We were there in October when the New York Times announced it would be following six New York-area small business owners over the next several months as they attempt to cope with the credit crunch and what we now know to be a recession, one that could be both long and deep.

Well, the Times checked in with the six last week. The stories of their experiences over the past couple months are sometimes hard to digest but nonetheless great to read, and you should read them.

The good news? All are still in business--which, given what the past three months have witnessed on the economic front, is frankly something of an accomplishment in and of itself. One or two even look to be safely away from a real danger zone.

On the other hand, things are clearly slow all around. "You lie in bed sometimes wondering how you’re going to get through the next day and make sure everyone gets paid," says the owner of a Bronx meat market.

Indeed, a chief concern for many of these entrepreneurs is trying not to cut payroll--not for business reasons as much as for human reasons. As the owner of On Location Tours put it, "My worst nightmare would be to cut staff, because I feel a responsibility toward our staff."

It's heartening to read of some of their optimism: "I have four workers, one is Irish and three Mexicans. I give them a bonus of one week’s work, and that won’t change," explains the owner of a Ditmas Park construction firm. "Looking ahead, it looks better than two months ago and it’s going to get better faster than what everyone thinks."

But then you hear from the owner of a Financial District Middle East restaurant: "Me and my wife came to the conclusion that we should take a smaller place, just me and her and a dishwasher, like when we started out. I noticed that there are lots of places that are empty and nobody’s renting. It’s going to hurt me if I have to leave this place. The woodwork, I did it all myself. I’m very proud of it."

We certainly hope all six are in business the next time the Times checks in on them. We're just not sure that we'd bet that they all will be.

Welcome to my first BizBox column about the challenges and the fun of creating and building a business. As I discussed in my Small Business Salon, in 1992, I broke free from the “golden handcuffs” of large law firms and started my own firm, and then never looked back (okay, maybe once or twice). I now run a 24-lawyer shop in Manhattan, which I started as a one-man practice. This means that I deal with all the gray hair-inducing decision-making as well as the high-five moments of exuberance that years later still have me excited to come to work every day (okay, almost every day).

So what’s difficult for entrepreneurs? You may have heard of the “entrepreneur’s lament,” but an intense (well, two-minute) Internet search does not lead to a definition. So what is the entrepreneur’s lament? What, exactly, do entrepreneurs lament? Say it enough times and it starts sounding kind of dumb. We turn to www.dictionary.com, which says lament means “to feel or express sorrow or regret for.”

What do entrepreneurs have sorrow or regret for? In my experience both running businesses and representing entrepreneurs as an attorney, I have seen about seven different laments stand out. In this and the next few columns we will talk about these and I'll offer a little advice on how to deal with them:

o Focus. Pursuing new ideas to the detriment of the core business.
o Work/Life. Missing out on real life while pursuing business passion.
o Employees. Inability to find great help and keep them.
o Partners. Challenges in finding or maintaining good business partners.
o Money. Inability to find necessary financing for growth or survival.
o Burnout. When one morning you just can’t do it anymore.
o Boredom. When there’s not much more to build.

Let’s hit just the first one today: focus.

Entrepreneurs are natural dreamers, who tend to focus all they've got on pursuing something new and exciting. After successfully building a business, an entrepreneur may come up with something additional that may be accretive to the business that is already there or, sometimes, may be an entirely different business altogether. This may be especially true in the current economic environment, in which entrepreneurs are apt to sense the need to diversify or hedge their bet.

Entrepreneurs are the ones who never listened to the advice, “Don’t give up your day job,” since most of them did exactly that. So how do you ensure that your first business doesn’t slip while you dive into the new obsession?

A client of mine had a rapidly rising magazine business. He was on the Inc. magazine 500 list of fastest-growing private companies. At one point, he got excited about adding a business conference side to the operation that would complement the magazines. He focused almost exclusively on that, leaving inexperienced managers to tend to the magazines. Several years later, he suddenly realized that the magazine business he was in was consolidating, and that his larger and larger competitors were beginning to crush him. But by the time he came to this realization, it was too late. He ended up selling the business for much less money than he had expected to. Oh yeah: the conference business never took off.

