Small-business Q&A: Boosting your credit score

Houston Chronicle

By Jacqueline Taylor

Published 11:19 p.m., Friday, March 30, 2012

The Washington Post

More good news on unemployment front for President Obama

By Chris Cillizza, Published: March 30

The Bureau of Labor Statistics released detailed information about the unemployment rate in the states earlier today, and the news is quite good for President Obama.

NEW YORK, NY – MARCH 21: People stand in a line that stretched around the block to enter a job fair held at the Jewish Community Center (JCC), on March 21, 2012 in New York City.. (Photo by John Moore/Getty Images)

Of the 15 states expected to be seriously contested by the two parties this fall, nine have an unemployment rate below the 8.3 percent national rate for the month of February. (For a full list of the swing states and their unemployment rates, scroll to the bottom of this post.)And, the Midwest, the region widely regarded as the most electorally critical for both Obama and former Massachusetts governor Mitt Romney, the average unemployment rate in February was 7.5 percent, the lowest of any of the four regions of the country.

While the unveiling of the national unemployment rate on the first Friday of every month tends to draw the big national headlines, the state-by-state numbers may be of equal import.

Why? Because the presidential election is a national race in name only. In reality, it is a series of state contests. (If you live anywhere outside the 15 or so swing states, you aren’t likely to see television ads, get persuasion phone calls or get snowed under by direct mail appeals. Depending on how you view politics, that could be either a very good or a very bad thing.)

That means that for people living in those 15 swing states, how they feel the economy is doing is likely to be more influenced by the unemployment rate in their particular state than what the national rate might be.

If you live in New Hampshire (5.2 percent unemployment), Iowa (5.3 percent unemployment) or Virginia (5.7 percent), the likely Romney argument that the economy continues to struggle simply won’t resonate all that well.

On the other hand, if you live in places like Nevada (12.3 percent unemployment), North Carolina (9.9 percent) or Florida (9.4 percent), you may well be more open to the idea that Obama hasn’t done enough to make the economy better in his first four years in office.

Looking for the swingiest of the swing states when it comes to the economy and the unemployment rate? Check out Michigan (8.8 percent), Colorado (7.8 percent), Ohio (7.6 percent) and Pennsylvania (7.6 percent) — all of which are within a point of the national average.

The state-by-state unemployment numbers aren’t conclusive and won’t stop Republicans from arguing that the economy would have recovered faster — and more broadly — with a different occupant in the White House.

But remember that the ground on which the election will be fought varies by state. And right now, the state-by-state economic outlook looks better for Obama than the national one.

Swing States Unemployment Rates (as of February 2012)

Arizona: 8.7%

Colorado: 7.8%

Florida: 9.4%

Indiana: 8.4%

Iowa: 5.3%

Michigan: 8.8%

Missouri: 7.4%

Nevada: 12.3%

New Hampshire: 5.2%

New Mexico: 7.2%

North Carolina: 9.9%

Ohio: 7.6%

Pennsylvania: 7.6%

Virginia: 5.7%

Wisconsin: 6.9%

A spirit of bipartisanship is sweeping Capitol Hill, with lawmakers poised to approve a package of bills aimed at reducing regulatory burdens on small business.

We wish we could raise a glass. This moment has been too long in coming. But the legislation it has spawned would be dangerous for investors and could harm already fragile financial markets.

At issue is a measure called Jumpstart Our Business Startups, or JOBS Act, which lawmakers in both parties claim would relieve small businesses seeking to raise capital from burdensome regulations, and thereby create jobs. The U.S. House overwhelmingly passed the measure 390-23 last week, and the Senate is expected to consider it this week. The White House has said President Barack Obama will sign the legislation.

We agree that red tape can needlessly tie up small companies. We also agree that securities laws that bar startups from harnessing the power of the Internet to raise funds could use updating. And it makes sense to allow, as the bill does, an initial public offering on-ramp, which would give startups a chance to grow before saddling them with certain costly and time-consuming regulations.

Accounting Scandals

But the JOBS Act goes too far. It would gut many of the investor protections established just a decade ago in the 2002 Sarbanes-Oxley law. A wave of accounting scandals — think Enron and WorldCom — had destroyed the nest eggs of millions of Americans and upended investor confidence in Wall Street. The relief would extend beyond small businesses and apply to more than 90 percent of companies that go public.

At the center of the package is a new class of emerging growth companies, defined as those with as much as $1 billion in annual revenue, which would be exempt from a host of disclosure, reporting and governance rules. These companies would be able to operate for up to five years without an independent test of their internal controls — the checks and balances that help companies prevent outright fraud and costly accounting mistakes.

Emerging companies would also be able to promote public offerings with less-than-complete information by “testing the waters” with fancy PowerPoint slides and other pre-IPO materials. Executives wouldn’t be held accountable for any misrepresentations. To go public, companies would ultimately have to file an official prospectus — where they must reveal their financial secrets, warts and all — with the Securities and Exchange Commission. But investors who have seen the glossy brochures might never read those documents.

