working. Barbara Weltman sums up what the law means for your business.

Cash Flow: Solar Power

Outsourcing tasks is among the tips suggested by Kasey Navita Phifer for keeping costs low when starting a small business. Communication is crucial in order to set up and nurture a partnership. A team of solar experts explains why your business should consider solar power. Steve King reports on the rise of small-business crowdfunding. Dave Bui shares 10 winning principles for wholesale imports.

Marketing: Grouponicon

Valeria Maltoni says customer data is your biggest advantage. Nora Richardson has five tips for better brand recognition. If you want to attract more customers through events, here are 4 reasons virtual conferences rule, a few ideas for creating more effective webinars and 10 free Web conferencing tools. Groupon holds its first Grouponicon for small businesses in Dallas.

Social Media: Pinterest for Guys

Tumblr now hosts more than 100 million blogs. Flipboard opens up magazine creation to the masses. A webinar will explain how to jump-start your business using social media. Lauren Dugan says there are five elements to a great Twitter strategy. Andrea Vahl explains how to set up a Facebook page for your business. Consider these four social media sites you may not be using but should. Jeff Korhan explains how to be the best-connected business. Researchers say there is a link between customer use of social media and higher revenue. And thank goodness: there’s now a Pinterest for guys. This is how to speed up your Web site, increase your online visibility and make Google AdWords an effective and profitable marketing method for your business. And here’s a beginner’s guide to search engine optimization. These are the top three affiliate marketing niches for the home entrepreneur. Justin Fishaw lists three ways to improve your content management strategy.

Around the Country: Hurricane Mistakes

A zombie television show turns a Georgia town into a tourist hub. Manufacturing in Texas and Chicago picks up while activity in Richmond, Va., slows. Seattle home prices post their biggest gains in nearly six years. Business owners in the New York area discuss the mistakes they made leading up to Hurricane Sandy. The head of the Small Business Administration tries out mattresses in Norfolk, Va. The S.B.A. joins state and local officials to recognize Chicagoland’s small-business exporters. A competition in Minnesota that supports and accelerates the development of business ideas from across the state opens for entries. Philadelphia hosts a conference on emerging technologies this week while a nearby baseball stadium offers urinal gaming. An Ohio prosecutor drops all charges against Punxsutawney Phil. The new season of Shark Tank is looking for entrepreneurs in five cities, and a search has begun for American college students who possess the entrepreneurial ambition to start the next global brand. And if you’re a recent college graduate, your best opportunities may be in Austin, Tex.; San Jose, Calif., and Washington.

Around the World: $30 Million for a London Schoolboy

Cyprus (whose economy is smaller than Akron’s) gets a bailout. Students from all over Russia visit a 16-year-old’s site to learn about math, physics, literature, scientific breakthroughs and curious facts. Anna Hein takes an in-depth look at Start-Up Brasil. Palestinians are reaching for a tech start-up future. China creates a tax-free zone for art. The Bank of England reports that British banks have a capital shortfall of $38 billion, but Blockbuster Video still is rescued. A London schoolboy sells his app to Yahoo for $30 million.

Taxes: Everyone’s Waiting

Paul Shread advises small businesses to avoid several tax mistakes. Steven Sloan says that everyone is waiting for corporate tax reform, and Congress is considering making a very popular small-business tax deduction permanent. The Internal Revenue Service apologizes for its $60,000 Star Trek parody. Small businesses in Tennessee may be receiving a tax holiday.

Technology: “Ungoogleable”

Apple acquires an indoor location company. Google is trying to prevent Swedish language officials from adding “ungoogleable” to their official word list. Big data is going to blow your mind in five ways; 15 BlackBerry apps offer to increase productivity and security. Erik Wolf learned three important lessons from introducing his software product. Francesca Gino warns that the next time you are on your computer to chat or text, you should consider raising the blinds and asking the person on the other end to do the same. New technology may soon replace credit cards with fingerprints. The United States is seeing a surge in mobile patents. Here are a few ideas for making your blog mobile-friendly, and Hillel Fuld explains how to use mobile-friendly content to fuel your blog’s success.

Tweet of the Week

‪@ReformedBroker – The last time the Dow advanced 9 consecutive days it was 1996 and we were listening to the Spice Girls. Oh sure, it was just me.

