November 22, 2017

Dashboard: This Week in Small Business: Gordon Ramsay Calling!

Dashboard

A weekly roundup of small-business developments.

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

Must-Reads

Tim Duy explains what Japan’s growth means for the rest of the world. And here are the social media lessons from a Gordon Ramsay nightmare gone viral.

The Economy: Cash Is Not Safe

Retail sales rise and household debt declines, driven largely by lower housing and credit card balances. Corporate earnings are at a historic high. The latest small-business confidence index ticks up. Builder confidence improves, too. But April’s producer prices and industrial production both fell, and the latest business inventories and sales numbers continue to show little improvement. A forecast predicts a plunge in gasoline prices. Business conditions in the New York region (pdf) deteriorate, and the New York Federal Reserve Bank says tight credit is restraining small-business growth. David Rosenberg explains why cash is your least safe bet, and Rex Nutting is convinced that everything is overvalued: “No one’s sure when the reckoning will take place, but it’s likely to be ugly when it does.” Joseph Biden agrees with a 7-year-old’s suggestion to make the world a better place.

Washington: Sequestration Watch

The Congressional Budget Office says the deficit problem is solved for the next 10 years. Paul Krugman says the case for austerity has crumbled, but Keith Hennessey says it’s too soon to celebrate. Jared Bernstein submits the fourth installment of his “sequester watch.” The Federal Reserve, whose policy has pushed some start-ups to be valued at a billion dollars, may ease up on monetary easing this summer. Here are a few buzzwords to watch as the Fed plots its exit strategy. Joe Weisenthal reveals the real reason people bash Ben S. Bernanke and John Maynard Keynes at conferences. A bunch of economists offer advice to graduates.

Your People: Hourly Workers

Alex Befekadu lists seven employee types that you should fire. Joanne Sammer takes a look at what constitutes a healthy work/life balance and how companies can achieve that goal. A study finds that freedom is the top reason for quitting and that millennials want to be entrepreneurs (but that doesn’t always mean starting businesses). Here are four steps to hiring hourly workers this summer. Crispin Jones explains the benefits of having a diverse workplace. Here are five ways to deliver bad news to employees (and the best ways to open a beer).

Finance: A Trip to Mars

André Mouton believes that if venture capitalists aren’t interested in crowdfunding, maybe you should be (apparently, Donald Trump is interested). Jeff Hindenach explains why credit cards remain a viable option for small businesses. Kabbage expands its small-business financing (using QuickBooks data), and NASA is offering $9.8 million to small and midsize businesses for a trip to Mars. Joe Taylor gives advice for building a profitable banking relationship, but here are some alternatives if you cannot. And here are two helpful online valuation tools to find out how much your business is worth. Bayer HealthCare goes on a start-up hunt. Retiring baby boomers are driving the sales of small businesses.

Start-Up: Controlling Fear

Ken Oboh says start-ups should ditch their “go big or go home” mentality. Peter Thiel’s first investment in Europe has gone to a London-based start-up in financial technology. A life coach explains how to control the fear of starting a small business. Two start-up founders were not afraid to sleep in a van for months on end. Here’s how start-ups can get cheap office space and three ways to jump-start your dreams. Morgan Hartley and Chris Walker explain why your city needs a start-up scene. A venture capital firm is eager to invest in start-ups in Charlotte, N.C. A start-up “dream team” is looking for 45 young aspiring entrepreneurs from around the world to join a nine-week summer program in Silicon Valley. This is how one entrepreneur started three businesses by age 32.

Management: Go to Bed

Todd Wasserman explains key performance indicators. Julia Kirby says that if you want to change the world, you should get to bed by 10 p.m. Here are eight easy ways for your business to go green, and Jim Smith explains what your business can learn from the $1 cups at Starbucks. Communicating with energy is one of the five most important business skills. According to an American Express study, 70 percent of entrepreneurs say they purchase and source goods and services from other small businesses. A survey reveals the DNA of America’s small-business owners.

Marketing: The Ultimate Pitch

Here is how Lowe’s is making its customers smarter with six-second videos on Vine. Pamela Wilson has suggestions for getting customer testimonials that will convince even the most skeptical prospects. Mark Emond writes that there are four foundational elements of marketing analytics success. Suren Ter-Saakov explains what is important about competitive analysis. Diane Carlson warns not to make these business card mistakes. Jill Konrath says this is the ultimate sales pitch. A contract manufacturer shares eight marketing tips.

