May 26, 2018

You’re the Boss Blog: This Week in Small Business: Cronuts!


A weekly roundup of small-business developments.

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


Jim Tankersley wonders if the era of uncertainty is over and whether a growth boom will begin. Drex Davis asserts that the Marketplace Fairness Act will bankrupt small businesses. And here is everything you need to know about cronuts.

The Economy: Bigger and More Profitable

Construction spending (pdf) increased in April, the service sector picked up slightly and the trade deficit is $6.3 billion (pdf) smaller than a year ago. Auto sales roared back in May, and Ford truck sales hit their highest levels since 2007. The financial sector is bigger and more profitable than ever. But factory orders rose less than expected, manufacturing declined and Vahan Janjigian believes that manufacturing is on life support. A research paper asks if the information technology revolution is over. A  poll finds that more than half of America thinks we’re still in a recession and only 36 percent are satisfied or very satisfied with the economy.

Jobs: Solid

The jobs report was “solid” but unemployment ticked up and wages are not rising. Private employers added 135,000 jobs in May, and small businesses picked up the hiring pace. Gallup says job creation is the best it has been in five years.

Ideas: Drone Deliveries

Here are 2013’s 100 most creative business people. Amazon starts delivering groceries, and Matt Yglesias explains why. Burger King gets into the delivery game and, not to be outdone, Domino’s uses a drone to deliver pizza. The Dollar Shave Club introduces a very special product for the guy who has everything — and a jilted girlfriend leaves a brilliant note for her guy.

People: Taco Bell Responds

Smoking employees cost employers $6,000 a year, a study finds. A Taco Bell employee appears to lick a bunch of shells, and here’s how the restaurant chain responded. John Patrick Pullen says transparency is essential to a trusting staff. A Cornell professor discusses whether tipping should be banned. These internship stories paint a tough picture for young professionals. Here are Jim’s greatest office pranks. One in 10 young job hunters is rejected because of social media. A peer-to-peer bonus system is made easy for employers. A job site is recruiting only beautiful candidates. A mind-body therapist explains her methods for reducing stress for Google’s employees. Apple employees based in Cupertino, Calif., earned $2 billion in 2012 and the company is poised for another hiring spree.

Cash Flow: Excess Cash

An online resource for entrepreneurs and small businesses releases a guide to help owners get an overview of the different types of Small Business Administration loans. Ked Harley suggests four steps to take before applying for a small-business loan, and Pam Baker summarizes all of the ways you can be paid. Michael Shedlock says the Federal Reserve’s policies and President Obama’s programs are exacerbating the credit squeeze for small businesses. Ian Kerrigan wants owners to think about diversifying their investments, and here are a few places to consider investing excess cash.

Red Tape: Insurance Premiums

The president wants to prosecute patent trolls. The Internal Revenue Service continues to take heat. Here are six ways that the new health care law changes insurance premiums, and a dental start-up sees profit in the law’s gaps.

Women: A New Index

The United States tops Dell’s new index on female entrepreneurship, but unfortunately the opportunities are not as good in India. This is what you should know about women in agriculture. Richard White suggests 10 tips for female entrepreneurs to stay on track.

Management: Three Companies in Five Weeks

A book offers help for easing any manager’s people problems. Jay H. Heyman explains how much a $10 bottle of wine really costs. A Cigna study finds America’s sole proprietors are independent and confident — and often uninsured. And if a tornado destroys your business, here’s what to do. Salvatore Babones says that when it comes to business profits, “it’s the ‘plutonomy’ versus the ‘realonomy’ — and the plutonomy is winning.” R. Kay Green shares six lessons in entrepreneurship. Kevin Owyang thinks you might be a social entrepreneur without knowing it. One entrepreneur sells three companies in five weeks.

Marketing: Getting Leads

John Jantsch suggests giving stuff away to generate referrals. Harry and Sally Vaishnav explain why better packaging improves sales. Ciara Pressler evaluates whether you should hire a publicist or do it yourself. Sara Davidson explores where marketers get leads.

Around the Country: Best Cities

Rieva Lesonsky explains why you should get ready for National Small Business Week. Constant Contact will celebrate the week with Get Down to Business events across the country. A report says that Denver, Minneapolis and Seattle are the cities most friendly to employees of small companies. Two Philadelphia women are selling fashion from a truck. Researchers at the Massachusetts Institute of Technology explain why doubling a city’s population increases its economic productivity by 130 percent. Other countries are seeking entrepreneurs from Silicon Valley. A New York factory of the future fabricates customer-ordered designs with top-of-the-line, industrial 3-D printing machines.