The Week’s Best Quotes

Brian S. Cohen explains in his just-published book what angel investors are looking for: “Entrepreneurs who most impress angel investors are the ones who deeply know their customers. They have done research into the demographics of their typical customers: age, gender, geography, lifestyle, income, aspiration, brand preferences, shopping habits. They know what their behavior and thinking is because theyʼve spent time with them. They even learn which words and phrases resonate most with customers. This research doesn’t come cheap or easy, but it’s available with a little work.”

Maneesh Sethi explains how to make it impossible to fail: “The secret is called precommitment. Precommitment is the process of making a promise, when you are in your sane state, that will prevent your tempted insane-emotional-id-self from doing something bad. Precommitment is the process of creating an environment that forces you to succeed. You might not be able to find a month to hike in the wilderness, but there are still ways to use precommitment in your normal life.”

This Week’s Question: Are your ducks in a row?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

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DealBook: Earnings at Wells Fargo Jump 22%

A branch of Wells Fargo in New York.Shannon Stapleton/ReutersA branch of Wells Fargo in New York.

2:15 p.m. | Updated

At the height of the financial crisis, the mortgage business was a millstone for the banking industry. Today, it is a profit center.

Wells Fargo on Friday reported $4.9 billion of profit in the third quarter, a 22 percent jump largely led by a booming mortgage business.

The San Francisco-based bank continues to churn out record profits, with 11 straight quarters of net income gains. The results of 88 cents a share narrowly beat the estimates of analysts polled by Thomson Reuters, who forecast earnings of 87 cents a share.

The bank increased revenue as well, sidestepping a common sore spot that has plagued most all of the nation’s biggest banks. Wells Fargo recorded $21.2 billion in revenue, which surpassed the $19.6 billion figure from a year earlier but was slightly below expectations.

The bank’s lending division drove the growth, as consumers refinanced their mortgages amid record low interest rates. Wells Fargo, the nation’s largest mortgage lender, snared $188 billion in home mortgage applications, an 11 percent jump from the third quarter of 2011.

But the bank’s chief financial officer, Tim Sloan, underscored that “it’s more than just the mortgage business.”

The strong results, he noted, were spread across the bank. The wealth management unit improved. So did the sales and trading business.

“We just have the great benefit of this diversified model,” Mr. Sloan said in an interview.

But investors weren’t fully impressed. By mid-afternoon, the bank’s shares were down more than 3 percent, reflecting concerns about net interest margin, an important measure of the bank’s investment moves. The metric declined in part because the bank’s own investments suffered from the low-interest rate environment.

Wells Fargo, along with JPMorgan Chase, kicked off bank earnings season on Friday. The nation’s other big banks, including Goldman Sachs and Bank of America, will report their results next week.

The Wells Fargo story line – that a deep lending effort breeds success – is rooted in broad federal stimulus efforts that have propped up the mortgage industry. A Treasury Department initiative is spurring refinancing activity. And the Federal Reserve has introduced a long-term plan to buy large batches of mortgage-backed bonds, which should help keep rates low.

Wells Fargo, more than five years after the mortgage crisis, has seized the opportunity. The bank now creates roughly a third of all mortgages in the country. Total outstanding loans jumped slightly in the third quarter to $783 billion while the bank’s home mortgage originations soared 56 percent to $139 billion.

The demand for credit came largely from refinancing, which accounted for 72 percent of all home loan applications. The Treasury program produced 14 percent of the mortgage volume.

Like other big banks, Wells Fargo makes home loans before turning around to sell most of them to investors after attaching a government guarantee. Those gains totaled $2.61 billion in the third quarter, up 225 percent from $803 million in the third quarter of last year.

The refinancing boom is fueling profits. Wells Fargo’s profit in the community banking division, which includes Wells Fargo’s retail branches and mortgage business, climbed 18 percent to $2.7 billion.

Despite the gains, the mortgage crisis continues to haunt Wells Fargo. The bank this summer agreed to pay $175 million to settle Justice Department accusations that it discriminated against certain minority homeowners from 2004 to 2009. Wells Fargo, which denied the charges, was also sued this week by federal prosecutors in New York, who said the bank defrauded the government and lied about the quality of the mortgages it handled under a federal housing program.

