The National Federation of Independent Business, one of the prime small business interest groups, will frequently issue press releases extolling (or condemning) various bills and legislators. But it caught our eye when the group had praise for Heath Shuler, a congressman from North Carolina just re-elected to his second term. This partly because Shuler is a Democrat, and the NFIB, while officially nonpartisan, does tend to favor Republicans because its agenda more closely aligns with the GOP's. The other reason it caught our eye is because we still find it difficult to think of Shuler as a congressman: to some of us, he will always be an okay, mid-'90s Washington Redskins quarterback.

It's worth noting that Shuler is, if anything, the protypical "Blue Dog" Democrat--which is to say, staunchly moderate (and usually, as in Shuler's case, from the South). It's not like the NFIB has suddenly turned liberal. But the group's open-mindedness in this regard is laudable. And it's something we're especially thankful for given our previous call for the group to think more broadly as it attempts to define and articulate an agenda that is "pro-small business".

The NFIB also publishes a scorecard for the 110th Congress (that would be the one culminating now), accessible here. Check it out.

By now you're probably familiar to seeing a person--an actual individual--referred to as a "brand". You first heard such a thing a decade or two ago, perhaps regarding Michael Jordan, or a movie star. And the trend has only increased over the past several years as people who are explicitly businessmen and -women have figured out how to turn themselves into brands. Oprah Winfrey. Bill Gates. Martha Stewart. People who are brands are capable not just of selling their products on the products' terms; they can additionally sell them as having coming from them. Harnessed well, it's hard to imagine a more powerful marketing appeal.

Peter Montoya expertly chronicled such personal brands, and told you how you can emulate these successful models, in his book, The Brand Called You. BizBox is hosting Peter on our regular BizBooks discussion forum this Friday, December 5, at 3 P.M. EST. So if you have any questions about how you can turn yourself into a brand among your customer base, you no longer have an excuse for not getting them answered. Instead, go to our BizBooks page and ask Peter yourself. Then tune in Friday at 3--or check in any time afterward--to see what Peter has to say about your question and other readers'. We hope you enjoy!

So last week came news of the Federal Reserve's ambitious new lending program. $500 billion to buy mortgage-backed securities. $100 billion to buy the debt of Fannie Mae, Freddie Mac, and others in the mortgage underwriting business. Plus, and most relevant to us, $200 billion (courtesy of the Federal Reserve Bank of New York) to be loaned to banks against securities backed by several types of troubled loans--auto loans, student loans, credit-card loans, and loans backed by the Small Business Administration. Many in the small business community were quite pleased; we were a bit more pessimistic. We take no pleasure in pointing out that this new policy, even combined with the Treasury Department's planned injection of $700 billion into the country's leading financial institutions and even into smaller banks, has not prompted increased lending.

In sum, we wish we could agree with Sen. Chuck Schumer--who has also proposed lending "tens of billions" directly to small businesses via the SBA--that, as far as "Main Street" is concerned, the Fed's new gambit "couldn’t come a day sooner." But we fear that it is simply too little, too late.

Such, anyway, is the news brought by this recent piece from the Washington Post that points out that for most small business owners, "the bailout" is little more than something they can read about in the paper every day.

Anyway, back to "too little, too late". It's worth breaking that cliché down--in this instance, it's truer than you'd know.

Too little. Too little because short of direct government compulsion, we really don't see the banks lending any time soon. We've noted over and over and over: that the bank-recipients of government capital remain risk-averse and prone to consolidation rather than increased lending; that the government may tacitly approve of this; and that the community banks, who would be more amenable to lending to small businesses, don't want the government cash. Too little because, as the article makes clear, small retailers are dying if they're not already dead and currently conducting going-out-of-business sales (and the article focuses on D.C.-area businesses--and the D.C. area is doing relatively well!).

Too late. Too late because the holiday season is already upon us, and many small retailers are going to have to pack up shop afterwards if they haven't already as 2009 appears likely to be the worst year for consumer spending since 1980.

The silver lining? Well, if you're a massive discounter, you're probably doing better; then again, such massive discounters tend to be larger companies with larger balance sheets who can absorb the blow right now. Are you a small auto repair shop? The credit crunch is crunching auto loans too, and tightened consumer spending extends to new cars if it extends anywhere, so if you fix old cars for a living, you're probably in decent shape. Are you a vintage clothing store? Great--just make sure you're selling at prices that make the Gap look like Louis Vuitton.

For those of you who do not fall under the above categories, however, it really does appear as though your government is not doing enough to help you.

This is not one of those usual “how to take advantage of your retirement plan” posts I’ve been writing. Instead, this week, I want to try to help you deal with one of the harsh realities of being a business owner--particularly in this economy and particularly at this time of year. It’s the unfortunate action that business owners sometimes have to take. It’s having to lay people off. That’s the polite term for firing.

Guy Kawasaki, who blogs at How To Change The World, posted an article recently on The American Express Open Forum (OPEN also sponsors BizBox) called "The Art of Laying People Off". In it, Guy nicely covers some of the practical aspects of down-sizing. His advice includes, "Cut deep and cut once," and, "Show consistency". The whole thing is worth a read.

Additionally, before you start the layoff process, there is an important retirement matter to consider: whether or not a “Partial Termination” will occur.

Under IRS regulations, if there a sufficient number of employees are terminated, then a Partial Termination results. In that event, the IRS requires everyone to be 100% vested regardless of your retriment provisions. This could include employees terminated prior to the round current cutbacks, depending on the specific situation and timing.

Unfortunately, there is no objective set of rules, so I can't just tell you if this applies to you or not. Each case is based on the individual facts and circumstances, an expression I've heard on many occasions from my attorney friends over the years.

So what should do when planning layoffs?

* Consider the Partial Termination rule in the context of the planning for the reduction in force and layoffs.
* Determine whether it would make sense to submit your retirment plan to the IRS for a ruling as to whether a partial termination occurred.

Here is the nitty-gritty of Partial Terminations: the IRS' 401(k) Resource Guide - Plan Participants-Plan Termination.

Now, good luck.

New York Times columnist Joe Nocera's Anonymous Banker is back. When last we quoted this "small business banker and credit underwriter" at "one of the country’s biggest banks," he was angling for the government to direct its bailout dollars to the small community banks who can in turn lend it out to the small businesses in their communities. Naturally, we were highly sympathetic to this line of argument. And whether or not the Treasury Department reads Nocera's wonderful blog, they have taken limited steps to encourage smaller banks to apply for infusions of government capital.

Today, Anonymous Banker attempts to explain the precipitous drop in so-called 7(a) loans, the main credit program of the Small Business Administration. We reported on the drop here, noting that while the average loan size actually increased this year, the total amount loaned dropped 13%. Anonymous Banker's explanation for the drop is farily commonsensical, though it's nonetheless useful to hear it from him (and he is, according to Nocera, a him). AB's proposed solution, meanwhile, deserves wider airing.

Anonymous Banker's explanation for the drop is a combination of the SBA's own explanation, our explanation, and some important technical information.

The SBA pointed directly to the credit crisis (which has choked lending) and the generally poor economy (which has choked demand for loans). The news since this earlier announcement that we've been in a recession for a whole year now certainly only lends this explanation credence; and to be sure, AB doesn't rule it out.

Both Anonymous Banker and we have pointed to the combination of community banks not getting their share of federal funds and to the fact that the big banks who are getting those funds--and, lo and behold, the two biggest SBA lenders also happen to be the two biggest banks, Bank of America and JPMorgan Chase--are uniquely poorly suited to lending to small businesses. It is the community banks who are willing to look beyond impersonal numbers, credit scores, and the like and instead really to understand a small business's market niche and specific balance sheet when considering a loan application.

Finally, Anonymous Banker cites the specific dynamics of 7(a) loans as a reason why banks have cut back on them so starkly:
Interest rate ceiling. The upside of issuing an SBA loan, if you're a bank, is that you can get the SBA--possessing as it does the full faith and credit of the federal government--to guarantee between half and 90% of the loan amount. The downside is there's a loan ceiling: prime plus 2.75% in the event of loans greater than $50,000, according to AB. That's paltry compared to what banks can currently get for normal loans in this credit climate.
No fees. Well, there are fees: 7(a) borrowers pay them, and the SBA gets them. The banks simply don't get a cut. This seems like a poor idea if we're trying to encourage banks to make them voluntarily.
Bad for the books. The loans go on the banks' books until they are securitized. And you try securitizing SBA loans right now.
Bad loan protocol=no guarantee. If a loan defaults and it turns out that the bank had failed to take all the necessary steps--from documentation to auditing--then the SBA retroactively withdraws its guarantee. In theory, the solution is just for banks to do what they're supposed to do. But apparently that's asking too much?

Now, things should be slightly better after the SBA's relaxing of standards. The prime-plus-2.75% isn't required anymore; the more bank-friendly Libor may also be used. And securitizing the loans was made easier as well. But still, this is a daunting set of obstacles for banks to be facing, especially when we recall, again, that no bank is required to make any SBA loans in the first place.

So, in the immortal words of Lenin, what is to be done? Anonymous Banker essentially reiterates what he said last time: give the money--those billions and billions in taxpayer capital you've been hearing so much about--to the banks that are actually going to lend out to that Main Street you've been hearing so much about. That's the plan you've not been hearing enough about.

Except there's a subtle modification to AB's strategy. Whereas he previously wanted the money to go more to banks more likely to lend to small businesses, now it appears the dire situation has activated his big-government gene (we mean that in a good way) and he wants the money to go to banks who have pledged to loan x% of it to small businesses.

This, of course, is what we've been screaming out. The government has been asking banks nicely to extend credit to these businesses, when it should have been behaving like, y'know, a government, which gets to compel action if it sees fit do so.

The allocation idea is basically a slightly more free market version of Sen. Chuck Schumer's vague idea to loan "tens of billions" directly to small businesses through the SBA. We can live with that. What we can't live with is anything short of the government requiring increased lending to small businesses, as opposed to suggesting it meekly.

"Small businesses owners are adamant," declared a release issued Monday by the National Federation of Independent Business and authored by the group's head, Todd Stottlemyer: "Don't ask us to send our tax dollars to Detroit to pay for their mistakes without significant restructuring and effective independent oversight." The corollary of this statement is that said tax dollars--looks like upwards of $30 billion at this point, mostly in favorable loans--can and probably should be sent (or at the least loaned) to the struggling Big Three automakers--General Motors, Ford, and Chrysler--should that restructuring be promised and that independent oversight established. We are wholeheartedly behind this sentiment and argument.

We hope the NFIB, which titled this release "The Voice of Small Business," means it. Because a large chunk of what follows is devoted not to thinking over what would be best for the legions of small businesses indirectly dependent on the continued health of the auto industry, or to what needs to be done to keep the current year-long (and counting) recession from becoming a full-on depression, but rather to blaming the companies' problems on their employees' being paid too much and having too cushy health insurance--which, in addition to lacking a certain amount of political persuasion, seems to us to be missing the point.

As most coverage of the bailout negotiations makes clear, including Washington Post business columnist Steven Pearlstein's latest article, some sort of bailout is, simply put, going to happen. You thought Bear Stearns and AIG were too big to fail? The American auto industry might be one of the few things that's even bigger. So, no matter how noncommital Speaker of the House Nancy Pelosi may sound (and the Times has her saying, "I think it’s pretty clear that bankruptcy is not an option"), this battle has already been fought. Now we're just haggling over price.

And part of the price is definitely going to be significant restructuring and an independent advisory board--in fact, General Motors, which is both the biggest and perhaps the most troubled of the Three (Chrysler, which is owned by the private equity group Cerberus, is in very poor shape too), has proposed such a thing. Plants will close. Dealers will be cut loose. And, yes, employees will be laid off: 25,000, to start with, at GM alone. "There is real pain in the GM plan," Pearlstein writes, "and the prospect of real gain."

To hear the NFIB tell it, though, the real problem is auto employees' "gold-plated healthcare plans," "platinum-level retirement benefits," and "generous pensions" (these last apparently not deserving of their own precious metal).

Yes, these employees' outsized compensations are a great burden on the companies, and a competitive disadvantage against foreign automakers whose nonunionized employees make fractions of what these employees make; and, yes, these obligations risk becoming a burden of the federal government, which is to say, of the taxpayers. (Incidentally, part of the problem is that the explosion in health care costs generally over the past twenty years was validly unanticipated by the management of decades ago.)

It's certainly worth pointing out that under the GM plan, according to Pearlstein, the current union contracts would be renegotiated to lower pay and benefits dramatically (to say nothing of those 25,000 fired workers); and that, according to the AP, United Auto Workers is holding an emergency meeting to discuss not whether to agree to concessions, but simply where precisely to draw the line.