Around the World: Learning From Dabbawalas

A Spanish city is using a network of sensors to improve services and save money. David Rohde explains how privately financed economic initiatives are quietly spreading peace in the Middle East. A recalculation of gross domestic product may help app designers in Nigeria. The International Monetary Fund halves Germany’s growth forecast, and Australia’s economy expanded at the slowest annual pace in almost two years. Unemployment in France rose to 10.8 percent. Brandon Smith reports that Canada could be an entrepreneur’s utopia, and this is what start-ups in India can learn from dabbawalas. A teenage “wakeboarder” takes on a flood.

Start-Up: Big Data

Bill Gates is helping lead a $35 million investment in a networking Web site for scientists. Intel creates a $100 million fund for more “human-like” devices, and Bloomberg L.P. introduces a fund to invest in start-ups. A new company aims to beat Verizon and ATT with free mobile phone service. A 17-year-old entrepreneur learns about starting a business from Jack Dorsey. Here is how to avoid bad advice that can kill a start-up. Dealstruck takes on banks with a “Lending Club for small businesses.” Here are 14 big data start-ups you’re going to hear more about, and Tim Devaney and Tom Stein explain what big data can do for a small business.

Social Media: A LinkedIn Strategy

Here is how to avoid a virus on Facebook that can drain your bank account. Jill Konrath suggests a LinkedIn strategy that can pay off, and this is how Motorola Solutions uses Facebook to generate more engagement. SocialBro raises $1.8 million to help businesses manage, analyze and monetize their Twitter communities, and here are six factors that make a picture popular on Pinterest. The grumpy cat gets a movie deal.

Online: The Best Unsubscribe Message

Andy Crestodina compares your blog to a beer: “an enticing head is just the beginning.” Hubspot creates the best unsubscribe message ever. A case study shows how two artists used online content to build their face-to-face business. Joy Gendusa shares four aspects of pay-per-click marketing that can help you solve the puzzle. Jayson DeMers explains how to build an online community around your business. Daniel Oyston has advice for improving content marketing, and here’s how to not break the law when using testimonials, endorsements and online reviews.

Mobile: A Competitive Edge

Google is closing the mobile app gap, and its Chrome browser starts to take off even as Android dips among mobile operating systems. The Onion reports that a new, improved Google Maps lets users launch missiles at any location on the globe. Foursquare is testing small-business promotions. This is how mobile marketing is changing the way companies appeal to customers. Francesca Louise Fenzi explains why Starbucks’ mobile payment success is good news. Here are seven oddball mobile apps.

Technology: Windows 8

The number of Amazon Web Services servers has exploded. Om Malik shares his thoughts on Salesforce’s decision to buy Exact Target for $2.5 billion. Windows 8 is failing to beat Windows 7 (and XP and even Vista). Insightly integrates its customer relationship management software with Microsoft Office 365 and Outlook 2013. Here are 10 excellent video-editing apps, and this is how to protect your small business from cybercriminals. A teenage inventor tests a homemade submarine. Here are nine great hotels for technology users.

Tweet of the Week:

@saundiela – If a company just can’t seem to make it, you need to look at the top! A good manager is a good checker a good owner checks his managers.

The Week’s Best Quotes:

André Mouton warns that the first quarter was business as usual for cloud companies — and that’s a bad thing : “Cloud companies are growing, and they’re losing money. If that’s all you know about them, it’s enough. Those two facts define the industry more than any hyperbole coming out of Silicon Valley. Much as their predecessors did 15 years ago, today’s tech companies are selling an exciting new technology; and like the dot-coms, they’ve embraced a business model that will self-destruct at the first sign of trouble.”

Derek Thompson explains why work-life balance is so bad: “Although the workweek has fallen, the changing composition of families has put tremendous time stresses on more mothers. Over all, research shows that lower-income men have never had more downtime, while working single mothers have never been more common. The first part is a problem. The second is a crisis.”

This Week’s Question: Where do you get your leads?