Around the Country: A $50,000 Challenge

An Alaskan town will vanish by 2017. In tornado-hit Joplin, Mo., employees of local businesses chip in again to rebuild. A new Colorado law provides recourse for discrimination against workers at companies that employ fewer than 15 people. Constant Contact joins with Staples and Score to host free webinars. CNBC’s new small-business show introduces a $50,000 challenge. In Chicago, mothers are showing their children the real estate ropes. In Pennsylvania, four businesses receive energy-efficiency and pollution-prevention grants, registration opens for a small-business expo on government contracting and a small-business conference plans a summer debut in Philadelphia.

Around the World: Manufacturers Coming to U.S.

The euro zone recession continues into its sixth quarter, and the social mood darkens. The United States oil boom leaves OPEC sidelined from demand growth. Japan’s economy expands faster than expected. A youth hockey brawl breaks out in Russia. China’s industrial production grew 9.3 percent in April. Jeffrey Telep and Joshua Snead report that global manufacturers are moving production to the United States. The proportion of British-based small businesses targeting the growing international market for low-carbon products has doubled in the past two years.

Social Media: Exclamation Points

Amanda McCormick wants to know how you are using social media to market your business. Dan Zarrella finds that exclamation points get more retweets but fewer clicks. LinkedIn bans users from promoting prostitution and escort services, but this is not why the social media service annoys Benedict Evans. Christopher Null wonders if Google Plus matters for small businesses.

Red Tape: Deficiencies

The Government Accountability Office finds 60 deficiencies in the Internal Revenue Service’s internal controls, and Jon Stewart weighs in. The Obama administration announces three advanced manufacturing innovation institutes. A survey reveals a lingering uphill battle for the new health care law, but Emily Maltby and Angus Loten wonder whether the law may create new entrepreneurs. Sarah Kliff explains what will happen if you don’t pay the tax penalty, and a small-business owner explains the hard facts of the health care law to employees.

Online: Call to Action!

Seth Godin explains why they call it a browser: “Call it attention inflation. More time spent looking, less time spent clicking.” A company that provides legal services to small businesses is now accepting Bitcoin as payment (and Amazon introduces its own virtual currency). OpenSky becomes another “interesting competitor” in the online marketplace. Here are some keyword strategies to draw people to your site, and here is how to use calls to action in your next e-mail campaign. Roger Kohl tells you everything you need to know about “the scariest search engine” on the Internet. Here are Time magazine’s best Web sites of 2013, and here are 16 steps to hosting a successful webinar. Did you know that 70 percent of consumers trust online reviews?

Retail: Bike Lanes Are Good

Square unveils hardware for its point-of-sale iPad registers, Groupon officially introduces its own point-of-sale system, and PayPal unveils a program to compel small merchants to throw away their cash registers. Also, keep your eyes on these shopping-cart-mounted tablets that will detect nearby items and offer recipes in real time. Fred Lizza says cloud retail can transform your business, and these are the benefits of a cloud-based inventory management system. A survey finds restaurant sales and traffic improved in April. Restaurant marketers are waking up to a $50 billion breakfast opportunity, and millennials are propelling the growth of the sandwich industry. Bike lanes happen to be good for local businesses.

Mobile: Dead in the Water

Nearly 75 percent of all smartphones sold in the first quarter were Android-based, and this chart shows that the iPhone’s market share is “dead in the water.” It is now estimated that the mobile marketing industry may employ 1.4 million people by 2015. Tobin Dalrymple suggests five ways to publish content on mobile. Here is a guide to mobile productivity apps, and Brian S. Hall shares six mobile apps created by nontech companies. Jon Gold explains why everyone is still confused by mobile management. BlackBerry will introduce BBM for iOS and Android this summer. A coming webinar looks at small-business adoption of mobile.

Technology: Texting to Landlines

Google is offering free unified storage across its services along with a way to send money by Gmail. Here is everything Google announced at its developer’s conference (which is also where the company’s chief executive said he wanted to start his own country). A company introduces texting to landlines. Michael del Castillo shares the lessons learned from five huge tech flops. Megan Totka suggests five customer relationship management tools for small businesses. Windows Blue may leave customers seeing red.

Tweet of the Week

@dansinker – How long does a keynote have to last before it’s considered a hostage situation?

The Week’s Best Quote

Charlie Hamilton shares a few lessons from the lemonade stand: “Successful adults often worked when they were young. They mowed lawns, baby-sat, or had a lemonade stand. Learning how to work hard, provide good customer service, overcome challenges, ask for the sale, and understand the value of a dollar are invaluable life lessons that kids simply can’t get from a textbook.”

This Week’s Question: Would you buy a point-of-sale system from Groupon?

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.