These companies would also be able to use so-called crowd- sourcing to raise capital, an idea that deserves support. The bill, however, puts an overly high $2 million ceiling on what entrepreneurs can raise with little oversight (more on that later).

Perhaps most disappointing, the bill rolls back rules meant to prevent analysts from misleading investors by talking up stocks simply to win investment banking business. Such conflicts of interest were banned in 2003, after federal and state investigations revealed analysts were privately deriding stocks they were publicly touting and failing to disclose conflicts.

Supporters of the bill point to the falloff in initial public offerings as evidence that regulatory costs are dissuading entrepreneurs from creating businesses or taking them public. And they say rescinding the analyst research restrictions would benefit small companies, which Wall Street otherwise ignores.

That sounds great in theory, but the reality offers a different picture. It’s true the number of initial offerings has declined, but evidence suggests that has less to do with regulation and more with global economic trends.

Exemptions Exist

IPOs of small companies — those with less than $50 million in annual sales — have declined more than 80 percent since 2001. It would be easy to blame the Sarbanes-Oxley law, which ushered in sweeping accounting and governance rules after a series of bankruptcies revealed that companies were cooking the books and auditors were looking the other way. But the SEC has long exempted companies with less than $75 million in sales from some of the law’s more onerous provisions, including the most costly of all, the internal controls audit.

As Jay Ritter, a finance professor at the University of Florida has documented, the decline in IPOs is related to declining profitability of small businesses. Many are opting to merge with larger companies to quickly get bigger and more profitable, rather than go public.

What’s more, many of the rules the bill seeks to upend have helped companies, including the internal controls rule. An SEC study, for example, found that such audits helped companies avoid financial restatements, which are costly exercises that often drive down share prices.

Luckily, a bipartisan group of senators has realized the damage this package could inflict and plans to offer changes during this week’s floor consideration. Among them: lowering the threshold for emerging growth companies to $350 million in annual sales. That’s a vast improvement, but probably still too high — $350 million in sales isn’t exactly small beer.

The senators would cap the amount raised through crowd- funding at $1 million, and require those soliciting funds to register with the SEC. To help unsophisticated investors, it would cap investments at the greater of $2,000 or 5 percent of income for those who earn less than $100,000. (Those earning more could contribute a maximum of $100,000 per year.)

The senators would also wisely prevent analysts from recommending the pre-IPO stock of an emerging growth company.

Deregulation Surprises

There is room to improve small-business rules, but Congress should tread carefully. History is full of examples of legislation enacted in the name of deregulation, only to have it backfire. The 1999 Gramm-Leach-Bliley Act, which ended the Depression-era ban against mixing investment and commercial banking, and the 2000 Commodity Futures Modernization Act, which allowed explosive, but unregulated, growth in over-the-counter derivatives, are two. Both laws helped set the stage for the 2008 financial collapse.

It shouldn’t be necessary to gut investor safeguards to promote job creation. If investors lose confidence because of worries about fraud, they will demand a higher return on their money, raising the cost of capital for all.

­ (ISO 9001 Conference: Orlando, FL) — The 20th Annual International Conference on ISO 9000 has been structured to provide a balanced program of presentations by corporate executives and management system experts. Most organizations face compelling issues that must be continually addressed to survive. Often, conformity to management system standards is viewed as too cumbersome for the dynamic business environment. But successful organizations find that they must maintain a management system that is flexible enough to conform to a variety of standards while maintaining its focus on the customer.

The integrated management system needs to fit with organizational objectives. It has become critical to sustain adequate controls to ensure an organization’s long-term success while adding short-term value. This situation provides serious challenges for the quality professional.

The programs are focused on sector-specific implementation updates, general management system topics, and real-life examples of integrating management systems. With an exciting program of topics and international speakers, this year’s conference provides an unparalleled opportunity to network and learn how to take your management system beyond compliance.

Keynote speaker

Bennie Fowler, the group vice president of global quality and new model launch at Ford Motor Co., will be in Orlando, Florida, as the keynote speaker at the 20th Annual International Conference on ISO 9000 on Feb. 26, 2012. He will discuss how quality is critical at Ford, and how it’s a commitment that touches every aspect of the vehicle process—from design to manufacturing to product launch—to ensure that quality is built into every vehicle. Ford has made significant strides during the past few years to achieve world-class levels of quality and desirability.

Small business hiring edges up in Feb: poll

WASHINGTON (Reuters) – Hiring at small U.S. businesses edged higher in February as the number of firms laying off workers fell to its lowest since 2007, although companies scaled back plans to hire workers, a poll showed on Friday.

The National Federation of Independent Business said companies in its survey added an average 0.04 jobs last month. In January the reading was flat.