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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Bucks Blog: Employers That Forbid You From Telling Others What You Make

I was surprised earlier this month when I tuned in to a Marketplace report that noted that there are employers that contractually forbid employees from telling anyone how much money they make.

It’s a free country, and private employers can do what they wish in this respect, though plenty of companies (and many public employers) make a point of sharing salary data so there is no question about who is making the most (and, hopefully, why).

I doubt that a clause in an employment agreement mandating salary silence would be a deal killer for anyone in this economic environment. But doesn’t this sort of mandated vow of silence raise suspicions in the eyes of people who work for these employers? What are they hoping to hide from their employees, and why?

If you work (or have worked) for such an employer, please name it below and tell us a bit about why you think the rule came to be and whether it was a good or bad thing.

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Private Sector Job Growth Accelerates, Report Shows

Better-than-expected housing and regional factory data released on Wednesday reinforced the view that the economy should avoid recession, though growth is unlikely to be brisk.

“All of this confirms the economy, after slowing in the late spring and early summer, is back firmly at its 2 (percent) to 2.5 percent growth rate,” said Steve Blitz, senior economist at ITG Investment Research in New York.

Even so, Blitz added, “Firstly, I need to temper the enthusiasm that these numbers indicate that economic growth is accelerating, and secondly, it’s still a very dangerous world out there.”

Central banks around the world addressed some of that danger on Wednesday as they acted jointly to provide cheaper dollar liquidity to European banks facing a credit crunch.

The credit crisis in the euro zone is one of the biggest dangers to the U.S. economic recovery that is still highly sensitive to shocks.

Janet Yellen, the vice chair of the U.S. Federal Reserve, said earlier in the week the central bank still has room to ease monetary policy further. The Fed has bought more than $2 trillion in long-term securities in efforts to boost the economy.


The ADP National Employment Report on Wednesday showed private employers added 206,000 jobs this month, surpassing economists’ expectations for a gain of 130,000 jobs. It was the biggest gain since December 2010.

The data set an optimistic tone ahead of Friday’s more comprehensive government report on the labor market and some economists raised their forecasts.

“So far in the current U.S. economic expansion, the only period of relatively healthy job creation lasted for a few months from late last year to this spring,” Ryan Wang, U.S. economist at HSBC Securities USA, wrote in a note.

“Today’s job gain of 206,000 in November raises the possibility that we may be on the cusp of a similar period of job creation.”

The weak labor market remains one of the biggest hurdles for the economic recovery and is a major concern for U.S. President Barack Obama ahead of next year’s elections.

Friday’s non-farm payrolls report, which includes both public- and private-sector employment, is expected to show a rise in overall non-farm payrolls of 122,000 this month.

While economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, ADP’s track record as a predictor has varied.

Deutsche Bank raised its forecast for Friday to 150,000 from 125,000, while Capital Economics increased its expectations to 140,000 from 100,000.

One economist, however, cautioned that the ADP number has a tendency to overshoot in November and warned against building too much optimism before the Friday report.

“A seasonal adjustment quirk typically — six of the past seven years — generates November ADP readings well above the underlying trend,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note.

“In 2010 and 2011, ADP was an average of 64,000 better than the prior three-month average, so applying the same margin today suggests the ‘real’ November ADP number was 140,000.”

Shepherdson said he was maintaining his forecast for a gain of 125,000 jobs.

Macroeconomic Advisers’ Joel Prakken said he didn’t see any evidence of seasonal effects in the day’s data.

“I don’t see any technical or seasonal reason to question the momentum in today’s numbers,” Prakken told journalists in a conference call. Macroeconomic Advisers jointly developed the report with ADP.

The data helped lift U.S. stocks, but investors were more focused on the moves from the central banks. The three major U.S. stock indexes jumped more than 3 percent, with the blue-chip Dow industrials up more than 400 points.


Meanwhile, a separate report showed the number of planned layoffs at U.S. companies edged down marginally in November, though job cuts for the year so far have surpassed 2010’s total.

On the housing front, the National Association of Realtors Pending Home Sales Index jumped 10.4 percent to 93.3 from 84.5 the month before. It was the biggest monthly gain since November 2010.

But that report was tempered as separate data showed applications for U.S. home mortgages slumped for the third week in a row last week, hit by a drop in demand for refinancing.

Business activity in the U.S. Midwest grew faster than expected in November, adding to expectations that national manufacturing data should show an uptick in growth when it is released on Thursday.