But obligations to employees aren't the whole story. There's the credit crunch and the lousy economy. There's also Detroit's being caught pants-down with a bunch of gas-guzzlers in its inventory at a time when an unprecedented rise in gas prices made such vehicles uniquely undesirable. There's generally poor and arrogant management. And that's just off the top of our heads.

And anyway, the NFIB is framing the employee-obligation problem in a decidedly unproductive manner. Wouldn't it be great if, instead of disparagingly referring to those health plans as "gold-plated"--as though not only could the companies not afford them, but the employees don't deserve them--the NFIB had instead expressed jealousy at them, and then demanded that the federal government work to ensure that more workers' health plans were just as auric? Imagine a world where, at this incredibly troubled time for our economy, when calls for increased government spending resound across the political spectrum, the NFIB had called upon the government do what it needs to do in order to make sure that smart and prudent entrepreneurs are able to offer equitable plans to their own employees so that they can attract the best possible talent?

When we called on the NFIB to continue to pursue a pro-small business agenda but perhaps think outside the box when crafting it, we had such innovative thinking in mind, not the same old tired--to say nothing of borderline partisan--talking points.

"A strong domestic auto industry is important to the U.S. economy and many small businesses," the NFIB says. Absolutely (if the brake plant closes, remember, so does the bar in town). "The Big Three and the auto workers unions must make serious changes if they want to survive," it adds. Amen.

Soon, though, bromides won't cut it: a definite, specific plan, x dollars for y concessions, will soon come (oh, and by the way: even if all Three default on all of their loans, which is unlikely enough, the chance that the total cost to taxpayers will be "as much as $50 billion," as the NFIB suggests, is quite slim). Once that plan is on the table, we hope the NFIB comes out for or against. The plan could end up being unacceptable, in which case an "against" would certainly be appropriate. But either way, we'll be watching. And the NFIB's stance could tell us a lot about the group's future relevance, and how much it merits being listened to when it calls itself "The Voice of Small Business".

We'll make it auto bailout day here on BizBox. In our last post, we dealt with what we thought was the National Federation of Independent Business's unhelpful hostility towards a hypothetical bailout. Though this wasn't our main point, we did mention that saving the Big Three--General Motors, Ford, and Chrysler--isn't just about saving the Big Three: it's about saving all the small businesses associated with them, and dependent upon them. The small bar in the town near the brake factory, we said, will go belly-up just as surely as GM will if there is no bailout.

Meanwhile, Business Week has run the census numbers to figure out just how many small businesses would be threatened by the big automakers' collapses. Its figure? 57,000. And those are just the companies that are explicitly car-related; that doesn't even include the small bar in the town near the brake factory.

The vast bulk of those 57,000--over 44,000--are new car dealers. In fact, many of these are going to go out of business anyway: GM has announced that it will sever ties with many in its dealer network, not if it doesn't get the $18 billion it is requesting, but if it does. However, saving GM will still keep plenty of dealers in business.

Besides the dealers, there are makers of parts, makers of tires, and makers of other ancillary things necessary to the manufacture of one of those things currently sitting in your garage.

"Those 50,000 companies should be at the heart of the discussion of any auto bailout," theBusiness Week author says. Indeed. Congressmen, senators, and federal regulators could do worse than to put the fates of the small businesses tied to the Big Three squarely in the middle of the bailout debate, both substantively and rhetorically. These same congressmen, senators, and regulators have over the past several months been accused, not unjustifiably, of overlooking the needs of small businesses in the favor of the biggest banks in crafting the financial industry bailout. Not making the same mistake as they attempt to save the auto industry will go a long way towards reassuring the country's entrepreneurs that their government is thinking of them, too.

If you've been reading the news, you've probably noted the announcement that 250,000 jobs were eliminated in the U.S. private sector in November alone (although, since in the same report the payroll company ADP revised its prior October number upwards 20,000, that quarter-million may be a lowball estimate). Your next question may have been: how many of these were small business jobs? Apparently, 79,000. Apparently, that's the most jobs small businesses have lost in a single month in seven years.

So times are bad, if you're small business owner, and if you're a small business employee. Or a prospective small business employee--another report found that small business hiring was about an inch above flat in November, while year-over-year salaries at small businesses have declined 2.6%.

We'd only remind you that, though cutbacks and layoffs may very well be necessary, there is inherent value--from a business perspective--to actually terminating as few employees as possible. Layoffs are absolute morale killers on those who are remaining. You might think layoffs have the opposite effect, that is, of making those whom you still employ work that much harder out of fear. But fear is not a lasting motivation; and if fear rather than sadness is your employees' prime reaction to several layoffs, you probably have a workplace with poor morale to begin with.

Because of this--and, yes, because it's also the nice and right thing to do--it is worthwhile to take pains to cut costs without firing people. Here's how.

That said, for the average small business payroll represents the vast majority of costs. November's poor numbers probably won't be the last.

Well, there’s a been a whole lot of discussion here about whether banks are lending to small businesses in this environment. For BizBox posts alone, see here and here. Oh, and here, too. So I thought I’d share my personal experience, as a small business owner, trying to get credit from a bank in this enivornment.

Last month, in the midst of the worst credit crunch since the Great Depression, I acquired a large line of credit for my small business.

Now the astute reader will ask: how large is "large"?

I already had a decent line of credit from a national bank. But I just obtained a line 17x larger than that one from a small bank. Naturally, I’m in the process of moving my business generally to the new, smaller bank, which I’ll blog about next week.

The next question is: how did I do this?

My small business situation is unique. Still, I’ll offer a few reasons I was able to secure this valuable credit that may also apply to other small businesses.

1. The new bank was a de novo bank--in other words, a start-up--. It has only one branch, and bills itself as a community bank for small- and medium-size businesses.

2. My banker from the national bank, with whom I’ve worked for four and a half years, moved to the new bank and invited me to apply for a line of credit. This personal relationship has been a key to my success.

3. Not to brag, but my financial fundamentals are impeccable: I have perfect personal credit, four years of business tax returns, and two years of audited financials.

If there’s a “To Do” lesson to be gleaned from my experience for other small business owners in need of an increased credit line, at the top of it would be that you should try to seek out de novo banks. They are the only banks with pristine balance sheets in 2008, and they are naturally eager for new customers.

If any reader in the New York City area wants to know which insitution I now bank with, write a comment or send me a note (c/o bizboxonslate@gmail.com), and I’ll refer you. Also, feel free to leave a comment if you've had similar success already.

Reminder! The BizBooks discussion with Peter Montoya, author of The Brand Called You, goes down tomorrow, Friday, at 3 P.M. Eastern. In other words: it's not too late to submit a quesiton for Peter! Please do so.

And tune in tomorrow at 3 to see the live discussion. Of course, you can also go to the site any time after that and see the conversation in full. Hope you'll join in!

As we come up upon today's BizBooks with Peter Montoya (check it out!), we were reminded of one our BizBooks past, the one with with Scott Cooney, who discussed his vision of "ecopreneurship": environmentally friendly small businesses. Green is great, of course. But what about now--during the recession, when many small businesses are struggling to stay alive without also worrying about Mother Earth? Is now really the time to be thinking about this?

Our answer, and that of a recent Forbes article as well, is: absolutely. Because being green can cut your costs (that's what the article's all about). And being green can help you sell your product.

As to the cost-cutting: it's about saving on energy, and it's also about so much more. Not that saving on energy prices is something to be sneezed at, but at the same time such an initiative lacks the urgency with oil below $50/barrel that it had at just below $150/barrel. But still, if you can take the used vegetable oil from your restaurant and use it to power the vehicles at your other business--as one Wisconsin entrepreneur apparently does--then more power to you (and more power for less money).

Beyond the energy realm, there is much to be done. Encouraging telecommuting, for example, can in turn enable you to reduce overhead in terms of office maintenance. Our president-elect's promises to improve rural broadband access vastly will only help this.

But going green is also about so much more than cost-cutting. It's a marketing technique. Green is hot, but it's hard. So if you're a consumer, one of the easiest ways for you to be green yourself is to buy green products. Which means as a business owner, one of the smartest things you can do is be green and, shall we say, not be shy about advertising the fact.

Moreover, this advantage is, if anything, amplified during lean times. As consumers are spending less and generally buying fewer products and services, they are going to be paying for that much more bang for their buck; they're going to be looking to kill as many birds with a single stone as they can. Do you want to be in the business of just selling them what you sell? Or do you want to enable them both to purchase a good or service and feel eco-conscious while they do it, all for the same amount of cash? The answer is obvious.

The Product (Red) model isn't, from the perspective of the companies who sponsor it, about charity. When Starbucks or Converse or whoever creates a (Red) product, they're not just looking to help Africa--primarily, they are looking to sell more products and make more money. In other words, it's about marketing. You should think about going green in the same manner.

BizBox's favorite unnamed source, New York Times columnist Joe Nocera's Anonymous Banker, is back to answer your questions about small businesses' (not) getting loans these days. AB, you'll recall, is a high-placed "small business banker and credit underwriter" at a top bank.

A few key insights:
-The new rule, which we first reported here, that banks may now make Small Business Administration-backed loans using the Libor rate, as opposed to the prime rate, in theory should increase lending, though AB is skeptical (as has been his wont).
-"If the banks receive federal funding through the bailout program they should be required to utilize some of those funds for SBA loans. The big struggling banks are not going to voluntarily engage in boosting our failing economy by structuring prudent lending parameters. I just don’t see it happening." This has been our point as well.
-Not only are banks, even those that have received government capital, not upping their lending; they are pulling back yet further, doing everything they can to decrease their exposure to debt.
-Community banks are probably the better bet for small business credit right now, not the big ones. (We've argued as much; and that was our writer Michael Taylor's personal experience, too.)

But read the whole thing. And have a good weekend.

Sounds hard to believe. Last week, after the broader, much-publicized announcement that U.S. private companies got rid of a whopping 250,000 jobs in November alone, we reported on the fact that 79,000 of those came from small businesses. That wasn't the only bad news. Total growth was barely up at small businesses--it was up, that is, by all of .26%. And year-over-year salaries at small businesses declined, weirdly, by exactly ten times that: 2.6%.

But is there a silver lining? Or, more precisely, is there a way to see in the numbers a surprising amount of good? SurePayroll, which is actually responsible for some of these numbers, thinks so. "At SurePayroll, we are big believers in small business resiliency," the firm said, "but even we were a little surprised to see that U.S. small businesses managed to hire new employees in November." In fact, SurePayroll appears to have a point.

That figure--the .26% rise in size--made November fully the twenty-fourth consecutive month to see an increase in small business size. November saw the firm's Hiring Index rise, indicating a higher size, in terms of number of employees, of the average small business. November saw a year-over-year nationwide hiring increase of 3.3%. Hell, that .26% rise wasn't even the lowest monthly rise in small business sizes this year, according to SurePayroll--and the lower figure was still above zero.

And these numbers appear likely not to be soft: they are based on figures from over 20,000 small businesses located throughout the country.

The bad news may be for the employees themselves, in the sense that this appears very much to be an employers' market. Take the continued (slight) increase in hiring, combine it with the utterly terrible economy, add in a pinch of increased reliance on independent contractors by small businesses, and you are seeing significant downward pressure on wages.

Sure enough, there's that 2.6% nationwide decrease in year-over-year salaries. And regional figures demonstrate the close relation between hiring and wages movements. In the Midwest, Northeast, and South, where the average small businesses increased in size over the year ending November 30, you saw wages dropping (especially in the South, where the average paycheck dropped 8.6%). By contrast, in the West, the one region which saw a (slight: .5%) decrease in the average small business's size, you saw a 5.3% increase in average wages.

So what does it all mean? It means that, in large part, small business owners have managed to remain somewhat in the driver's seat as far as the job market is concerned. They can dictate wages better than workers can.

What could change this? No doubt some would warn of card-check legislation, which has been proposed by congressional Democrats, supported by President-elect Barack Obama, and staunchly opposed by the small business lobby. No doubt card-check would increase unionization, and increased unionization would probably manage to push wages up more generally. But a card-check law's effect on the small business job market is likely to be a lot less pronounced than its detractors suggest. It will also likely have the effect of raising the costs of many big-box retailers (we're thinking of one in particular), which is the single best thing that could happen in terms of making locally-focused small businesses--particularly those especially hard-hit retailers--more competitive.

The other thing that could yank small business owners from their (relatively) enviable current spot in the job market are precisely those falling wages, which, if they persist, will likely lead to deflation, which will mess with business owners' profit structures like nothing else. It's a path we simply don't want to go down.