In my case, I have become known as a lawyer helping companies go public through non-traditional means such as reverse mergers. I have written the only text on the subject and travel the country to speak. It is the foundation of my law practice. But I also do other things, and I believe I do them very well, too. One example is mergers and acquisitions. So I have spent time in the last few years trying to increase my visibility in that area. I have attended and spoken at some M&A conferences, and am working on building relationships in M&A. But I am staying at all times focused on the base, never turning down a reverse merger speaking opportunity (I am off to China in March for one) and continuing to build visibility through my blog, www.reversemergerblog.com.

In sum, while that Great New Idea needs a lot of attention, you should never obsess over it at the expense of continuing to bring the same dedication, enthusiasm, and creativity to your main business. If you’re just bored with the business you built, well, stay tuned for a later column. But if not, then realize you cannot do 500 things at once. Focus on the base and save 2-3am for the new idea if necessary. In my case, my best creativity comes in the shower…I know, as my kids say, Too much information, Dad!

Next time we will cover other components of the entrepreneur’s lament—which, if handled right, really need not be all that lamentable.

David N. Feldman, founding partner of Feldman Weinstein & Smith, is the author of Reverse Mergers and blogs at Reverse Merger & SPAC Blog. He can be reached at dfeldman@fwsllp.com.

Two pieces examine how owners of business should deal with their employees when it comes to two issues that are especially liable to be prominent in the coming weeks and months. We refer to talk of politics, sure to reach fever pitch with Barack Obama's impending inauguration and efforts to enact an agenda, and to illness, which is never worse than in these winter months. (Yay?)

In sum: both politics and sick people should not have to cross the office door.

The Washington Post recommends trying to keep political tension--which is to say, any political talk, which more or less inevitably will lead to tension--to a bare minimum. One trick is to think of political talk that risks hindering the workplace environment as simply another type of performance issue, to be dealt with ably but firmly by a manager or human resources employee. Should it become clear that there is a broad and strong need for some sort of political discussion in the workplace, then the manager ought to provide a clear channel for it, the Post adds. Such a channel, or space, would all the more clearly limit political discussion outside of its confines.

Meanwhile, the AP runs a very good article (nothing like a typical straight-news AP article--it's definitely worth your time) on dealing with sick employees as the flu season, bless its little heart, gets into gear.

First: know the law. Sick paid time off is not required by federal law or by most state laws; federal law does generally require unpaid sick leave, depending on circumstances. Check out the U.S. Department of Labor's info here.

But there's what's legal, and there's what's smart. And the fact is perks such as paid time off and paid sick time are a classic way to get the best and the brightest to come work for you rather than for some other guy, which is why the AP suggests either providing specific paid sick days or factoring a few sick days into more broadly defined paid leave days.

One other note is that you shouldn't want sick people coming into the office to make the rest of your employees sick--which is to say, less productive and generally less happy. One more reason to provide paid sick days; and one more reason to invest in business infrastructure that makes it easier for your employees to telecommute, thereby letting them keep their germs to themselves.

Much of BizBox's content is devoted to delineating the special rewards of going into business for yourself, and no doubt they are many. But it sure does make paying taxes on a retirement plan more difficult.

If you’re self-employed, your “compensation” as it is defined for retirement plan purposes is not quite as simple as it would be if you were an employee of your company. If you were an employee, your source of personal income would be W-2 compensation, which is considered “compensation" for plan purposes. As a self-employed entrepreneur, however, the basis for making a retirement plan contribution is your “self-employment income,” or net profits from Schedule C or Schedule F. If you are a self-employed entrepreneur and contribute to a retirement plan, you must make a special computation to figure out your maximum deduction for these contributions. (These same computations must be made if you are a Partner in a partnership or a Member of a Limited Liability Company (LLC) that is taxed as a partnership.)