Still, the legal troubles will barely nick the bank’s bottom line.

Like JPMorgan, Wells is experiencing growth beyond mortgages. Wholesale banking, which includes the sales and trading business along with the corporate lending division, increased its profit by 11 percent to $1.9 billion. While the unit operates in the shadow of the Wall Street investment banks, Wells Fargo has gradually extended its reach in that area.

“There are a lot of underlying positives that will continue to drive the earnings of this company,” said Ed Najarian, a senior bank analyst at ISI, a New York research firm.

Peter Eavis contributed reporting.

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You’re the Boss: This Week in Small Business: Lessons in Negotiating


A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

The Deficit: Lessons in Negotiating

A debt ceiling deal seems close, but a report says we could avoid default a few days longer. Budget cuts may close 3,652 post offices but Mark Hendricks asks whether it would matter to your business if the postman left town. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it’s really Americans who hold most of America’s debt — and the United States issues 59 percent of the world’s AAA sovereign debt! Research ties the size of our government to the size of our people. Once the debt crisis is over, we can look forward to another government shutdown fight. This pastor appreciates the finer things in life. Everyone asks why you can’t run the government like a business; Fred Paul wonders what it would be like if you had to run your business like the government. Mitchell York says the debt-ceiling talks reveal three important lessons in negotiating for entrepreneurs.

The Data: Are Consumers Crazy?

Gross domestic product numbers show a sputtering economy. New home sales fall more than expected. Home prices are bouncing along the bottom. Mortgage applications are at their lowest since February. A real estate investor explains that we are 40,000 properties away from recovery. Orders for durable goods (pdf) decline. The price of electric cars goes up. Gas prices go up. But for some products, prices have been falling. Truck tonnage jumped in June. Consumer confidence (pdf) rose (what are consumers thinking?!!!). Manufacturing production in Texas improved. And this chart from Russell Investments shows that most economic indicators are still within the norm. A recent review of job vacancy postings found that employers would prefer to hire only people who are currently employed or recently laid off.

The Economy: The Current Malaise

Respondents to the Kauffman Foundation’s third-quarter survey expect weak employment growth and higher annual deficits (pdf) ahead. David Leonhardt explains the current malaise. Rasmussen finds that 47 percent of Americans are eating out less often than six months ago. Maybe that’s because the price of dinner foods are up almost 5 percent. This I know: no one’s going to buy the world’s most expensive hot dog. Amazon’s sales soar. Expedia breaks a billion. Research In Motion is having problems.

Red Tape Update: A Whopper of an Idea
Small businesses want the debt deal to address corporate tax dodging. The Senate investigates the Small Business Administration. Each day, we work almost two hours to pay our taxes. A poll shows that small-business owners believe the new health care law will cause higher taxes. The Obama administration’s push to mend its relationship with business has gone cold. Mark Bittman says we should tax junk food. “Simply put: taxes would reduce consumption of unhealthful foods and generate billions of dollars annually.”

Marketing: No One Cares About My Products

David Meerman Scott says that the most difficult challenge companies must overcome in creating a viral hit is coming to the realization that the content usually can’t be about the product or service itself: “I define it as, No one cares about your products.” Google introduces AdWords Express for local businesses. Here are 10 reasons small-business owners should avoid making TV commercials.

Management: Is Our Cash Safe?

Avi Gilburt asks if our cash in the bank is safe? Facebook for Business has its debut and the company touts its small-business marketing capabilities. Some smart doctors are making house calls using video. Seth Godin says the unhappy theory of business ethics is this: “You have a fiduciary responsibility to maximize profit. Period. To do anything other than that is to cheat your investors.” A $100,000 salt and pepper shaker can teach us a few business lessons. An eBay seller starts a Casey Anthony bidding war.

Books: The One Book You Need to Own

For improving your business, Mark Shead likes “Anything You Want” by Derek Sivers. Mark Suster recommends the one book every entrepreneur and venture capitalist should own. I’m not sure how these products made it onto shelves.

Success Strategies 1: This Guy’s Having a Blast on Google+

Some small-business owners are capitalizing on the weak commercial real estate market. Chikodi Chima says that education is the next hot market. A study says that shopping on tablets is proving popular. Guy Kawasaki is having a blast on Google+. Wall Street investment bankers give their views on Netflix’s prospects. A new company wants to help business owners choose the best deal site for them. A 72-year-old retired Marine runs down and kills an armed man who robbed his business. LinkedIn introduces a universal résumé apply button. Here are the 10 best job titles ever.