But it's also a path we probably won't have to go down. According to this Wall Street Journal article, the combination of falling oil prices (which does lower prices, yes, but also gives consumers a lot more spending power in income they don't have to spend on gasoline) and government stimulus will likely stave off deflation by increasing consumer spending. That should continue to put small business owners in charge of their own hiring destinies. Here's hoping. And here's hoping that, a year from now, it won't be a .26% rise in small business size that we have to think of as good news.

Sen. Olympia Snowe (R-Me.), who is the ranking member (i.e., the shadow chairperson for the minority party, which is currently the Republicans) of the U.S. Senate Small Business and Entrepreneurship Committee, has some very compelling thoughts on the Small Business Administration. She offers some of them in an illuminating interview with Business Week.

While all 100 senators are nominally equally powerful (excepting majority leadership, which has a bit more official power), in reality certain senators' votes count for more than others; and few votes will carry more oomph over the next two years than Snowe's. She is an extremely moderate Republican, whom Democrats will be constantly courting over bills in which they need two or more Republicans to join all Democrats in averting a filibuster. She and her fellow Maine Sen. Susan Collins will be the first two people in the Democrats' Rolodex for this purpose. This means that if she in turn wants something done she will be listened to. In sum: this is someone you want in your corner. And it looks like entrepreneurs have her in theirs.

Her two marquee suggestions for President-elect Barack Obama are to make the SBA administrator, whom Obama has not yet announced, a Cabinet-level officer (the SBA sits under the umbrella of the Commerce Department, whose Secretary is in the Cabinet; Obama has nominated New Mexico Gov. Bill Richardson for that position), and to fund the SBA fully. But she also has thoughts on the chronic misreporting of federal small business contracts as well as the massive decline this year in the administration's signature program, 7(a) loans. The whole thing's worth a read; our thoughts come after the jump.

First off, it's important to take stock of just how unradical those two central positions are. The SBA Administrator frequently is elevated to Cabinet-level status (the vice president and the department secretaries automatically gain such status, and it is frequently extended to other executive branch officials, such as the FBI Director; Obama has announced he will elevate his U.N. Ambassador, for one, to his Cabinet). And as for fully funding the department...well, we certainly hope that calling for a component of the U.S. government to get the full amount of money it is supposed to get isn't considered a particularly bold proposal.

A couple of other issues Snowe addressed:

Female-owned business procurement. Amid all the fuss over the more than $5 billion in supposed federal small contracts that actually went to some of the world's largest corporation, it was easy to overlook the fact that the U.S. government last year fell shy of legally mandated procurement quotas for other sorts of businesses too, including those owned by women and minorities. In fact, as we reported, the SBA is looking to expand these requirements.

"Under current law, there is a statutory goal for 5 percent of government-wide contracts to flow to women-owned small businesses," Snowe said. "Unfortunately, in Fiscal Year 2007, women-owned businesses were only awarded 3.4 percent of federal contracting dollars." She added, "I stand ready and willing to help to do anything I can to assist the new Administration in implementing a meaningful final rule and helping the Federal government to satisfy -- and exceed -- its goaling requirement for women-owned small businesses." While we would expect any male politician to be just as angered at the government's failure to meet these goals--a failure that Snowe explicitly lays at the feet of the Bush administration--it surely can't hurt that Snowe is one of the most visible and simply most powerful female politicians in the country.

7(a) loans. They fell. Lots. The SBA promulgated new rules meant to encourage banks--who are the ones that actually get to decide to make or not to make the loans--to up their lending. There is skepticism over whether this will actually work.

Snowe, acknowledging all of these facts (which is promising enough), pointed to SBA loans' being "overly complex, cumbersome, and expensive." "This is especially true for smaller and community banks that may only make a few small business loans a year," she added--these are, of course, the banks that would otherwise be likely to make more of these loans. So, for one, Snowe proposes streamlining the 7(a) process.

Additionally, she announced her intention to submit a bill that would attack the credit crisis from a variety of different angles. Among its proposals is to slash lending fees by $500 million. Good thinking.

Miscellany Snowe also spoke of the other ways in which the SBA can perhaps make a contribution. These include entrepreneurial training; influencing overall administration economic policy; and helping small businesses identify promising foreign markets.

All of this sounds immensely encouraging. Snowe is clearly on top of her game. Her passion regarding female-owned business contracts and her obvious knowledge of what's ailing the 7(a) program are among the most heartening things we've come across regarding these issues in quite some time.

But Snowe, powerful as she is--and she is fairly powerful!--holds barely a fraction of the juice that the incoming president will have. The four-person team that the Obama Transition has assigned to review the SBA has been given solid marks by current (and almost certainly outgoing) Acting Administrator Sandy Baruah, Sharon McLoone reports. (And we will not be shocked if one of those four reviewers--Fred Hochberg, Ginger Lew, Karen Mills, and Kathleen Maher--ends up as Obama's nominee for administrator.) That's a good start, but we are far away from giving a final grade.

Our point is that, regarding the SBA and its important attendant issues, the ball is, as with so many other venues, in Obama's court. It is good to know, though, that in Olympia Snowe, someone good is on the other side to receive his passes.

Last Friday, we hosted our latest BizBooks discussion forum with Peter Montoya, author of The Brand Called You. For an hour, Peter graciously answered our and our readers' questions about how to market yourself to customers. You can--and should!--read the whole thing here.

Below the jump: a select few highlights, including Peter's thoughts on using personal brand to get through this dismal retail season, how to use the Internet to spread your personal brand, and even how personal brand plays into the current discussion over bailing out the U.S. auto industry.

BizBooks: How can the Internet and social media be harnessed to improve one's personal brand?

Peter Montoya: These are new and very excited areas of marketing. First, EVERY BUSINESS MUST HAVE A WEBSITE. PERIOD. The reason is that consumers use the web to determine if they want to continue with their inquiry based on whether you have a professional web site or not. No web site, they are going on to someone who does. New sites like Linked-In, Facebook are great for making connections to get hired and they are starting to be used to make connections with decision makers in companies. Their acceptance is certainly growing.

Chicago, Ill.: Please discuss the relationship between cultivating a personal brand and the brandee's personal life.

Peter Montoya: Much/most of your personal life is reflected in your professional brand. Some of the most common elements are where you live, spouse, children, hobbies, religion, personal style and dress, friends, family. You may try to hind various aspects - - you will be successful at this if you only have a local brand. However if you ever reach the National spotlight, everything will eventually come out. For example do you know the religion, marital status and personal details of the following? Oprah, Tiger, Obama, Paris Hilton? Most people probably do.

Pittsburgh, Pa.: I'm 29 and I don't know anyone of my generation that would want to buy an American car. Not because they are going broke. But because of their reputation for being gas hogs and having constant maintenance problems. I've heard American cars are pretty comparable to Japanese cars now but, to me this seems like an insurmountable branding problem. Can U.S. automakers really build a brand solely around patriotism?

Peter Montoya: No, they can't build it soley on Patriotism. Patriortism will help - people may be willing to give them a second chance - a second look, but they must start building cars based on value, environmental and quality. Maybe most importantly, they've got to design exciting cars! Foreign cars like Mercedes, Lexus and Infiniti turn my head! But Lincoln, Buick and Chevy's put most people to sleep. US Automakers have got to make high quality, environmetally sounds (efficient) and exciting cars to succeed.

BizBooks: We're now facing an extremely weakened climate for retail, even though it's the holiday season. How can retailers harness their personal brands to upend this bad trend as far as their own businesses are concerned?

Peter Montoya: Consumers really associate with personally branded companies such as Martha Stewart, Charles Schwab or Walt Disney, part of the reason is that subconsciously we feel that their is a realy human being being impacted by the success or failure of the company. Many people will use local professionals over national brands because they like to see money going back into their community. I would strongly suggest the following:
1. Shake hands, exchange names and really engage with your clients. Try to break out of the normal "Can I help you with something" into a personal dialog. Share personal stories.
2. Tell your customers "Business is going well, but we are working hard to do better. Would you be kind enough to pass along some positive comments about my store to your friends?"
3. Develop a customer mailing list. Mail out Greeting Cards, Happy B-Day Cards, Personal Letters.
Basically, develop a human relationship! That is what personal branding and The Brand Called You is all about.

Credit continues to be tight for small business owners, as BizBox has been reporting. So now just may be a good time to take from another, more readily available source of money: your 401(k) plan account. Assuming your plan permits participant loans, this could be an incredibly useful source of credit. But borrower beware: your retirement savings are on the line.

The retirement plan rules say that you can borrow up to 50% of your vested account balance, not to exceed $50,000. There are no specific restrictions on what the need for or use of the loans will be. You are required to make loans reasonably available to all plan participants.

That said, many plans do only allow loans for the following reasons:

1. To pay education expenses for yourself, spouse, or child;
2. To prevent eviction from your home;
3. To pay un-reimbursed medical expenses; or
4. To buy a first-time residence.

Besides that, the loan must be paid back over five years, although this can be extended for a home purchase, e.g., 15 years. Interest rates vary, but many plans charge a very manageable prime plus 1%.

Sounds like a pretty good deal, yes? Indeed. But here’s the other side of 401(k) loans.

1. You’re losing the earnings on your account, since, obviously, there’s less money to invest.
2. The tax shelter advantage is lost, because you're actually paying back the loan with after-tax dollars.
3. According to the rules, the interest you pay on the loan is not tax-deductible: rather, it’s considered regular consumer debt.
4. If the plan is terminated before the loan is paid off, the loan must be repaid or it is considered a taxable distribution; if the participant is under age 59 ½, a 10% penalty tax is tacked on.

In other words, borrowing from your 401(k) plan will have an impact on your future retirement earnings. How much of an impact? Here’s a calculator, developed by CalcXML, to help you make your decision.

Be careful: this avenue for credit is mightily tempting, and tapping it may be wise or even necessary; but make sure you are being prudent all the same.

Jerry Kalish is founder and President of National Benefit Services, Inc., a Chicago-based employee benefit consulting and administrative firm that serves private-held companies, publicly traded companies, and public sector employers. He blogs at The Retirement Plan Blog and can be reached at jerry@nationalbenefit.com.

"Small businesses are always searching for ways to differentiate themselves. But with fewer people out buying, some of the businesses are doing whatever they think will draw in customers." So says this entertaining recent New York Times story on the "special events" and other cool gimmicks that small retailers around the country are increasingly resorting to during this unmerry holiday shopping season.

Some of these events have to do with what the store sells, such as the Albuquerque, N.M. lingerie shop planning a men's night (sex, indeed, does sell). Others do so only obliquely, like the San Francisco futon shop that decided to host comedy shows...with, naturally, for-sale futons provided for specators' sitting pleasure. Some stores are starting Facebook groups and reaching out to customers via the Internet in other ways.

What all the gimmicks have in common is that they build buzz and, at their best, physically get customers either at the company's retail site or in the store itself. Once they're there, the thinking goes, they're bound to buy, so you must get them there at all costs.

And yet, it's also at less of the costs. Part of the advantage of using such things as marketing is that it's a lot cheaper than more traditional forms of marketing--chief among them, advertising. We could link to about five articles a week telling you that economic downtimes are precisely the time not only not to cut your marketing budget, but in fact to raise. But we don't, because you're probably cutting costs across the board and we think it would be fairly difficult for an entrepreneur who is liquidating inventory and has just laid off a fifth of his employees simultaneously to give an outside firm yet more money than usual to place ads. These events are the perfect compromise: you are increasing your marketing without increasing your osts (by too much--these events aren't free to put on)

The other thing these events and event-type marketing ploys do is give you that crucial leg-up on the retail outlets of big corporations, who very likely are able to undersell you. This ability, in turn, has never been more important to consumers. In other words, right now the average customer needs an extremely good reason to shop at a small retailer instead of a big one. We can't think of a better one--can you?--than the warm, personal service they receive and feeling they get when they patronize a community store as opposed to a national chain. And we can't think of a better way to remind them of this difference than to convey your hospitality and sense of fun through one of these events.

So get at it! The more creative, the better.

Oh, and a tip: free food always gets the masses coming.

The Wall Street Journal runs a fascinating article today that exposes a specific problem with the Small Business Administration's ailing marquee program, 7(a) loans. A type of loan designed for women- and minority-owned small businesses has been rejiggered entirely to exclude many such small businesses, particularly those in middle class neighborhoods. In addition to being not at all what the program's founders would have had in mind, it doesn't exactly make for great press.