There is another option: the "Solo-K". This is the marketing name given (author unknown) to a retirement plan that takes advantage of tax law changes made in 2001. Before then, the maximum tax deduction that a business owner could make to a defined contribution plan had to include both profit-sharing and 401(k). EGTRRA changed the tax law so that the maximum deduction could include both profit sharing AND 401(k). The Solo-K takes advantage of this.

Under some circumstances, this tax law change may make a one-person profit-sharing plan with a 401(k) feature--a Solo-K--a viable alternative to other retirement plans for small businesses.

Let me see if I can translate all of this for you with an example.

Let's say you're a 50-year old self-employed taxpayer making $100,000 in net earnings before the retirement plan deduction in 2008. After going through the computation, self-employment income for retirement plan purposes is $92,935.23. So now what’s the maximum contribution that can be made to each of the possible retirement plans?

Maximum SIMPLE IRA Contribution: $13,206.85
Maximum SIMPLE IRA Catchup: $2,500.00
Total Maximum SIMPLE IRA: $15,706.85

Maximum SEP Contribution: $18,587.05

Maximum Profit-Sharing Contribution: $18,587.05
Maximum 401(k) Contribution: $15,500.00
Maximum 401(k) Catchup: $5,500.00
Maximum “Solo-K” Contribution: $39,087.05

And therein is the reason why so-called Solo-K retirement plans should be considered if a self-employed entrepreneur wants to contribute the maximum amount to a retirement plan. The Solo-K plan, as you can see above, is comprised of two parts, the profit sharing contribution and the 401(k) contribution. The maximum contribution is simply the sum of the two parts.

One word of caution. This is another one of the “kids don’t try this at home” tax matters. Always check with your tax advisor becoming establishing a retirement plan and making a contribution to it.

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.

New York Times small business columnist Paul B. Brown has collated several pieces of advice from the blogosphere that together add up to the same thing: small business owners, both generally and especially right now in this dismal economy, should embrace their very smallness and even be wary about growing much beyond their current sizes. In fact, Brown suggests, some entrepreneurs would not be wrong to find their businesses too large and decide that now is a good time to shrink.

Brown marshals points from every angle: financial, customer service, and work-life balance considerations all point to the advantages of smallness. A smaller company may have fewer employees, but those employees (rightly) feel a greater stake in the business; a smaller company may have fewer clients, but it can devote more time to them and thus make more money off of them--a more efficient model. A smaller company involves the entrepreneur in a greater share of the transactions, which is among the top competitive advantages of small businesses versus large ones; and a smaller company gives the entrepreneur greater leeway to decide where work ends and personal life begins--which for many entrepreneurs was a major reason why they decided to strike out on their own in the first place.

Brown's implicit larger point is that if you're going to run a small business, you may as well run a small business. In other words: there are advantages to being small, and there are advantages to being big. If you can grow while maintaining the advantages of smallness, then great. But, with few exceptions (and they do obviously exist), you're not going to grow into a big business: you're only going to grow as a small business. And if you do so in a way that sacrifices some of the small-business advantages while necessarily not gaining the advantages of the big guys, then you are liable to find yourself in the no-man's-land where otherwise solid businesses go to die.

Everyone's focus is squarely on President-elect Barack Obama, who has entered office with the type of mandate for change not seen in nearly three decades and who is taking the helm as the U.S. faces its greatest economic crisis in at least that long, if not much longer. The stimulus plan he is proposing--which contains a mixture of new spending and tax cuts and whose total pricetag is in the neighborhood of $775 billion--is receiving much examination and scrutiny: by Republicans (who may think it's too much but may not want to get clobbered by the Obama juggernaut); by Democrats (the more liberal of whom may be somewhat dismayed by the prominence of tax cuts in the plan); and by a nervous and struggling public. That last, of course, includes small business owners, whose traditional role as engines of economic and job growth make them essential to any long-term strategy for economic recovery.