Success Strategies 2: For Women

Justin Rivero explains how money-savvy women can save the economy: “From Wall Street to the West Bank, women are wired to make a significant difference.” Small businesses owned by women are faring better than small businesses owned by men, according to a new report. These 50 women are shaping Africa. Some women may plot a different strategy for success.

Around the States: Spanish in the West, Chinese in the East

Texas added the most jobs of any state this year. Michigan businesses are more upbeat about the economy. The Los Angeles Times’s Spanish-language newspaper hosts free financial seminars for small-business owners. The State University of New York is set to introduce a program teaching local business owners Chinese language and culture. Restaurants are the top employers in Manhattan. Government keeps growing in 35 states.

Around the World: A Couple of Brits Explore Wal-Mart

Despite American politicians’ pro-small-business rhetoric, the United States lags far behind most developed countries in the share of citizens employed by small businesses. A couple of Brits explore Wal-Mart. For the first time ever, developing countries as a group have been growing faster than industrial countries. A South African entrepreneur demonstrates how business and faith can work together. Check your TV listings for “The Office”… Afghanistan-style. India moves closer to allowing foreign firms into retail.

Finance: Big Retailers Are Lending Small Businesses Money

Steve King and Carolyn Ockels wonder if Office Depot, Google and Wal-Mart are disrupting small-business lending: “The customers targeted by Wal-Mart, Office Depot, Google and others are very small businesses, most with less than $1 million in revenue — a segment seen as unattractive by many financial institutions. But by ignoring this segment, financial institutions are providing an entry point for new competitors who may leverage this beachhead to become significant players in the financial services industry.” The Small Business Administration unveils a new venture capital fund. If you are a bank and still haven’t repaid government bailout money, Uncle Sam has a deal for you.

Technology: Billions of Smartphones

Mashable provides an infographic of Web and business tools that start-ups use most. According to a recent Hewlett-Packard survey 93 percent of companies have placed cost concerns over the best information technology solutions, leading 89 percent of those companies to experience I.T.-related problems. T.J. McCue lists eight top online backup services for small businesses. Annual smartphone sales could reach a billion by 2016. Inc. magazine suggests the best software for the front office. Jason Hiner says the future of I.T. will be reduced to three kinds of jobs. Rob Enderle suggests the best tablet for business. Google releases a cluster of improvements to its Docs and Sites and buys a facial recognition start-up. Tech Republic offers a free download of Google keyboard shortcuts. But Roger McNamee says, “Google is done.” Bob Cringely predicts “the fading of the entire social media category.”

The Week Ahead

How productive were we in July? We’ll get an answer from the Institute for Supply Management’s manufacturing and non-manufacturing indexes, as well as from factory orders. We’ll also see how much consumers are earning and spending, particularly on cars. On Friday comes the big number: July’s unemployment rate.

This Week’s Bests

Marketing Tips for Start-Ups Brad McCarty offers 10 marketing tips for every start-up, including “Avoid Cliches Like The Plague: pivot, ground-breaking, magical, synergy … these are words that make me delete a press release on sight and you would be best served by avoiding them entirely. Even if you have pivoted into a ground-breaking photo-sharing application that uses synergistic analytics to seem magical, you should find another way to say it.”

Thoughts on Technology Nicholas Carr struggles with the benefits of technology: “You could argue that technology has improved life on earth because a lower percentage of people exist in a state of physical suffering today than used to. But one of the most important effects of technology has been to allow for an enormous increase in human population. And if you look at raw numbers, you might well find that more individuals exist in a state of physical suffering than did before.”

Small-Business Lesson From Amy Winehouse Tricia Fox says that Amy Winehouse’s untimely death is a wake-up call for small-business owners. “But whether you are a pop star, a plumber or a business consultant, the same rules still apply: you are the product. And if that’s the case, you are going to need to take really good care of yourself if you want your business to succeed.”

This Week’s Question Are you taking care of yourself? I’ll be taking care of myself on vacation next week. See you again on Aug. 15!

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

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