There is a type of 7(a) loan called a Community Express loan that, historically, has been set aside for small businesses owned by women, minorities, and veterans. However, the SBA expanded the program to target all small businesses--no matter their owners--that operate in SBA-designated Historically Underutilized Business Zones (HUBZones) or in communities considered "distressed" under the federal Community Reinvestment Act. (Start-ups looking for under $25,000 may still receive Community Express loans no matter their locations, according to the SBA's Website.)

According to the article, this change, made in response to the credit crisis, has had the effect of decreasing the amount of 7(a) loans that go to women- and minority-owned businesses, which was the program's original purpose, because the emphasis is now on a business's location rathern than its ownership. Or, as an SBA officer puts it, the new structure "changed the program from a demographic-based program to a geographic-based program." On the one hand, we can't say we're saddened to see the SBA reaching out to these distressed communities. At the same time, the administration essentially took this program away from small businesses--specifically those in middle class neighborhoods--owned by minorities and women. There's really no defending that, even if the explanation puts the SBA in a slightly less-harsh light.

Now, we've known for some time that 7(a) loans have been falling massively: 30% in total number of loans, 13% in dollars, from FY 2007 to FY 2008. Everyone from "Anonymous Banker" to Sen. Olympia Snowe have given their thoughts on why, and on how to fix the program; the SBA has even instituted additional rules meant to encourage banks--the ones who actually decide whether to make the loans, which are backed anywhere between 50% to 90% by the SBA--to loan more.

According to the article, what happened was that several months ago, an influx of applications for Community Express loans came through due to the credit crunch elsewhere. At the same time, the Community Express program is legally mandated not to take up more than 10% of all 7(a) loans. To deal with increased demand and static supply (or, really, given the fall in 7(a) loans generally, constricting supply), the SBA decided to institute the relevant rule change, which decimated demand by making many prior applicants--basically, women and minority owners of small businesses not located in a designated troubled neighborhood--ineligible for the program.

It's easy to see where the SBA was coming from, and in fairness, because it is not actually making the loans, there is only so much it would be able to do when faced with that 10% rule and a sharp decrease in available credit.

Still, results speak for themselves, and these results are dismal. It's bad enough that women-owned small businesses do not get their legally mandated share of federal contracts. Now one of the SBA programs specifically designed to help them is...no longer specifically designed to help them? This needs to be fixed, and now.

I recently moved my main business checking account to a new bank, for the best reason possible: my new bank--a small, locally focused institution--offered me a significant line of credit for my business. I have to admit I had been dreading the transfer, because after four years with the same institution I was used to the process at the old bank. Also, I worried that the new bank, a one-branch startup, would not have the technology and processes I need.

To my surprise, however (and now I am knocking on wood to make sure this streak of good fortune continues), I shouldn’t have worried. The checkbooks arrived on time, properly printed, as did the deposit stamp. My first monthly statement arrived on time in the mail--actually, it arrived a week earlier than my old bank usually sent it. My online account access is flawless.

Oh, and did I mention my brand new remote check deposit capture? Where has this been all my life?

If you’re a small business owner who treks daily to the bank to deposit checks, as I have done for the last four years, you’ve simply got to insist on getting one of these machines.

On my office shelf sits a device smaller than my desk phone. It's for scanning checks. I put the check in its place, press a few buttons on my desktop computer, and the deposits are done, with funds available the next day.

My fondness for my new gizmo may be a little nerdy, but it’s the little things like this that make my new bank a big upgrade.

If you thought our posts about the failure of big banks fattened up by new government capital to provide credit to small businesses were bitterly angry, well, then you haven't met the laid-off employees of Chicago-based Republic Windows & Doors. Over 200 of them staged a sit-in at their old factory in protest of Bank of America's refusal to lend the company money, which would in part be used to pay them severance and vacation pay they are owed. There's no better way to fight such things than with public attention; they even got Illinois Governor Rod Blagojevich--yes, that Rod Blagojevich--to ask all Illinois state employees and agencies to cease working with BofA for the time being. The Chicago city government followed suit. And whaddya know? Today, BofA announced that it is likely to extend limited loans Republic's way after all. (The workers say that they have remaining grievances.)

CBS News has a nice report.

And you can be sure we'll continue to follow the story as developments occur.

The point is that the chickens are going to start coming home to roost for the big banks in the form of negative publicity. They have been taking the taxpayers' money after having lost so much of their own--which itself hasn't exactly endeared them to the public at large--and now, after all the haggling, they have yet to lend the money back to, yes, "Main Street". And it looks like they've gotten themselves on Main Street's bad side.

We know the banks are hoarding the money--maybe with tacit government approval (certainly we know that the government isn't forcing them to lend the money, as it could and should). We know that it is the small businesses, in many ways the lifeblood of the economy and certainly the lifeblood of that fabled "Main Street" to which so many taxpayers (which is to say, voters) think of themselves as belonging, who are getting the brunt of this particular shaft. We know it...and it looks like everyone else, including Main Street itself, is starting to learn of it, too.

If we were those banks, we'd be looking to clean up our image as stingy hoarders of taxpayer cash, and quick. Starting to lend it out, especially to small businesses, could do the trick.

One more point. Though in many, many cases around the country it is small business owners who are being hurt by this refusal of the country's biggest banks and biggest recipients of government capital to increase their lending, in this instance it is actually company employees who, having themselves been screwed over royally, have taken it upon themselves to draw attention to their cause and to work out a fair deal for themselves. In other word, in this struggle--there seems no better word for it--the interests of small business owners and small business employees (and other employees) are frequently aligned.

This is something that the National Federation of Independent Business and other entrepreneurs' interest groups ought to keep in mind the next time they blame the Big Three's collapse on too-cushy compensation packages or decide that the blocking of card-check legislation, which would make it easier for workers to unionize, is paramount for small business persons' interests. The Republic workers are members of United Electrical, Radio and Machine Workers of America. Given the common interests at stake here, a little solidarity is probably in order.

The National Small Business Association--that would be the prime small business interest group that isn't the National Federation of Independent Business--has put out a snazzy new Website trumpeting its proposed small business agenda, called "Think Big. Start Small.", for the incoming Obama administration, and especially its "First 100 Days".

As Inc.com puts it, the NSBA is the mirror of the NFIB: it, too, is officially non-partisan, but in practice it leans one direction--where the NFIB leans to the right, the NSBA leans to the left (or at least stays firmly in the center). So "Think Big. Start Small.," though often frustratingly vague, nonetheless provides a good opportunity to see what set of policies might constitute a "pro-small business" agenda that is alternative to the NFIB's proposals, which have at their worst lapsed into standard GOP talking points.

The main principle that stands out is that the NSBA clearly sees an enlarged role for the Small Business Administration in terms of combating the credit crunch from the perspective of small businesses. The group calls for preventing credit card companies from imposing capricious retroactive rate increases and other abuses, a subject we've covered. Its bromides on health care, while vague, do express a certain open-mindedness that could very well, if followed through upon, see the group supporting a drive for truly broad, near-universal health care of the type Barack Obama proposed during his campaign.

Oddly enough, on one of the few positions where the group does take a definite stand (as opposed to espousing a vague sentiment), it takes the "Republican" stand. That's right: it opposes the Employee Free Choice Act, otherwise known as card-check legislation. "It is not yet clear how such a change in the law would affect small businesses and their employees," the group writes. "Action should at least be deferred until the many small business questions about this legislation can be answered." It adds: "Such a new law could create significant new division at a time national unity should be a higher priority."

If this is how the more liberal of the two main small-business lobbies feels about the law, then Obama and the Democrats may be looking at a distinctly uphill battle in bringing the majority of the country's entrepreneurs on board. At the very least, they have an obligation to do whatever it takes until those questions about how card-check would affect small businesses, whose situation is never more distinct from that of big companies than in the realm of labor relations, are answered. That said, if those answers turn out to show card-check not having a deleterious effect on small businesses--whose owners, after all, frequently have interests aligned with workers, even unionized workers--then we hope that will be reflected in the NSBA's platform.

Q: With big companies folding and getting bailed out, should I take advantage of growing distrust of corporations by making my business more personal?

A: You should always make your business more personal; that’s why it’s called a “personal” brand. Even before the economic collapse, people distrusted corporations. But now, with Corporate America taking its place as Public Enemy #1, that’s truer than ever. Essentially, the public perceives the corporate decision-making hierarchy as being far removed from the day-to-day concerns of regular folks. So they assume that when companies make decisions, those decisions will be in the interest of the company, not the individual.

But when the average person is dealing with another person, he or she is much more confident that decisions and actions will be based on empathy, communication and doing what’s right. We all want to be cared for and treated with respect and caring, and we all want to feel that the buck stops with the person we’re talking to, not with some board or committee.

So there’s really no downside to making a business as personal as possible, as long as you keep two caveats in mind.
-Be aware of personal boundaries with your individual clients and your target demographic as a whole. For example, elderly people tend to be a little more sensitive about their personal space than Gen-Y types, so you might want to dial back the familiarity; continue to use “Mr.” and a last name instead of a first name, for example.
-Be sure you comply with the legal requirements governing your relationship with a corporation For instance, if you’re an independent insurance broker, you may be legally required to display the logo of the big insurer you represent on your business card. However, you should always be looking to minimize those ties even as you ensure full compliance. To take the independent insurance broker example: display that logo, but display it as small as you can and make your name as big as you can. Remember: people are working with you, not Farmer’s or Aetna.

Other than that, personalize away. We suggest things that are professional yet personal: redecorating your office to reflect your interests, sending cards to clients on birthdays and other occasions, stocking their favorite teas or treats before an appointment, making house calls at their convenience, and throwing informal clients-only events where people are encouraged to relax and get to know you and each other. The more you connect with them on the level of shared values and stories, the more your practice will benefit.

Peter Montoya and Tim Vandehey are the authors of The Brand Called You, the definitive guide to Personal Branding, published by McGraw-Hill. The book can be purchased here.

Well, looks like the bailout of the Big Three isn't going to come through, at least for now. Though a bill that would have provided $14 billion in loans was backed by everyone from Congressional Democrats to President George W. Bush (and President-elect Barack Obama) and even passed in the House, Republicans in the Senate, along with a few red-state Democrats, stopped it by keeping its supporters to a filibuster-vulnerable 52. "I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight," said Sen. Harry Reid (D-Nev.), the Majority Leader. "This is going to be a very, very bad Christmas for a lot of people as a result of what takes place here tonight.”

Merry Christmas is right. And we also dread to see Main Street, including the 57,000 other businesses directly dependent upon the Big Three's well-being (already people are sounding death knells for many auto suppliers), as well as the hundreds of thousands of others that are dependent upon the buying power of the millions of workers who may find themselves laid off by the end of the year should General Motors and Chrysler go belly-up, as most have predicted they will without emergency government loans. What we mean to say is, lots of the little guys--particularly in the upper Midwest (Michigan, we're looking at you especially)--are in real trouble as a result of what happened today.

It was for them that we urged the National Federation of Independent Business, for example, to consider supporting help for the Big Three (the group hasn't appeared to comment on this latest development yet).

The NFIB's main objection to a bailout, which it did not take an actual stand on but did express significant skepticism of, was worry that a deal would not address the problem of unionized Big Three employees' "gold-plated healthcare plans," "platinum-level retirement benefits," and "generous pensions". (While these burdens definitely consitute a problem here, it's hard to believe they're number one on an objective list.)

And in fact, the Senate Republicans' nominal disagreement came down to cuts that the United Auto Workers were promising to make as a condition of the deal. But it's worth noting that much of the dispute had to do not over the degree of those cuts, but with the swiftness of their implementation: the deal had them gradually phased in; the Senate Republicans demanded that they all go into effect next year. It sounds to us as though the phase-in is probably the more balanced compromise; plus it's an under two-year difference between what was proposed under the deal; plus a recession, when the government should be trying to put as much money into consumers' hands as possible, is generally not the best time to slash millions of workers' wages. This was a triumph of ideology not just over the common good, but over common sense.

So now we wait to see if the Federal Reserve will step in, as some Democrats have suggested it should (and must). Such an act would not require congressional approval. It's hard to see how it fits under that agency's purview--its role is to set monetary policy and regulate banks--but the thinking goes along "desperate times" lines.

A combination of impersonal factors and legitimate mistakes put everyone in a terrible position, and this bill was one of the more decent ways to start to try to fix it. This is frankly a sad day, and it may turn out to be a very destructive one as well.

When we talk about "eco-preneurship"--which we try to do frequently--we're usually talking about a small business's practices, not its business itself. We talk about how running a business that is conscious of its own environmental impact can help you as a marketing tool and as a way to cut costs. Certainly we still stand by all of this: if done right, "going green," in terms of the way you run your business, is both the right thing and a good thing.