Separate data showed the rebound in U.S. non-farm productivity growth was not as strong as previously estimated in the third quarter, while wages declined for two straight quarters.

Productivity increased at a 2.3 percent annual rate, the Labor Department said, a downward revision to its previous estimate of 3.1 percent.

(Reporting by Leah Schnurr; Additional reporting by Lucia Mutikani and Jason Lange in Washington; Editing by Jan Paschal)

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Fed Chairman Sticks With His View of a Slowly Mending Economy

Mr. Bernanke also said that he continued to see no evidence of broad and enduring inflation despite recent increases in the prices of oil and other commodities.

“Over all, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers,” Mr. Bernanke said in remarks that he planned to deliver Tuesday afternoon to a gathering of bankers in Atlanta.

His speech followed related remarks by President Obama, who told reporters that he was worried about the pace of growth, but saw no possibility of another recession.

“I am concerned about the fact that the recovery that we’re on is not producing jobs as fast as I want it to happen,” Mr. Obama said.

Mr. Bernanke’s speech, which came just before the financial markets closed for the day, was awaited by investors looking for any indication that the Fed might consider additional steps to enhance growth. The Fed chairman alluded to that possibility only once, noting that “monetary policy cannot be a panacea.”

Stocks quickly headed lower after he spoke, after spending most of the day in positive territory. The Dow Jones industrial average, which had been up more than 70 points, closed the day down 19.15 points at 12,070.81.

Mr. Bernanke spent more time explaining why the central bank planned to continue its existing programs despite concerns about inflation.

The economy has expanded much more slowly this year than the Fed predicted. Last month, private employers added only 83,000 jobs, reducing the average so far this year to about 180,000 jobs a month — barely enough to maintain the current rate of unemployment.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Mr. Bernanke said.

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Stocks & Bonds: Stocks Drop Sharply on Disappointing Reports

Stephen J. Carl, head equity trader at the Williams Capital Group, said the latest economic reports suggested that “the economy is running out of steam.”

News that Moody’s cut Greece’s credit rating again because of debt restructuring concerns also contributed to the drop.

All 30 stocks in the Dow Jones industrial average fell. The index closed down 279.65 points, or 2.22 percent, at 12,290.14. The Standard Poor’s 500-stock index was down 30.65 points, or 2.28 percent, at 1,314.55. Both registered the worst percentage declines since August 11, 2010.

The Nasdaq composite index fell 66.11 points, or 2.33 percent, to 2,769.19.

On Wall Street, financials, materials and industrials all fell more than 3 percent, with financial shares declining by 3.48 percent. Bank of America was down 4.26 percent at $11.24, while Wells Fargo tumbled 5 percent to $26.94.

ADP Employer Services, the payroll processing firm, said Wednesday that private employers added 38,000 jobs in May, the smallest increase since September and well below market expectations.

The report came in advance of Friday’s monthly employment report for May by the Labor Department. The nonfarm payroll employment numbers are keenly anticipated every month by investors to assess the state of wages, salaries, and ultimately consumer spending.

“We had this accumulation of data pointing to slower economic growth,” said Kathy Jones, a strategist at the Schwab Center for Financial Research. “I think today’s ADP number probably just tipped everybody over the edge who was hoping we might see a strong employment report on Friday.”

Economists said that the ADP survey could have been affected by severe storms in many parts of the country last month, while automobile manufacturers have temporarily laid off workers in response to a disruption in supply chains. Analysts at Capital Economics said in a research note that the dip also reflected a slowdown in the growth in the service sector.

Economists at Goldman Sachs revised their estimate of May nonfarm payrolls to 100,000 from 150,000 after the ADP report.

“While the ADP report has a mixed track record in forecasting payroll growth, our research indicates it should receive some weight,” they said in a research note. “Moreover, the weakness in the ADP report follows a streak of weaker-than-expected news on both the labor market and activity as whole.”

The slower growth in employment along with fewer new orders were factors in the lower measure of manufacturing last month. In its survey of 18 industries, the Institute for Supply Management said its index fell to a 19-month low of 53.5 last month from 60.4 the previous month. Analysts surveyed by Bloomberg had estimated that the index would decline to 57.1 points.