Article source: http://boss.blogs.nytimes.com/2013/05/20/this-week-in-small-business-gordon-ramsay-calling/?partner=rss&emc=rss

Student Loan Debt Is a Drag on the Economy, Too

Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts.

Mr. Gill owes about $45,000 in federal student loans, plus another $40,000 to his parents. That investment in his future has led to a secure job with decent pay and good benefits. But it has left him with tremendous financial constraints, as he faces chipping away at the debt for years on end.

“There’s this anxiety: what if I decided I wanted to get married or have children?” Mr. Gill said. “I don’t know how I would. And that adds to the sense of precariousness. There’s a persistent, buzzing kind of toothache around it.”

The Federal Reserve Bank of New York, in a new study, found that 30-year-olds with student loans were now less likely to have debts like home mortgages than 30-year-olds without student loans — even though most of those with student loans are better educated and can expect to earn more money over their lifetimes. The same pattern holds true for 25-year-olds and car loans.

“It is a new thing, a big social experiment that we’ve accidentally decided to engage in,” said Kevin Carey, the director of the Education Policy Program at the New America Foundation, a research group based in Washington. “Let’s send a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too.”

The weak economy and tight credit standards remain the main culprits preventing young people just establishing themselves from making major purchases. But millions now face putting a substantial share of their take-home pay toward past debts rather than present needs. Student loan debt leaves them with less money for things like clothes and restaurant meals. And it is even more likely to suppress purchases of more expensive items that need to be bought with credit. A poor job market is compounding the problem: the educational debt burden of many so-called millennials has sharply increased even as they are being forced to get by on significantly less income than the previous generation — a decline of about 15 percent in real terms since 2000, with much of that drop coming from the recession.

According to calculations by the Pew Research Center, the measure of debt to income for households under the age of 35 has ballooned to about 1.5-to-1 in 2010 from about 1-to-1 in 2001. The composition of that debt has shifted, too: more is tied to student debts, and less to homes. “Having a lot of student loan debt makes it harder to qualify for a mortgage and harder to save for a down payment,” said Jed Kolko, the chief economist at Trulia.

Student loan debt is not only constraining young adults, but also, at least in the near term, holding back the recovery itself, some economists say. The shadows might remain even as the economy picks up, by making young workers more cautious when it comes to decisions about their careers and their finances. Millennials might end up buying less expensive homes or more often choosing to rent than previous generations.

“The debt is shifting how much young people can spend, and it can also be a powerful psychological thing as well,” said Selma Hepp, an economist at the California Association of Realtors.

On the other side of the equation, many college graduates now in their 20s and early 30s should eventually be able to make up for lost ground. Students who take on debt to pay for higher education commit themselves to paying off huge sums, but they usually lift their lifetime earnings by substantial amounts. And they are in a better position to insulate themselves against economic bad times, given the profound rewards the job market provides to the college-educated.

Indeed, the economy is far more punishing to workers without a college degree. The college-educated earn, on average, 80 percent more than those who only completed high school, a premium that has widened over the last 30 years. Unemployment rates for the less educated are higher, too.

For most young workers, gaining a college degree remains well worth it in the long run, even if it delays some purchases in the near term. “For an individual going to college and ending up with a lot of debt — you’re still better off,” said Chris G. Christopher of the forecasting firm IHS Global Insight. There might, however, be a slice of young workers who paid huge sums for degrees that prove less valuable on the job market, saddled by a debt burden that could end up holding them back for decades.

Mr. Gill said his education remained a vital investment, even if the debt overhang has for now put white picket fences or a condo with a gleaming view out of reach. “Sometimes I think: ‘What if I were to buy an apartment?’ ” he said. “It is like asking: ‘What am I going to do when I first land on the moon? What’s the first thought that I will have when I see Earth from outer space?’ ”

Article source: http://www.nytimes.com/2013/05/11/business/economy/student-loan-debt-weighing-down-younger-us-workers.html?partner=rss&emc=rss

DealBook: European Private Equity Firms Seek Nontraditional Loans Amid Debt Crisis

Matthew Sabben-Clare, a partner at the London-based private equity firm Cinven.Bill RobinsonMatthew Sabben-Clare, a partner at the London-based private equity firm Cinven.

LONDON — As the sovereign debt crisis has slammed Europe, Cinven has had to get creative to finance buyouts.

When the London-based private equity firm wanted to buy CPA Global this year for $1.5 billion, Cinven looked beyond banks, the usual source of money. Along with debt from HSBC and JPMorgan Chase, it secured almost $200 million of higher-interest loans from nontraditional lenders. It also had to spend roughly $600 million of its own cash.