But there's running a green business and there's being in the business of green: actually selling green products or services. Entrepreneur.com ran a fascinating column on this phenomenon earlier this week. It makes the point that green products is a viable niche market, and a fast-growing one at that.

The column takes the example of green houses: domiciles built with, say, extra-energy efficient appliances, or even with solar panels. If you are in the business of constructing green homes, or at least have that capability, then a sizable and growing population of homebuyers is more likely to come to you; and meanwhile, you all of a sudden have fewer competitors for what they're looking for than you did when you were just another homebuilder. The fact that what you're looking for is something that is by consensus serving a greater good won't exactly hurt your overall marketing strategy. Oh, and go ahead and charge a little more for your work: that's the green premium, and you should be able to get away with it.

Pick your industry: there's a way to make it green, and being green is only on its way up.

We'll close with the same point we always like to make about going green, no matter what way you do it. If you started your own business, you probably did so for reasons in addition to making money for yourself (not that there's anything wrong with wanting to make money for yourself!). You probably had some inkling of doing something that would be fulfilling in an extra-financial sense. Being green is a prime example of that, and just might be the thing to scratch that extra itch.

When we last we checked in on the National Federation of Independent Business's monthly small business optimism survey, the outlook wasn't brilliant: the index was at its third-lowest reading ever; there were essentially no good stats, whether concerning credit or labor or inventory; and generally, talk was of "recession-level" this and "recession-level" that.

Well since then, we've learned that we are indeed in a recession, and have been so for the past year. So we suppose some heart can be taken from the November numbers (press release here; full report here), in that they are better than October's. The previous optimism index, we have said, was the third-lowest reading in the survey's 35-year history; November's is the fourth-lowest. Hooray for improvement!

We sort out the little good, the mostly bad, and the altogether ugly news after the jump.

Net -4% is the number, seasonally adjusted, of surveyed small business owners who plan to increase their number of employees over the next three months. It was flat last month; it's been worse only during the recessions of the mid-'70s and early '80s. Only 43% tried to hire over the past month, down from October's 46%. This is obviously bad news for prospective employees, and the economy as a whole.
The Great Inventory Liquidation continues apace. Net -17% increased their inventories in November--10% increased, 27% decreased. November was the eighth consecutive month in which this figure was in the negative double digits.
56% reported having made some sort of capital investment over the past six months, a figure that's actually up two points from October's, though recession-level to be sure. And slightly more small business owners in November than in October said they have plans to make capital outlays in the near future. This was one of the brighter spots in the numbers. (There is one area where investment has tightened: the number of small business owners who reported purchasing a vehicle for their business declined one point. Somehow we suspect a couple gigantic car company bankruptcies won't help that.) On the other hand, only 2% feel that now is a good time to expand, down from 7% in October.
Inflation was not really much of a concern--only 9% reported it their number one concern--chiefly because there isn't really any inflation at this point. Net 0% reported higher selling prices in November, a whopping 15-point drop from October and a seasonally adjusted 32-point drop since July; net -11% are planning to raise prices, a 27-point drop from July.
It is an optimism survey, right? And the explicit optimism question provided one of this report's best numbers: Net 2% think conditions will improve near-term, which is four points up from October.
Net -38% reported strong profit trends. This figure has been worse exactly once in the survey's history. It would be unsurprising, then, if the sales figure were also second-worst in survey history. But it's not. net -25%, seasonally adjusted, reported higher sales over the prior three months, and that sales figure is the worst ever.
31% reported having all of their borrowing needs met; and 31%--though not the entirely same 31%--reported regular borrowing. That latter 31% is tied for the lowest reading in survey history. No wonder Small Business Administration-backed loans have fallen so much: the lack of lending is a demand-side problem, too.

It's worth noting the way two figures are connected, or at least matched up. We're seeing continued massive liquidation, and we're also seeing an upswing in capital investment. What explains this? Why are small business owners seemingly selling their stocks, without replenishing them, with one hand, but taking what money they have and plugging it back into their businesses with the other?

The explanation lies in the fact that generally right now assets are, at least in absolute terms, underpriced. Sound silly? It can seem like everything is incredibly expensive when your business is failing or you've lost your job, and there is plenty of truth to seeing things this way. At the same time, though, the fact that more people want to sell things than want to buy things right now, as everyone from banks to basic retailers tries to unload all of the products they stocked up on during the boom (and bubble) times, means that prices are, historically speaking, low.

This fact in turn means that if you can get the financing together now may be a phenomenal time to invest in your business. The year ends in half a month, though: get that write-off in before the new year.

Also we're looking at those massive swings in the inflation numbers, especially as compared to the high July numbers. (By the way: July is when oil hit its peak and started its plummet. You'd almost suspect that weren't a coincidence.) Are we headed for a deflationary period? Stick around for December's numbers some time in January.

There's a fascinating post on the New York Times's Green Inc. on alternative energy start-ups and how they are hurting right now. It's useful as a brief rundown of what's going on in that specific industry, of course, but it also communicates some points that could have broader relevance to start-ups and small up-and-coming businesses in a variety of cutting-edge industries.

Alternative energy start-ups are struggling both for the reasons all start-ups are struggling--a decline in venture capital funding, the credit crunch, and the generally poor economy--as well as for the specific reason that alternative energy looks less attractive now than it did, say, six months ago. Then, a barrel of oil was priced in the medium triple digits, trading for as high as $147. This meant that alternative energy, which especially in start-up stages is much more pricey to produce than oil, could compete as an energy source. But now that oil is having trouble staying above $50/barrel, the cost structure for alternative energy just doesn't make sense.

So what's going to happen? Ironically, even though now seems like a poor time to initiate an alternative energy start-up, it is those endeavors in their earliest stages who are going to have the easiest time surviving, according to the Times, for the simple reason that earlier-stage ventures require less overall capital. It is the later-stage start-ups--which were started when alternative energy seemed like a good idea economically speaking--who are in real trouble, with almost no one thinking everyone will survive. And the lesson can be extrapolated to the broader realm of start-ups: earlier companies will do better right now than later ones.

Meanwhile, while alternative energy companies' cost structures have been thrown into mayhem by the ridiculous drop in oil prices (a roughly 70% decrease occured over roughly four months), their additional raison d'etre--an environmental and geopolitical need for the West to lessen the degree to which it is dependent, as economies and as societies, on oil--has never been more operative. Which is why government investment of $150 billion into private sector solutions to our energy problem seems like a good idea.

Take a look at our coverage of Apple's iPhone: quite a lot for a site concerned with small business owners, right? Certainly Apple is no small business. But the reason we cover it so closely, as well as its rivalry with Google's upstart Android operating system, is, as we said from the beginning, that it provides a potentially extremely lucrative and generally great-for-innovation avenue for start-ups. These iPhones--the 13 million and counting of them that Apple has sold--are an absolutely phenomenal platform for applications, from the Shazam music discovery engine to the rock lighter, that can be produced by one and two entrepreneurs working out of their houses, or by sophisticated, slick ventures.

This week's Newsweek--a brother publication of BizBox's--has a great run-down of the money to be made off of iPhone apps, as well as of Apple's fight to make itself destination number one for developers.

For entrepreneurs, it's about combining brilliant inspiration with solid execution, waiting for a little luck and for something to catch on, and watching your business soar. The article talks about one company--and by company we mean a few engineers funded by a few investors' worth of seed money--called Smule that made four iPhone applications. One of them, Ocarina, has been downloaded 400,000 times for $1 a piece since it was released...last month. Smule, which had been aiming for $100,000 in revenue this year, will instead gross something closer to a profit-turning $1 million. (The article also contains the interesting information that Apple gets a 30% cut of all sales.)

The more inside baseball part of the article concerns Apple's attempts to secure for itself enough market share and street cred that its OS is the one developers aim to design for, rather than that of rivals such as Research in Motion's Blackberry line, Google's Android system, or others. They've been criticized for overly heavy-handed policing of their app store, which could turn users and developers off; on the other hand, Apple's party-line attitude could solidify its position.

Regardless, the fact is that smartphones are here to stay, and so are the awesome and useful apps that entice consumers to purchase them. This is an extremely promising frontier for enterprising and creative entrpreneurs. So we will continue to be watching.

As if these lean times weren't hard enough on your bottom line for purely economic reasons, the Wall Street Journal reports that the low points of the business cycle are also breeding grounds for employee fraud, which is substantial--the average company lost $2.4 million to employee fraud in 2007, according to PricewaterhouseCoopers--and believed to be growing.

The article is based around a new survey of businesses of all sizes and in all industries that found 20% of owners saying employee fraud was a "moderate to very big problem". And it offers a number of interesting tidbits on the identity of the typical employee fraudster as well as some tips for preventing--and the key is preventing, rather than detecting after the fact--employee fraud.

First, a couple caveats. Don't get too scared by that $2.4 million: it appears to be a corporate average, so you've got to figure both the the massive companies and their most massive instances of employee fraud are tipping the scale a bit. Also, it's not entirely clear if the relationship between bad times and increased employee fraud is one of causation or mere correlation. One theory has it that during recessions, business owners are simply paying more attention to their balance sheets and therefore more apt to notice fraud, which could be caught more and seem like more even if it's continuing merely at a constant rate. Our guess is it's a little bit of both: owners are catching fraud more, but employees are committing it more as well.

Pricewaterhouse reported in 2007 that the typical fraudster is young, male, and educated. 44% of employee fraudsters are between 31 and 40; 38% are college graduates; senior-level workers make up 25% of them; and they are fully 85% men.

So how do you head off such activity, which can bring a whole heap of trouble--in lost profits, lowered morale, legal involvement--to your company? The article emphasizes the utility of preventing fraud before it occurs, and the additional utility of prevention without resorting to means that smack of Big Brother. Extra cameras and electronic monitoring have their place, to be sure, but between the legal realm--where the trend in recent years has been to restrict management's ability to watch employees invasively--and boosting office morale, this isn't your best bet.

Instead, what you should be doing is cultivating an atmosphere where fraud is both bad and a bad idea. In other words, both something an employee of yours would never want to do, because he or she (well, usually he) is happy at his job and with your management; and something an employee would never want to do because you have communicated to him and his co-workers what the legal ramifications for such fraud are.

Protect yourself. The slumping economy is doing enough damage as it is. You don't need this extra drain on your business.

Q: We're experiencing the worst holiday retail season in years. Let's say you're a retailer: particularly a small retailer. How do you market yourself as the place where Christmas shopping--and beyond!--should be done, particularly if your competition is a big box store that can probably undersell you?

A: You emphasize the qualities that your big competitor can’t match. You can’t compete with them on price, selection, or corporate brand recognition, so don’t try. Instead, focus on the things that make you different from the Walmarts of the world.

Try these tactics:

Specialize. Big retailers tend to offer everything under the sun but little in the way of quality or assistance. Go the other direction by specializing in a narrower line of products but offering a great selection within them, along with top quality and expert advice and help.

Customize. Big retailers typically evince a “take it or leave it” attitude. Why don't you be the retailer who creates custom solutions for people, whether they’re buying vacuums or model trains?

Reach out to the community. Pay local kids twenty bucks to put flyers in the front doors of 1000 homes in your area, inviting them to a Halloween party at your store. Sponsor a local Little League team. Organize a beach cleanup. You’re more a part of the community than any national store; take advantage of that fact to earn valuable goodwill.

Use your name. People know you, not your store. If your name isn’t the most prominent part of your business’s name, change your business's name. Rather than “Women’s Shoes 'R Us,” make it “Bob Smith’s Shoes for Ladies.” If people know you and what you stand for, then they’re more likely to give you their business.

Get things no one else can. Doing this is a major advantage of being a local retailer. Big boxes don’t really care about helping customers find rare or difficult-to-locate items. You can leverage this. Make taking requests for things that customers “have always wanted to find, but…” a major focus for your store. Then find them. Be the one who locates that vintage toy Grandpa wants to pass on to his grandson. Such gestures paint you as a merchant who really cares about people—and that’s what we all want to do business with. Plus, you really will be a merchant who really cares about people.

Give your store a makeover. The stereotypical local, small-town merchant has a crowded, cluttered store with crumbling signage and no organization. Defy that image. Make sure your shop is clean, neat, well-lit, and has clear, professional signage. This is an area where the big boys excel, and it’s what shoppers expect. Just be careful not to lose any local flavor that makes your place special.