“Pressures from rising commodity costs, plus supply-chain disruptions from Japan’s natural disaster, and extreme weather domestically, have combined to slow manufacturing’s momentum,” said Nigel Gault, IHS Global Insight’s chief United States economist.

“This is particularly worrying since manufacturing has been the economy’s shining star,” he added in a research note.

Also weighing on investor sentiment was a report that the steady recovery in auto sales stalled in May, as consumers stayed away from new-car showrooms because of higher prices, shortages of some Japanese models, and concerns over the economy. Automakers said that sales dropped 3.7 percent last month compared with the same period a year earlier. Despite the overall decline, sales by Detroit’s Big Three automakers outpaced imports for the first time in more than five years last month.

Markets were also down in Asia on Thursday morning after the pullback in the United States.

As stocks slumped, investors turned their attention to safer assets, pushing government bond prices higher. The Treasury’s 10-year note rose 1 1/32, to 101 18/32. The yield fell below 3 percent for the first time in 2011. It eased to 2.94 percent, from 3.06 percent late Tuesday.

Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, said Treasuries rose in reaction to the latest economic reports. He said the latest statistics suggested “what appears to be a significant slowdown” in the economy in the last month.

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April Job Data Is Strong, but Some Doubt Trend Can Last

The Labor Department said Friday that 244,000 jobs were added last month after a gain of a revised 221,000 in March. The unemployment rate rose to 9 percent in April from 8.8 percent in March.

“There are yellow warning flags that are popping up,” Joshua Shapiro, the chief United States economist for MFR Inc. “It remains to be seen whether this nascent recovery we are seeing is going to peter out or not.”

As has been the case for several months, all of the increase came from private employers, which added another 268,000 jobs last month, after a revised gain of 231,000 in March, the report said. Results of the previous two months were revised to show another 46,000 jobs were added.

Governments, struggling to balance budgets as they dealt with shrinking revenues and growing deficits, cut 24,000 jobs last month. Most of the drop came at the local level, where 14,000 jobs were lost in April after a decline of 15,000 in March.

April’s numbers exceeded the forecasts of analysts, who had expected a gain of 185,000 jobs over all, with the change in private payrolls of 200,000. The rise in the unemployment rate that came even as employers were adding jobs was an indication that more people were entering the work force as hopes for hiring increased.

While better than expected, Friday’s employment numbers showed that the national economy still had a long way to go to fully recover. Though down from its peak of 10.1 percent in late 2009, April’s unemployment rate reflects only those Americans who are still actively looking for work.

As such, economists said the April jobs report was part of a larger picture of the economy that remained mixed. The rise in the unemployment rate reflects the survey of households, which indicated a 190,000 decline in employment in April. And recent data on initial jobless claims and other employment indicators have been weak.

“Millions of people are unemployed and many have left the labor market and given up,” Mr. Shapiro said. “Against that we are maybe creating 244,000 jobs. That is all well and good but it just shows you how much further we have to go to make a dent into what has happened in the labor market.”

“It gets the basic debate out there about the economy,” he added. “Is all we have seen the product of government stimulus, and are all the problems coming back or not?”

Austan Goolsbee, chairman of President Obama’s Council of Economic Advisers, noted that the economy had added 2.1 million private sector jobs in the last 14 months, including more than 800,000 this year. The last three months of private jobs gains have been the strongest in five years, he said, despite the “headwinds” from higher energy prices and the Japan disaster.

President Obama, speaking in Indianapolis, said the report showed that the economy “can take a hit and still keep on going.”

Mr. Goolsbee added a note of caution. “While the solid pace of employment growth in recent months is encouraging, faster growth is needed to replace the jobs lost in the downturn,” he said.

The latest snapshot covered a period when several indicators pointed to signs of weakness. The American economy grew at a tepid 1.8 percent in the first quarter, according to the government’s estimate for the first quarter. Personal consumption has slowed and construction remains weak, though winter weather was cited as a reason.

Turmoil in the Middle East and North Africa has sent crude oil prices higher, pushing up the cost of gasoline, which in turn has taken a larger share of the money consumers have to spend. Supply disruptions in the aftermath of the earthquake and tsunami in Japan have rippled through American industries, especially the automobile sector where plants have reduced production and idled workers.

John Canally, economist for LPL Financial, said that there was a marked difference between the April report of last year, when the economy was hurt by uncertainty over the oil spill in the Gulf of Mexico and the European debt crisis.

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