“The debt markets have been challenging since 2007,” said Matthew Sabben-Clare, a partner at Cinven. “There’s a degree of selectivity by the banks over geographies and certain industries. Banks are more regionally focused than before.”

Europe’s financial woes are forcing private equity firms like Cinven to revise their deal-making playbooks.

As banks pull back, private equity firms are increasingly turning to high-yield bonds, mezzanine loans and other types of debt that carry higher interest rates. Some are appealing directly to institutional investors like pensions and sovereign wealth funds to finance specific deals.

Apax, a private equity firm, issued almost $1 billion of high yield bonds to acquire Orange Switzerland.Sebastian Derungs/Agence France-Presse — Getty ImagesApax, a private equity firm, issued almost $1 billion of high yield bonds to acquire Orange Switzerland.

Given the tight credit, most firms are having to put up more capital to get deals done. Cash now accounts for more than 50 percent of the average European buyout, according to the data provider S..P. Capital I.Q. Five years ago, that number was 33 percent. In the United States, cash represents 38 percent of the average buyout, mainly because firms have access to a variety of financing options, like capital markets.

Private equity firms “are having to widen the net to find the loan financing they need,” said Kristian Orssten, head of European high-yield and loan capital markets at JPMorgan Chase in London. “Many lenders in Europe are getting to grips with their own funding challenges.”

The financing troubles for buyouts are reflected in the weak deal-making environment.

Although firms are raising money to buy distressed assets in Europe, many have remained on the sidelines as the debt crisis continues. So far this year, European acquisitions by private equity firms have totaled $23.2 billion, a 38 percent decline from the same period in 2011, according to Thomson Reuters.

Firms have pulled some deals altogether, fearing that asset prices could fall even further. After months of negotiations, Blackstone and BC Partners dropped their $3.2 billion bid for the frozen-food company Iglo after failing to come to terms with its private equity owner, Permira, according to people with direct knowledge of the matter who declined to speak publicly.

In  good times, European buyout firms relied heavily on cheap bank lending. Flush with cash, the Continent’s financial institutions provided almost 80 percent of financing on deals, often keeping the debt on their own balance sheets instead of selling it off to other investors.

But as the debt crisis worsened, banks curbed their lending in an effort to meet stricter capital requirements, which penalize firms for holding risky investments like debt connected to private equity deals. Firms like Deutsche Bank and Royal Bank of Scotland have sold loans at a discount to other investors to shed unwanted assets.

Even when banks are willing to finance deals, they are limiting their bets. Local banks are focusing mostly on deals in their home countries, and they are often willing to finance only a portion of the buyouts.

As a result, private equity firms are often tapping multiple lenders, even when the costs of a buyout are less than $1 billion. To finance its £465 million ($749 million) acquisition of the British company Mercury Pharma, Cinven capitalized on its 20-year relationships with certain banks, securing £235 million of financing from a consortium of firms, including Lloyds Banking Group.

With banks being selective, private equity firms have had to tap other markets.

High-yield debt investors, in search of better yields, have been receptive. The European private equity firm Apax issued almost $1 billion of high-yield bonds in February as part of its $2.1 billion acquisition of the telecommunications company Orange Switzerland. Intelsat, one of the world’s largest satellite operators, owned by a BC Partners-led group, raised $1.2 billion this year in an effort to refinance its debt.

“The high-yield market in Europe is exploding,” said a partner from a leading European private equity firm, who spoke on condition of anonymity. “It’s attracting a lot of institutional investors who are chasing high returns.” The amount of European high-yield bonds connected to investments from private equity firms has risen 49 percent, to $13.5 billion, since 2007, according to the data provider Dealogic.

Private equity firms are also stepping in to fill the void. The Scandinavian firm EQT Partners turned to a consortium of financial players, including Kohlberg Kravis Roberts, for around $510 million of mezzanine financing for its $2.3 billion acquisition of the German medical supplies company BSN Medical in June.

“As bank funding has become more expensive, it has opened up an opportunity for new types of financing,” said Sachin Date, head of private equity for Europe, the Middle East, India and Africa at the accounting firm Ernst Young in London.

But such debt carries its own set of risks. Generally, loans from nontraditional lenders carry higher interest rates, which can be costly for companies, especially in the current economic conditions. If the financial burden became too high, it could force borrowers to default on their loans and exacerbate the region’s woes.

“The crisis has hit much harder than people had expected,” said Nicolas de Nazelle, a managing partner at the private equity adviser Triago in Paris.

Article source: http://dealbook.nytimes.com/2012/10/04/with-banks-skittish-europes-private-equity-firms-look-elsewhere/?partner=rss&emc=rss