Reward loyalty. You can’t compete on price, but you can give discounts to customers who come back again and again. This can be as simple as giving them a card and hole punching it each time they make a purchase; after five purchases, they get their next one for 50% off. Or something like that. Offer coupons, special discount days; take barter; anything to be creative and save folks money in these tough times.

Have a great Website. You can’t afford a 100,000-square foot store, but you can probably afford to have a nice-looking website. Get one. You’ve got to have one these days. Make sure it’s clean, offers people a place to sign up for your e-mail newsletter, download coupons, find out about sales, learn about community events, and ask about special hard-to-find items. And make sure you send out that e-mail newsletter every month.

Repair stuff. Finally, what could be better for saving people money during tough times than also offering to repair the products that you sell? Remember: these are customers who have already chosen you; this is a way to get more business from them. Either start an in-house repair service or contract with a shop that does repairs. In any case, you’ll benefit greatly by helping some people get more life out of their prior purchases rather than spending more money on something new while making new trash.

In other words, just as the big boxes may be doing what you can't pricewise, you do what the big boxes can't in terms of all of the other thing that factor into consumers' decisions.

Peter Montoya and Tim Vandehey are the authors of The Brand Called You, the definitive guide to personal branding, published by McGraw-Hill. The book can be purchased here.

"Anonymous Banker," who appears periodically on New York Times columnist Joe Nocera's blog, will always be our favorite expert on Small Business Administration-backed loans. But we also very much enjoyed this interview that Inc.com did with Christopher Hurn, the CEO of Orlando-based SBA lender Mercantile Commercial Capital.

Hurn was optimistic that the current trend of massively slowed SBA loans will be halted by government actions: not the SBA's, which we detailed here, but the New York Federal Reserve's agreement to buy up securities backed by struggling SBA loans, which we reported on here--in total, $200 billion will go to buying up securities backed by SBA, auto, and a couple of other struggling types of loans.

"It’s great that you can now price the loans off of Libor," Hurn says, referring to one of the SBA's changes. "But this is an issue of access to capital, not an issue of the cost of capital. Right now, rates are at historical lows. But it doesn’t really matter if a business owner can’t get a line of credit in the first place." He adds, "What the Fed and the Treasury have done is actually take some action. They’ve got the facility now where they can start buying these loans, and that’s really what’s going to thaw out the market." Let's hope.

Hurn--who, it should be disclosed, runs a company which is basically in the business of making SBA loans--criticized the big banks along the lines Anonymous Banker (who purportedly is a small business lender at one of them) did: namely, for taking the bailout money and not lending it back out to small businesses. "It would be interesting to see when these large banks decide they want to get back into SBA lending. They will in a year or so, but they’re not there when the small-business community needs them," he says.

As for what the federal government should do now, Hurn suggested addressing what he said was an overlap between the SBA's two big lending programs, the 7(a) one and the 504. He also suggested that the SBA, well, market itself better: not as the desperate lender of last resort but as a great resource that can frequently be used in concert with banks in order to borrow much-needed cash. Finally, echoing Sen. Olympia Snowe (R-Me.) and others, he suggested that President-elect Barack Obama make the Small Business Administrator a Cabinet-level officer, as President Bill Clinton did (and President George W. Bush did not). (We for one would be surprised if so uncontroversial a move didn't happen.)

At one point, Hurn says of the country's biggest banks--the ones who took the heaviest losses and have received the most in taxpayer dollars, and who at the same time are, in almost direct proportion to their sizes, the biggest SBA lenders--"They’re being encouraged to lend, but there’s no gun to their heads saying, ‘Look, you’ve got to put the money back on the street.’"

They're being encouraged. Even assuming that's true--and, according to Joe Nocera, who reported that the Treasury Department wants the big banks to take the government's money and use it to buy up smaller ones, it's not--we're talking about the federal government here, the one entity that is empowered and even expected to do a bit more than encourage. There is no gun to the banks' heads, and while we're not in favor of putting, you know, actual guns there, we are very much for actually requiring a burst in lending, particularly to small businesses. And it is there that we believe the incoming administration should begin.

"...to me, as an entrepreneur, I wanted to know: 'Hey, the number could be infinity.' When you start your own business, the theoretical number is infinity, and it's totally in your control. So I felt that it was better giving it a shot on my own."

Today BizBox inaugurates a new interview feature, Small Business Salon. Our guest is David Feldman. His business is his boutique law firm: he is the founding and managing partner of Feldman Weinstein & Smith LLP. He's also the author of Reverse Mergers: Taking a Company Public Without an IPO, and a blogger at Reverse Merger & SPAC Blog.

If you are a small business owner interested in being interviewed for Small Business Salon, or know one who would be (or should be!), please email us at bizboxonslate@gmail.com.

BizBox: So, Mr. Feldman, tell us about your business.
David Feldman: We're a law firm, Feldman Weinstein & Smith. I also have a blog: ReverseMergerBlog.com. That's become an interesting separate little business. I was always a very entrepreneurial guy: I was the eight-year old with a lemonade stand. I went to business school at Wharton [at the University of Pennsylvania] as an undergrad, and went to law school basically because my parents made me: they said, "When you're done with your schooling, you should have a profession." So I went to law school, never intending to use it.

While I was in law school, also at Penn, I bought a radio station in Daytona, Florida with a friend. I believe you're not a true entrepreneur until you have one significant setback. But when we sold it for a loss, we were able to give our investors their money back, and I learned a lot about crisis management, so that was an interesting experience. When I was in college, I bought an interest in a local day camp using my bar mitzvah money. And that worked really well--got about five times my money back in four years. So I always thought I'd be one of those guys.

How did you start practicing law?
My uncle started the largest law firm on Long Island, and they had over 200 lawyers at the time. So even though I had an offer to go to a big firm in Manhattan, I spent a year at my "family" firm. They did mostly litigation, which I discovered very quickly I was not interested in.

It was the Roaring '80s, so I joined what's now known as Fulbright & Jaworski. Learned a tremendous amount, hated the lifestyle. I was a corporate and securities transactional lawyer.

What did you hate about the lifestyle?
I don't mind working hard, but it was an every-single-night-and-most-of-the-weekend kind of job. And the randomness of when you were required to do that was really frustrating--the deals took on a life of their own. We sell time for a living, lawyers. The more billable hours a lawyer has, the more they like them. But that disincentivizes efficiency. And so the way to reward efficiency is with more work.

I was also starting to bring in a few clients, to build some independence. So right from the beginning I was out hustling and networking. And the firm didn't compensate you for that. They'd rather you be chained to their desk working on their own clients.

So you struck out on your own?
In '92, with a mortgage, and a two-year-old, and a wife, I decided to bail on my safe six-figure salary and give a shot with my own firm. I joined a guy named Doug Ellenoff. And he and I were Feldman & Ellenoff, which we built up to an eight-lawyer shop.

The way things were developing led me to just give a try to being on my own. So in '96 I started a solo practice. Just me, a desk, a computer, a phone, and I guess a chair. I had a client who was trying to go public. And that's what's morphed into my 24-lawyer shop.

What has working for yourself taught you about the work-life balance?
I always tell my staff that there's working hard, and there's working smart. Life in the big firm was: you kinda schmoozed around a while, went from one office to another, talked about the ball games, gossiped, and then in the middle of the afternoon you got some work done. And that's why you were there til 10 at night. Here, everyone gets in, pus their heads down, takes a break for lunch, and then gets the heck out of there. We try to have as much of a respect for people's right to have a life.

Did anything else prompt you to strike out on your own?
At Pryor Cashman [Sherman & Flynn, another law firm], I believe I was on the track to make partner. And I started looking at it and the numbers weren't bad, but to me, as an entrepreneur, I wanted to know: "Hey, the number could be infinity." When you start your own business, the theoretical number is infinity, and it's totally in your control. So I felt that it was better giving it a shot on my own. The lifestyle was a big part, too: the control. What I also didn't have was enough time to do was to build my own business.

How did your business develop?
I developed this niche called reverse mergers. (In general, I would say try to be the king of something.) And I got lucky enough to move into a leading position in this particular industry. This is where a private company, rather than doing a traditional IPO, instead finds a public company that's something of a shell; then you buy it, and you're instantly public. It got a bad name in the '70s and the '80s, but there have been rule changes since then, and now it's legitimate and popular: now, many companies--about 200 a year--do it. I've written the only text on the industry--Reverse Mergers. And my blog gets 3,000 hits a month. That's been a source of tremendous business and speaking opportunities.

Tell us about how you secure financing for your firm.
Like everything else, it's all about relationshipos. You not only need to perform in your relationship with your bank, but also make sure you like each other. I'm lucky enough to have a great relationship with a banker currently at Signature Bank.

Every single year, my individual practice has grown, including this year: but just barely--it happened yesterday, actually! As I say year-to-year it grows, but quarter-to-quarter it can go up and down, and we'll sometimes need to access lines to tide us over, and then we'll pay it off.

Have things been especially difficult in terms of financing recently?
No question you worry in this environment whether it will all be there for you. I ended up having a good 40-minute conversation with the president of Signature, not only to talk about the bank's healthiness, but asking if they are cutting credit lines, and they said no. They're public, but they're quiet, and they don't do any advertising. They handle not only my firm but also my personal banking. When I was at a big bank, I won't say which one, it was really hard to be a little guy.

The advantages of smaller banks for small businesses is something we discuss a lot at BizBox. Why did you switch from a big bank to Signature?
My guy, who's now at Signature, had been courting me. Meanwhile, at the big bank, one time I had been looking to increase my old credit line. And I had switched from being a PC to an LLC--just for tax reasons. Now I had been with this bank for probably seven or eight years: always paid everything on time, business was growing, etcetera. But they said they couldn't increase my line because I'm a less than two-year old business. Because of the LLC switch! They said, "We agree with you that it doesn't make sense, but we have no choice." When I called my old banker at Signature, they said, "That's ridiculous, of course we'll honor the fact that you've been in business," and they gave me the credit line. I'm very, very happy with that relationship.

How has being a lawyer helped you as a businessperson?
I felt that law school was actually the completion of my business education. In business school, you get enough accounting to know if your accountant's messing up, but you really have no idea if your lawyer's messing up. That makes CEOs unnecessarily dependent on their lawyers. I think business school should have more mandatory law classes. In business, you learn about taking things to the sky. In law school, you learn about managing risk. In law school you're supposed to be the ultimate pessimist; your job is to tell your client every possible thing that could go wrong. But my nature is to be a positive optimist. As a lawyer, I've been well-trained. But I will never say, "No, you can't do that" to a client, unless something's, like, a crime. But I'll say, "You wanna breach that contract? Here's what'll happen."

I have not found too many lawyers, even who run law firms, who have strong business skills. They may be good lawyers, and they do the things they're supposed to do in terms of going out to get business. But I'll bet of the ten or twelve firms that I directly compete with, I'm probably the only one that actually has a five-page written-down marketing strategy for my firm--and everything we do flows from that strategy. I know the three things I want to get across to someone when I meet them in terms of what my firm's about. But I also know long-term how I want to broaden that.

Tell us a bit about your blog, and how it's helped your business.
My publisher kind of made me set up the blog we're talking about, because they hoped it would sell books. I considered it like the updated feature of my book. And then I got more into it, and I started promoting it a little--I added it to my email signature, for example. And the traffic started building. Now, they say we got about 3,000 people a month, which for such a narrow topic is ridiciulous.

And yes, it has led to business. There are people who call me. Prior to the book, everything was a referral or someone I met at a conference. Now, I get unsolicited calls, form someone who read my book, or read my blog, or saw me speak, or saw me quoted in the Financial Times. It's exciting. For each one of those I get, that I never would have had, it has made a huge difference. People say, I want the guy who wrote the book on the subject. Well, that's me.

The year is winding down...which means that the tax year, too, is winding down. Time to figure out how to pay as little of your taxes as possible (well, without resorting to outright tax evasion--you don't want to take the Al Capone route). In many ways, it's ironic: you spend the whole year trying to make as much money as possible. Then, for tax purposes, you try to minimize. Certainly no one ever wished to make one dollar less in order to reduce his tax liability by one dollar. But, once you've made all the money you've made, you might as well in turn give up as little of it as possible, right?

Fortune Small Business has a nice feature on five tax tricks you shouldn't miss out on. We go over them below.

Deduct, deduct, deduct! Again, not illegally. But look at the IRS's definitions, and how they affect your taxable income, and use them wisely. The article cites one small business owner who knows to write off meals served and consumed off of the company's premises for business purposes (liberally defined) as "offsite strategic planning meetings" rather than "business meals with a client". The reason? The former are 100% deductible; the latter, only 50%.

