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A not-so-jobless recovery?
According to the Associated Press, November harbored good news for the labor market -- the 11,000 jobs lost is the lowest monthly decline since employment began nosediving in December 2007. Experts say it's a pretty monumental improvement, considering that the expected number of positions cut was around 130,000. "We've still got a long way to go," said Carl Riccadonna, senior U.S. economist at Deutsche Bank, "but the good news is this report provides important positive momentum." The article also reports that the average work week rose to 33.2 hours, from the record low of 33 hours, and that average weekly earnings jumped $4.08 to $622.17.Small business loans: $10 billion evaporates----Reports to the Treasury confirm what small business owners have known all year: Banks are cutting back on Main Street lending.
The 22 banks that got the most help from the Treasury's bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months, according to a government report released Monday
Over the six months that the reporting requirement has been in effect, the banks have cut their collective small business lending by 4%. Their cumulative balance stood at $258.7 billion as of Sept. 30, according to a Treasury Department report.
While credit conditions have improved in some parts of the financial system, lending remains very tight for businesses that rely on banks for their financing, Federal Reserve Chairman Ben Bernanke acknowledged on Monday.
"Many small businesses have seen their bank credit lines reduced or eliminated, or they have been able to obtain credit only on significantly more restrictive terms," Bernanke said in a speech at the Economic Club of New York. "The fraction of small businesses reporting difficulty in obtaining credit is near a record high, and many of these businesses expect credit conditions to tighten further
"Difficulties in obtaining credit could hinder the expansion of small and medium-sized businesses and prevent the formation of new businesses," Bernanke said on Monday. "Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth."
Still cutting back?
Private companies still cutting back. A new employment report from ADP estimates that private companies cut another 203,000 jobs in October, Bloomberg reports. The good news? That's down from a decline of 227,000 in September. The bad? "I'm still expecting to see payroll employment decline probably through the end of the year," Joel Prakken, chairman of Macroeconomic Advisers, told Bloomberg, "not turn up until January or February."
Do you barter?
The barter system is entering a new era, as some companies are opting to use a formal barter network that keeps track of credits and debts, just like a bank calculates a cash balance. These third-party exchange networks are becoming increasingly popular with cash-strapped companies during the recession, since it allows them to save their liquid assets for only the most important purchases. Last year bartering amounted to $10 billion in global trade between 400,000 businesses, a number that officials say could grow by 15% this year.
As businesses battle to get through the recession, more and more are turning to third-party-exchange networks like Bartercard. According to the International Reciprocal Trade Association, the industry trade body, more than 400,000 businesses transacted $10 billion globally in 2008 — and officials expect trade volume to grow by 15% in 2009. Bartercard, the world's largest exchange network, is leading the charge. So far this year trades through its network are worth more than $2 billion, up by 20% over 2008.
Are you growing or slowing?
This recession presents a continuing opportunity to realize share in market gains as your competitors go belly-up or continue to cut back on marketing (some going all the way to zero). They may also have suffered slippage in customer satisfaction, making their clients more open to considering new options. Market as aggressively as you can to generate business (but beware of discounting), and focus internally on good service and quality control. Ensure that existing customers have no reason to go elsewhere and new customers have no reason to go back to your competitors.
INC Magazine mentioned a couple of Chicago businesses that were taking advantage of the high unemployment and hiring at lower salaries. While this seems like a smart move, you need to consider what will happen when the UE rate drops and more firms start hiring. Are those that you hired at a discount going to have any allegiance to you or will they up and move? Will you spend a lot training the cheap labor only to see them take that training to a better paying employer?
Perhaps a wiser choice may be to hire on a sliding scale. That is, when the UE rate goes down and there is more demand for their skills, the employee's pay rises. If you can afford the extra expense, now is a good time to hire and train. Be prepared for the surge in business when it comes. The employees will be both loyal and grateful, and you'll be in a position to grab new work and charge ahead at full-speed.
Things are getting better for small businesses:
American Recovery and Reinvestment Act
- Temporarily eliminated fees for SBA-backed loans;
- Raised the guarantee on these loans to as much as 90 percent;
- Stimulated new lending to businesses with 10 or fewer workers through $50 million in
microloans and management assistance;
- Addressed issues with the clogged secondary market and bolstered funding for the surety bond program to increase the number of small businesses competing for Federal contracts.
- More than 1,000 lenders who had not made a loan since the credit crunch have begun making
SBA loans
Possible future changes:
- Main Street Credit Availability Act” – which would increase the loan size for the 7(a), 504 and microloan programs and create an online lender platform to allow borrowers to compare rates between lenders.
- A proposal that would create an intermediary lending program to assist businesses that need more than the $35,000 a microloan can provide, but less than the $200,000 loan level that many 7(a) lenders are able to make.
- A proposed pilot program that would allow the 504 program to be used to lend to non-profit child-care providers.
The INC Magazine 500 List is out and it's fascinating as usual. You can view the list by several views including industry, area, revenue, and growth. Go to: INC 500 LIST
Swine Flu and Sick Leave-What's your sick leave policy? Experts say one of the best deterrents is to keep people home and slow the spread. Does your policy promote a healthy atmosphere or do you penalize workers that need to stay home? If they come in sick, they can spread the virus to the rest of the company. If they can't stay home with a sick child, they may just send the child to school and infect other children.
Is it all YOUR business or do you accept help? Do you empower employees to make decisions on their own or do you micro-manage? Are you stressed from having to "do it all" or do you enjoy the challenge of dealing with the big picture and coming up with the next great idea? Sure there will be mistakes, but that's the best way to learn. Turn them loose and see what happens. Most likely they will work harder and you will work less. You'll have a stable of skilled managers to choose from if you decide to step aside and change your focus.