There are three components to the plan that will provide particular boons to small businesses, according to The New Entrepreneur. These are an extension of the so-called "carry back" tax rules, which allow businesses to deduct losses against gains from past years, from two to five years; a near-doubling of the amount you are allowed to deduct from your taxes for investing in new machinery for your business; and a one-year job creation tax credit.

Only the first of these three truly appears to be specifically designed to aid businesses exclusively: they really do benefit to few other constituencies, beyond the general appeal of putting more money in people's hands for stimulus purposes. The increased investment deduction encourages just that, which will help everyone from businesses to suppliers to others in the business food chain; and the job creation tax credit is most obviously targeted not at helping businesses per se as much as encouraging businesses to hire and get that rising unemployment rate back down.

The first is also the one that will probably give businesses the most money, in the form of a cash refund. Basically, you're ordinarily allowed to carry back losses over two years, which can enable you to get a refund this year on taxes you paid in past years of growth. Essentially, you get the benefit of all that money you made two years ago and the benefit of paying lower taxes on "less" income. Now, however, it will go back five years. And given the way the economics of the past years have worked--with 2008 being a poor year, generally, but the years previous being very good ones--this seems likely to set businesses up for extra-big tax refunds.

Independent Street, however, has what strikes us as a very legitimate objection to the carry-back extension, which seems so unambiguously pro-business on its face: what, it asks, about those firms that turned a profit in 2008? After all, such firms have no losses to carry back two or five years. And Independent Street is not referring here to an Exxon or someone who made gigantic profits last year at least in part due to good fortune; it's talking about businesses--and in particular small businesses--that were able to come out a bit in the black by making hard choices, such as cutting jobs and investment, that are likely to slow long-term growth but were necessary to make 2008 a halfway-decent year. “This stimulus package seems to reward the ones who have kept spending, and ignores the diligent business owners cutting off their limbs to save the core of their business,” one small businesswoman wrote Independent Street.

On a more political note, many progressives hate the extension for this reason. Blogger Matthew Yglesias, for example, argues that businesses who benefit from the change will know exactly why they got this money--which is to say, not because business has been booming--and are therefore more likely simply to pocket the money or store it away for future rainy days rather than to invest it on growing their business, which is the clear justification for the extension from a stimulus perspective. He also notes that "the distributional impact is regressive"--that is, the more you lost (which tends to mean, the bigger you are), the more money, at least in absolute dollars, you will be refunded.

This talk of regressive taxation, though, brings us to the National Federation of Independent Business's main advice for Obama: include a six-month payroll tax holiday as a part of the stimulus. This is very interesting, because, while many--including BizBox--have accused the NFIB of offering, at its worst, little more than standard Republican talking points and policies, the payroll tax is actually the most prominent regressive tax (which is to say, as a percentage of income it takes more from you the poorer you are), and so to cut it as it currently exists is actually a rather "progressive" thing to suggest.

The argument is that cutting the payroll tax will save employers money on payroll expenses, which might additionally encourage more hiring; the NFIB goes a step further and crunches the numbers in its release. Check it out.

And stay tuned as the stimulus plan develops and, post-Jan. 20 especially, makes its way (or not) through the House and the Senate. This will affect everyone--you should be paying attention.

Here's a cool thing. Count Me In, a non-profit devoted to helping women grow their own small businesses--whose founder and president, Nell Merlino, was apparently the original brains behind Take Your Daughter To Work Day--is launching Make Mine a Million $ Business RACE at the end of the month. (And, yes, we would be fans of the race even if its founding partner weren't our sponsor, American Express OPEN.) The program provides ample resources, including national networking events, access to exclusive expert advice, and media promotion, aimed at helping women small business owners reach their pre-set 2009 revenue goals of $250,000, $500,000, or, yes, $1,000,000. As if reaching those plateaus weren't award enough, the Grand Prize winner will get $100,000--cash.