Employee headcount. Particularly if you employ certain types of people--the disadvantaged, even the formerly felonious (there's one hilarious Office about that--you can get money back under the Work Opportunity Tax Credit program, just like that.

Get organized. No, this isn't about the Employee Free Choice Act. We mean that you need to keep your records crystal-clear, clean, neat, and accessible. This won't necessarily save you money (though it couldn't hurt: you never know what savings you'll uncover as a result of better book-keeping). But it will save you an immense hassle should the IRS come a-callin'.

Timing is everything. Write-offs for expenditures such as capital investments are tricky and complicated: you don't deduct it all at the same time, factors like depreciation play an important role...it's really quite complex. This is why you talk to your CPA. But having done so, make sure he or she knows if you'd prefer to maximize the amount of money you get from a write-off right away. This goes for vehicle deductions as well.

Interesting stuff, right? See, doing your taxes can be fun. And the most fun part comes afterward, when you see how much money you saved.

"Starting a business in a recession is like vacationing in the off-season," says Eric Ryan of Method Cleaning Supplies. "It's a little less crowded, and everything starts going on sale." And who doesn’t love a sale?

It runs counter to every human intuition. But starting a company in a down economy is actually very logical from a pure economics perspective.

First of all, it’s cheap. In a recession, there are many opportunities and deals to be had; you just need to remain calm and know where to look. Everyone is feeling the pain of this financial crisis, so, everything is negotiable: rental space, equipment, labor, and even inventory can be had at major discounts if you play your cards right.

Second, it’s a quiet time in the market. Established companies slash their marketing budgets at the first sign of recession, and they quite often lose customers as a result. That makes it the perfect time to grow organically and grab market share, especially if you’re competing on price. As Inc. magazine put it, “Downturns are actually a great time to sign up new accounts. That's because companies are examining every expense for ways to save. If you can offer a better price than their current vendor, you will have a decent chance of winning their business.”

For women long harboring secret desires to own a business, it’s a particularly attractive time to make the move.

Women are already becoming business owners at a record rate. In 2008, the U.S. Census estimated 10.1 million women-owned firms, up from 6.4 million in 2002: an increase of 58% in the last six years.

With the economy in shambles, many women and mothers are trying to think of ways to help their families stay afloat. At the same time, big companies are tightening their belts, cutting budgets and jobs, and it is that much harder to get back into the work force. So there’s no place to go--but out on your own.

Moreover, regardless of the economic situation most female entrepreneurs tend to start small and grow their businesses slowly and organically, having little need for outside funding. Women, in general, tend to start more home-based or online businesses. These businesses have low start-up costs and tend to allow for a great deal of flexibility. All of these factors constitute distinct advantages in our current economic climate, where credit is hard to come by.

Consider thinking against the grain. Consider a start-up.

Next, we'll give you some concrete rules for starting your own business during a down economy.

Nada Jones and Michelle Briody are the authors of Sixteen Weeks to Your Dream Business, a guide for prospective women entrepreneurs. They blog at Sixteen Weeks To Your Dream Business.

This post isn’t directly about retirement plans for small businesses. Instead, you might say it is about what it takes for a small business to be able to afford to make retirement plan contributions by, you know, staying in business in the first place. In a nutshell, I've found with my business that what it takes is great customer service.

BizBox talked about this a little while ago in its post, It’s A Wonderful Small Bank, referring to a New York Times article about small community banks keeping themselves above water. BizBox saw these small financial institutions as a bellwether on how other small businesses can expect to fare in today’s difficult economic climate.

And it added: "You also see in the article what appeals about small banks: their down-home-ness, their ability to provide a level of personal service that larger companies would have a difficult time matching--the classic small business advantages."

In other words, they “get it”.

Now here’s the other side of the equation: the ones who don’t. It’s a story told by Seth Godin who once wrote a classic post on parking spaces. It has more application today than when he first wrote it over a year ago. Here it is in its entirety:

"The manager of the Chase bank in Pleasantville parks right out front. Her branch is on a quiet street with parking meters available for customers to use. Figure there's perhaps a dozen spaces convenient enough to make it worth going to the bank... if they're full, keep on driving, because there's always another bank coming up soon.

And yet, the manager parks right out front (in fact, I saw her move her car from two spaces away to an even closer spot today). She has four or five people working in the branch, so if they follow her lead, that's half the spaces.

Of course, it's a far bigger issue than parking spaces. It's about eating lunch with your employees, handing out free samples to customers instead of your friends, or answering the phone yourself when customer service gets backed up.

I'm increasingly coming to the conclusion that there are really only two attitudes that people bring to work with them. Either they park right out front, or they park down the street in order to send a signal to their staff, their customers and themselves."

It's the park-down-the-street people who work for me in my small business. And it's the employers who have signs like this one in their parking lots who are the ones that will weather and even thrive in the current economic storm. The ones who will continue to contribute to their retirement plans.

Jerry Kalish is founder and President of National Benefit Services, Inc., a Chicago-based employee benefit consulting and administrative firm that serves private-held companies, publicly traded companies, and public sector employers. He blogs at The Retirement Plan Blog and can be reached at jerry@nationalbenefit.com.

That's the "dream pick" of Karen Kerrigan, who heads the Small Business and Entrepreneurship Council, for who should be in charge of the Small Business Administration under President-elect Barack Obama, the Wall Street Journal reports. (Obama has already named New Mexico Gov. Bill Richardson as his choice for Commerce Secretary, who would oversee the SBA). Could this happen? Kerrigan is apparently skeptical, but sees the merit in the idea: in the Journal's words, Johnson "has started a string of successful businesses, could draw celebrity attention to a stodgy federal agency, cares about helping the disadvantaged and urban revitalization and aligns himself with smart people." Except for the successful businesses part, he actually sounds an awful lot like Obama.

For those who just know Johnson as a former superstar Los Angeles Lakers point guard (as well as a prominent HIV/AIDS activist, who announced that he had HIV in the early '90s), you should read this, which details his "urban business empire". Basically, Johnson built movie theaters, Starbuckses, and in general invested in the inner-city communities that others wouldn't touch, bringing much needed capital to the neighborhoods that need it most...and making a bucketful for himself.

MSNBC recently interviewed Johnson, asking him for his business advice. He has all the charisma you'd expect of a former NBA star, and all the savvy you'd expect of a tremendously successful businessperson. Check it out:

President-elect Obama: we hope you give him some consideration for SBA head. We're sure Johnson would be willing to play an occasional game of one-on-one as part of the deal. Who knows, he may even let you win.

Big morning: President George W. Bush (yes, he's still the president!) has announced that the government will make $13.4 billion in emergency loans to the Big Three automakers, plus an additional $4 billion down the road in February. We explained why the auto bailout is a good thing--from small businesses' perspective--here and here.

But right now what we want to take away from this is the extraordinary measure that the government is undertaking. The government lending directly to retail businesses! It's largely unprecedented, excepting the special program set up earlier this year for investment banks, which has since been made obsolete by the disappearance of investment banks.

The government's action today makes you wonder: is this the last of the government's direct lending to businesses? Or is Main Street going to be next?

Sen. Chuck Schumer (D-N.Y.) proposed lending "tens of billions" directly to small businesses, but that was over two months ago, and we've seen no action on or even discussion of that idea since. We hope that, especially in light of today's announcement, it will be revived.

Alternatively, we came across a very interesting, if heavy on the economics-talk, article from the Financial Times. In it, the authors suggest that banks' refusal to lend right now is not a result of their not having sufficient capital--after all, the government is giving them billions of dollars of capital!--but rather their irrationally assuming that other banks won't lend, and that somewhere along the line there will be a default that will come back to hit them.

The authors propose that the government step in, guarantee something in the neighborhood of $200 billion in business loans to some extent, and then make banks make the loans. Not provide the means for lending; not politely suggest it; but actually compel action.

Read the whole thing. And consider what the government has done today (correctly, in our view) and how it should inform what it does vis-a-vis the thousands and thousands of small businesses that also need help, and that, through no fault of their own, aren't getting it right now.

President-elect Barack Obama did not select Magic Johnson to head the Small Business Administration, but his choice seems like a good one nonetheless. He has tapped Karen G. Mills (pictured at right, on the right), a private equity wheeler-and-dealer and venture capitalist who has been very active in developing economic policy for her home state of Maine. The main criticism that could be made of her is that she has no grounding as a typical small businessperson, but past successful SBA administrators have not, either. The other criticism that could be made of her is that she never won five NBA championships, but we'll take what we can get.

A woman from Maine...ah yes, just like Sen. Olympia Snowe (R-Me.), the ranking member of the Senate Small Business & Entrepreneurship Committee, for whom we had very kind words last week. We can't think this is pure coincidence. "Karen has a tremendous background in venture capital and lending, which will prove beneficial during these times in which small enterprises require every tool at their disposal to create new jobs," Snowe said in a statement released a few hours before Mills's appointment was official, reports Sharon McLoone.

(Incidentally, in that Snowe post, we named the four members of the group reviewing the SBA for Obama's transition team, and mentioned that we would be less than shocked if one of them ended up as SBA Administrator. Mills, needless to say, was indeed one of the four.)

McLoone has the rest of the goods. Nydia Velazquez (D-N.Y.), who heads the House Small Business Committee, was very pleased with the pick; so in fact, is outgoing Acting SBA Administrator Sandy Baruah. And so was the National Small Business Association, which brushed off the fact that Mills was not a typical small businessperson herself: "We're not overly concerned by administrators without small-business experience or backgrounds -- like former SBA chief Steven Preston -- so long as they are clearly grounded and have experience with key business, economic and operational challenges... which Ms. Mills appears to have," their spokesperson told McLoone. The National Federation of Independent Business, the more conservative and powerful of small business lobbies, has not put up a statement; we left a message for them seeking comment.

A final note. We absolutely think a man who is dedicated to making sure women entrepreneurs are treated equitably could do just as good a job at looking out for them as a woman. That said, appointing a woman to head the SBA sends a nice signal. For those not up to speed: female small business owners have not been receiving their legally mandated share of federal contracts; they have also just seen an SBA lending program designed specifically to help them yanked out from under them, a victim of the credit crunch.

The SBA faces a host of issues, most importantly declining 7(a) loans and most notoriously misreporting of government contracts. But Mills could do worse than starting in her new job by making sure women entrepreneurs are being treated as they should--and as the law demands.

We've written before about the American Small Business League, the organization dedicated to seeing that federal procurement quotas are enforced. As things stand right now, of course, they aren't: the amount of federal contracts that go to small businesses is lower than the legally mandated percentage, with over $5 billion in contracts being misreported as having gone to small businesses in 2007 alone; contract quotas for woman- and minority-owned businesses have been similarly not fulfilled.

The ASBL has not been hesitant about laying much of the blame for all of this at the feet of the Bush administration. At the end of last week, though, the group issued a press release preemptively attacking President-elect Barack Obama for allegedly planning to ignore this procurement issue and for generally turning his back on small business owners in favor of venture capitalists. Unmentioned by the press release, but probably not irrelevant to the charge that Obama is favoring venture capitalists over small business owners, is the fact that Obama's pick for head of the Small Business Administration is Karen G. Mills...a prominent venture capitalist

Lloyd Chapman, the group's founder and president, said in the release, "I predict President-elect Obama will not restore the Small Business Administration's budget and staffing as he promised during the campaign. I don't think he will do anything to stop Fortune 500 firms from receiving federal small business contracts. I believe he will sign legislation to create another colossal loophole that will divert billions more in federal small business contracts to billionaire venture capitalists. People need to start noticing the dramatic difference between what Obama said during the campaign and what he is actually doing."

The release pointed to the conspicuous absence of any supportive statements on Obama's famed change.gov transition Website. It also cited the $1 million in campaign contributions that his campaign received from the venture capital lobby, which, it argued, will lead Obama to support a bill called the Small Business Investment Expansion Act of 2007, which will allegedly provide a loophole to continue the flow of ostensibly small business contracts to large corporations.

On the one hand, it seems unfair to blame Obama for things he hasn't done (or hasn't not done) yet. That said, we are glad for the ASBL: it's good that someone is already dedicated to keeping the incoming administration honest on these crucial issues. If nothing else, it helps ensure that we and the rest of the press will be watching. And if Chapman and the ASBL turn out to be right, you can be sure that theirs will not be the only angry voice.

Friday brought huge news to the small business world, with President-elect Barack Obama announcing Karen G. Mills, a Maine-based venture capitalist and private equity executive, as his pick to head the Small Business Administration.