The NFIB’s reading on layoffs was in line with recent reports from the U.S. Labor Department, which have shown the number of workers lining up for jobless benefits has been falling and is near a 4-year low.

Nine percent of firms added jobs, one of the highest levels since 2007, the NFIB said.

But weighing on the outlook for the jobs market, the net percent of business owners planning to hire workers fell 9 percentage points, seasonally adjusted, to minus 9 percent, its fourth straight monthly decline.

The U.S. Labor Department is scheduled to release its February employment report on March 9. Economists polled by Reuters expect it will show a 210,000 increase in nonfarm payrolls, with the unemployment rate holding steady at 8.3 percent.

The NFIB poll was based on responses from 642 firms surveyed through February 28.

Small businesses harness the power of cloud computing

As part of a new series on how small and medium-sized firms use technology – which will run throughout March – we ask experts for their views.

Small- and medium-sized enterprises (SMEs) have access to greater computing power than ever before thanks to cloud computing.

This remote computing power – provided by a third party, usually over the internet using a web browser, and often without a contract – is transforming the way SMEs use IT and even do business.

Cloud computing is lowering the barrier to entry into business for some SMEs, and helping speed up exploitation of new opportunities for others.

It is democratising IT and enabling many SMEs to act like, and appear to be, organisations of much greater size and scope. In these ways, with SMEs the growth engine for many countries, cloud computing has the potential to have a positive impact on industries and economies alike.

Yet it’s not a panacea for all IT problems, nor is it for everything that IT may be applied to – it has its limits, of course.

SMEs in different industries use different cloud computing and related apps in different ways. And as with all business technology, local regulations may restrict the use of some cloud-based services by organisations in certain industries.

I’d argue, though, that it is for every business which uses IT, at least in some way, and will outline below how some of our customers have used it to their advantage.

Why the cloud?With cloud computing, SMEs no longer necessarily need to buy hardware and software licences, and manage IT in-house.

Businesses pay for what cloud-based services they use – such as email, customer relationship management (CRM), payroll systems, online back-up, web hosting, application management, printing, invoicing apps, and collaboration tools, to name but a few – removing the need to make large one-off investments.

It’s therefore much less expensive and risky for SMEs to procure and use IT in the form of cloud services, and the potential rewards are great.

For instance, MedicAnimal.com, an online supplier of high quality pet care and veterinary products that does business across Europe, is saving in excess of £100,000 a year by replacing its entire in-house IT infrastructure with Rackspace cloud hosting.

This move allowed it to reduce online operating costs and freed up resources from hardware management.

Little wonder then that recent Gartner research (Gartner Executive Programs, January 2012) showed that SMEs are increasing spending on cloud services.

Commenting on the findings, Gartner analyst Dave Aron said that “cloud-based services are allowing small companies to have industrial-strength IT very quickly”.

Clear benefitsIt’s also clear why we’re seeing SMEs – especially the smallest organisations – lead the way both with cloud adoption and in finding innovative ways to use the computing power at their disposal.

Reducing the barrier to entry to a market is a compelling prospect for start-ups intent on selling their products or services as soon as possible.

Similarly, cloud computing can improve business agility, and help more established businesses with relatively small IT budgets to rapidly move into new territory or alter their business model.

For example, UK-based florist Mode Flowers was able to develop a new e-commerce business using our cloud services – much faster and at a much lower cost than would have been possible before cloud computing.

The company is also using cloud computing to extend their e-commerce platform into continental Europe, to take on bigger players in the industry.

UK digital signage provider Signagelive recently moved its media delivery infrastructure to our cloud to unlock volume markets and new value chains.

The scalability of cloud computing is being harnessed by businesses which would formerly have been limited by the restrictions of in-house IT, such as having to wait days or even weeks for a new server to arrive at the office.

Freshbooks, a Canadian-based provider of online invoicing and book keeping for professionals – a cloud service provider itself – uses our services to scale capacity up as it grows, and manage spikes in online demand. So too does Behance, a fast growing US-based social network for creatives.

The ‘all-cloud’ enterpriseIt’s important to note that SMEs are not alone in driving cloud adoption.

Although large enterprises still often hold core IT applications in their data centre, and manage them in-house, we’ve seen their small business divisions or departments, which may have an entrepreneurial approach (ie are similar to SMEs), go around the IT department to put cloud apps to good use.

Conversely, we’ve worked with internal IT teams of multinationals which have used our cloud to provide apps and services to other business divisions.

In my experience, the smaller the company, the more likely they are to use cloud-based services for all their IT needs, but this will change over time.

SMEs will no doubt continue to embrace cloud-based services and related applications, and remain at the forefront of cloud developments. However, as they grow, and as the cloud market evolves to both meet the demands of industries for different apps and services and to overcome current limitations, it seems inevitable that we will also see the arrival of larger enterprises which are truly “all cloud”.