Responses to the pick were largely positive, despite the fact that Mills herself has never been what you would traditionally think of as a small business owner (although she did co-found her own venture capital firm). Mills has worked extensively with small businesses as a venture capitalist, though, and was also a member of the group reviewing the SBA on behalf of Obama's transition.

Jeremy Quittner of Business Week had actually spoken to Mills in September for a story about small businesses and politics, and he posted quotes and links to The New Entrepreneur blog.

“It is very important that we have a more granular understanding, particularly at the federal policy level, about the voice of small business," Mills told Quittner a few months ago. "It is not a one-size-fits-all category. There are differences in small businesses. A restaurant needs capital, too, but a different kind, and it needs a different approach from the Small Business Administration. The SBA needs to be evolved enough to recognize that a lot of business will come from high-growth small businesses and, once again, we can’t have a one-size-fits-all approach.”

Forbes's report gives a nice, brief biographical sketch: Mills is a graduate of Harvard's college and business school, put in time at consulting superpowerhouse McKinsey & Co., and is married to the president of Maine's Bowdoin College.

In announcing the selection, Obama cast her expertise as coming from her time as a venture capitalist investing in small businesses as well as her extensive experience working in both the private and public sectors: the former through her business dealings, the latter through her work advising Maine Gov. John Baldacci.

The elephant in the room is indeed the fact that the new head of the Small Business Administration will be someone who is not a small businessperson. As we reported, the National Small Business Association brushed off this concern; and so far we are inclined to do the same. (A call seeking comment from the National Federation of Independent Business has not been returned.)

However, Inc.com's Robb Mandelbaum is less sanguine: noting that Mills's focus has been less on venture capital and more on private equity, he writes, "Though this certainly doesn't preclude her from doing well at the agency--see, for instance, Steven Preston, who was an executive at ServiceMaster before George Bush appointed him administrator--it's not exactly an ideal resume for working with and advancing small business" (the NSBA also mentioned Preston as an example of an SBA head who did not come from the small business world but who nonetheless did a solid job).

Mandelbaum reports that Mills was suggested for the post by Sen. Olympia Snowe (R-Me.), the ranking member of the Senate Small Business & Entrepreneurship Committee, of whom we are fans. We certainly noticed the "coincidence" that both are women from Maine. And Mandelbaum theorizes that Obama intends to make Mills's position Cabinet-level, as it was under President Bill Clinton and as Snowe has urged.

So there you have it. We can speculate all we want. What's going to matter is what happens come January 21.

"The secret of our business is to be there when someone has a need."

Our guest today is Andy Stern, president of Andy Stern's Office Furniture, a Washington, D.C. area office furniture dealer. He has watched his six decade-old family company's continued success by reshaping the business, cutting costs, and mastering the e-newsletter and the Web.

If you are a small business owner interested in being interviewed for Small Business Salon, or know one who would be (or should be!), please email us at bizboxonslate@gmail.com.

BizBox: Tell us about Andy Stern's Office Furniture.
Andy Stern: My dad started it in 1946. Strictly in the Washington metropolitan area, we sell office furniture to small to mid-sized companies--not Fortune 500, and not tiny. Strictly business-to-business. These companies need a lot of help in terms of laying out their offices--if, say, they're moving and their landlord gives them a floorplan, they can't walk into Staples, or they can't even get high-end office furniture, cause they're too small. We come in and work with our computer design program.

Do you guys have physical locations?
We have four showrooms strategically placed around the D.C. metropolitan area: Rockville, Tyson's Corner, downtown D.C., and Beltsville. They're kind of like storefronts, cause there's so many different options available. Customers can see samples of the major lines of furniture. A lot of times we'll end up selling people sample designs. But it's not a retail business at all. They don't ever take anything off the floor.

What's happened in office furniture is there are so many differnt options available--sizes, fabrics, layouts--that you couldn't possibly stock the furniture itself and stay in business. We used to do that, twenty years ago. But everything in the market changed, and the margins are much less. We're basically just a sales-and-marketing organization. We don't have a warehouse. We don't have trucks. We don't have inventory. It's all been subcontracted out. People come in for our expertise. We order something from a vendor, and send it to a warehouse that we have a contract with, who then receives it and sets it up and delivers it. It was once a really high-expense business--we had a warehouse that was 130,000 square feet, we had twenty trucks. Now, the only warehouse expense we have is, when we sell something and it gets delivered, our contractor charges us a percentage of the cost of each item--so it's a completely variable expense.

How has the current economy affected your business?
I have not seen the credit crunch from our standpoint. We deal with local banks--we always did, my dad did too. A few months ago, I called our bank up--it's Columbia Bank--and said, "I want to get a line of credit, would it be a problem?" and they said, "No, we're lending." I've talked to other local banks: all of them are lending. It's taken some of our customers a little longer to get credit--we also lease, though we do it through a third-party leasing company, but they're still approving leases. But a lot of customers are so afraid of what's going to happen, and everything's just stopped.

So you have seen business slow?
In June, it was disastrous. The way June went, I didn't think I was going to be in business by the fall. Worst month we ever had, in the history of the company. Then things started to pick up over the summer and into the fall. So we're pretty much even with last year, but it's been pretty quiet so far. There are people out there moving and buying furniture, you just have to find them.

How do you find them?
We're doing a lot of things. First of all, a lot of networking: I'm out there an awful lot. It's hard to do this! A lot of Chamber of Commerce meetings. I'm also really active in the local Jewish community. I'm part of a networking group that meets every week. There are lots of opportunities to go to receptions, either through local business newspapers, or chambers of commerce, or entrepreneurs' groups.

We started an e-newsletter about a year ago, and we send it every two weeks now. We started with three names on the list, and we've got it up to 2500 names. We also cold-call. We'll go to an area with a lot of office buildings, and we'll go in, drop catalogs, try to get the business card of the office furniture buyer--and then we put that email address back into our computer.

The secret of our business is to be there when someone has a need.

I'm trying to improve our organic listing on Google. I took a Web design course, and we do all that stuff ourself. It's so expensive for a local business to advertise on Google--it's outrageously expensive to be in the top position. So what we do is we're limited to a certain number of hours: from 8-10. We pay $70 a day, and if we run out before 10, we're done then; if we don't run out up to 10, we'll go on again a little later in the day. But the real key is to get your organic listings up. I have a big project now, updating our meta-keywords, learning a lot about Google and its algorithms. I just redesigned all our meta-tag keywords: part of what they look at is the meta-tag description on each page. I change them every day. And our organic descriptions are coming up. So, if you Google "office furniture Washington D.C.", we're the top listing.

We get a ton of business from the Internet. We're not an e-commerce site; but if you're an office furniture buyer and you're sitting at your desk and your boss says he needs furniture, you're gonna Google it!

So it sounds like you have everything under control, even in this economy?
We really don't have any debt--I have a real estate loan for the building we're in, because we bought it, but other than that. I just think it's a matter of getting out there and talking to as many people as you can and trying to get business. Right today, for example, my sales manager is working on a 40-cubicle station order for a non-profit that I met through the Jewish community, and they have funding from the county and the state to set up their new offices. I met them through someone I knew through someone I knew.

What do you like about being in business for yourself?
I just like the independence, not having to report to someone. I can't imagine working for someone else. [Owning your own business] is very stressful, particularly now, because you're just worried every day that the bottom's going to fall out again. I'm hoping Obama will provide the clear boost to get everyone thinking positively again.

In our discussions of how to borrow money during these credit-starved times, we've frequently mentioned the option of borrowing on a credit card, whether your personal one or a special small business one. We are always careful to note the chief downsides: very high rates (usually in the neighborhood of 15%, but sometimes more) as well as the potential for sudden changes. (We are also always careful to note that BizBox's sponsor is American Express OPEN.)

Given all this, we were pleased to see the Federal Reserve's announcement changing credit card rules along the lines long urged by consumer advocates. Most notably, credit card companies are now barred from raising interest rates on existing, fully paid-up balances. Additionally, card holders must now be given 45 days' notice--up from 15 days'--regarding changes such as an increase in late-payment penalties. And as for late payments: anything short of 21 days may no longer be considered "late". Basically, consumer advocates got most of what they wanted, other than timing: the rules don't go into effect until July 2010.

All sounded pretty good to us, until John Tozzi of Business Week helpfully informed us in a post that these new rules...don't apply to commercial credit cards such as small business cards. "Why the rule excludes commercial cards remains a mystery to me," Tozzi says.

Er, us too. This is quite confounding. Why does it sometimes feels like the economic powers that be are largely blind to the needs of small business people?

Somewhat bizarrely--it seems bizarre to us, anyway--the National Small Business Association glosses over this catch in its statement, which praises the changes (the only thing about them it decries is that they aren't going into effect sooner). The NSBA president's response went, “More small-business owners use credit cards as a source of financing than any other source of funding, yet 57 percent report that their credit card terms are worsening. This new rule comes at a critical time when lawmakers and regulators must do everything in their power to ensure that the driver of the U.S. economy—small business—can continue to grow and create new jobs.”

Point taken--these rules will still help many small business owners. But one gets the sense they were not done for small business owners, but rather for cardholders. So if the Fed and the Congress and the Senate and the Obama administration's Treasury Department wanted to do something for entrepreneurs on the credit card front, they could look into reforming the underwriter/issuer-merchant relationship and estabilishing a credit card bill of rights for merchants. Or, at the least, they could make it so that these swell new rules apply to commercial cards as well.

The New York Times runs a provocative article on companies that are faced with plummeting revenue and therefore a need to slash costs, but that for various reasons wish to avoid laying workers off outright, and so have resorted to creative measures to keep employees on while lowering payroll costs. It's a must-read, particularly for any small business owner wishing to take our earlier advice and reduce payroll without commiting any actual layoffs.

So what have some employers been doing? Big and small, manufacturing and retail, they've been reducing work weeks; cutting unpaid vacation; freezing wages (along with hiring); and other things. The key is, as they're doing this, what they're not doing is firing people. They are thus able to make these other cuts palatable to their employees, because everyone knows how terrible the economy is, and everyone would rather have a cut-backed job than risk being let go. Besides, everyone also knows that if their employer fails because its payroll costs were too high, then no one will have any job anyway. “Organizations are trying to cut costs in the name of avoiding layoffs,” says one Berkeley business professor. “It’s not just that organizations are saying ‘we’re cutting costs,’ they’re saying: ‘we’re doing this to keep from losing people.’ ”

So you can see why full but reduced jobs rather than layoffs are better from employees' perspectives. In fact, in some cases the motivation for such a move has come from the employees themselves--apparently, over 30% of Brandeis University's professors have already signed onto a faculty initiative to take 1% pay cuts. (Although aren't some of them tenured anyway?)

But why should an employer be interested in cutting payroll in these new ways rather than in the oldest (and, let's face it, simplest) way?

It's not just about morale, though that does have plenty to do with it--few things will get your employees more on board than knowing they, too, are making sacrifices, that they are all doing it together, and that you have gone out of your way to make sure they don't lose their jobs. But there are also more concrete considerations. At some point, this economy will bottom out and start to rise again (sounds improbable, we know, but this is how the business cycle works). When that happens, would you rather be caught understaffed and needing to go on a reckless hiring frenzy, or would you rather have all of your experienced, trusted employees already on hand?

That said, the article does close with a warning, offered by a Yale economics professor, that if it appears as though cutbacks are going to last longer than a few months, some employees may prefer a layoff to the cutbacks. That may be less than ideal, but at least you'll have tried your best, and you and your remaining employees can move on into an uncertain but hopefully employment-filled future.

We'll be back full-time after the new year. For now, here's some recommended reading (and viewing):

-The rise of Wonder Book and Video, a used book e-retailer, shows how a single man used the tools of the Internet to grow his company in an industry--publishing--not currently known for great business prospects. [Washington Post]

-This post on the Small Business Administration's defects wouldn't be so remarkable did it not appear on Huffington Post, and therefore likely get ten billion hits. [HuffPo]

-He is big: it's the committee that got small. Sen. John Kerry (D-Mass.) has left the Small Business & Entrepreneurship Committee's leadership post to take the helm of the Foreign Relations Committee. [The Entrepreneurial Agenda] The new head is Sen. Mary Landrieu (D-La.), who thinks SBA Administrator should once again be a Cabinet-level position. [Sharon McLoone]

-Want to succeed in retail right now? Find yourself a niche. (Well, or be Walmart. But you're not Walmart. So find yourself a niche.) [New York Times]

-The struggle to secure credit continues: a report from the small business front line. [New York Times]

-MSNBC talks to National Federation of Independent Business economist William Dunkleberg and others about small businesses' 2009 prospects. [MSNBC]