Registration is here (it costs $100). And if you choose not to register, either because it's not for you or because you're, y'know, a man, we hope you'll still set yourself an ambitious 2009 revenue goal and check in with BizBox regularly to get tips on surpassing it.

Yesterday, the 111th Congress was sworn in. Now begins the tenure of a new chairperson of the U.S. Senate Small Business & Entrepreneurship Committee: Sen. Mary Landrieu (D-La.). The previous chairperson, Sen. John Kerry (D-Mass.), has left the leadership role in order to chair the (admittedly higher-profile) Foreign Relations Committee.

Kerry praised Landrieu's ascent; Inc.com blogger Robb Mandelbaum is less thrilled. A big fan of Kerry's, Mandelbaum worries, first, that Kerry--both an effective senator in his own right, and, of course, his party's standard-bearer in 2004--"brought a profile to the committee that Landrieu will find difficult to match." And he worries about Landrieu's reputation as having questionable ethics--she is accused, for example, of awarding a $2 million earmark that benefited a prominent donor.

All legitimate objections. At the same time, Mandelbaum is overlooking a key player: Sen. Olympia Snowe (R-Me.). Close BizBox readers know of our feelings: we like her lots. And while you ordinarily wouldn't expect a ranking member--that is, the sort of shadow chairperson; highest ranking committee member of the minority party--to have much influence on committee doings and policy, there is ample reason to suspect that in the specific case of Snowe and the Small Business Committee, that truism will not hold true.

Snowe is perfectly situated to wield a ton of power--she is a perfect storm of sway. She enjoys massive popularity among her voting constituency; more importantly, she is a moderate Republican, who would be a prime target for Democratic co-opting in any political situation, but especially where the Democrats naturally fall only a couple seats short of the filibuster-proof 60 votes in the Senate.

In other words, Snowe can get what she wants. And it appears she wants say as to small business policy: that, anyway, is the conclusion we draw when we look at President-elect Barack Obama's nominee for Small Business Administration head, Karen G. Mills. Mills is a moderate woman from Maine--sound familiar? In fact, you'd almost think Snowe had suggested her....

The point is that it may be just as important to look at Snowe as at Landrieu. And Snowe--in addition to lacking a reputation for corruption--appears to be pragmatic, moderate, and genuinely concerned for the country's entrepreneurs. Which is why, though the points about Landrieu are well-taken, we're not really particularly worried.

Independent Street has a post up highlighting the strikingly high percentage of freshmen congressmen and senators--over one-third--who have some experience in running their own small business.

Perhaps most surprising is the number of these rookie legislators who are Democrats. In one sense this is to be expected: more Democrats than Republicans overall are entering the House and Senate this week. Still, small business owners generally--and politically activist entrepreneurs in particular--do tend to skew Republican. Yet four out of the five incoming small-business-owner senators are Democrats, and nearly half of the nineteen incoming congressmen are. The balance can probably only be a good thing.

Oh, and by the way: our favorite? Betsy Markey (D-Colo., 4th District), owner of an ice cream and coffee shop, as well as a Web-services company. Apparently, Huckleberry's is the place to hang out and get a cup of joe next time you're in Fort Collins.

I recently acquired a large line of credit from a bank--you can read my tale of victory here--and I know that my personal credit played a big part in that.

Which led me to think: What if somebody stole my identity?

Suddenly I found myself looking up that company whose CEO offers up his social security number in national advertisements--it's called Lifelock.

For $110 annually, I decided to sign up last month with Lifelock, which promises to take regular steps to reduce the likelihood of identity theft as well as a blanket financial guaranty to cover any costs of undoing damage wrought by an identity thief. A sort of combination of preventive advice and insurance.

As the owner of a small business, especially one with significant access to bank and credit card lines, I’ve realized I’m particularly in need of identity protection.

I remain a little skeptical that some company can prevent identity theft, but the price was low enough that I’d be happy with just a reduced likelihood of crime. Like insurance, I won't get my full money’s worth unless the worst happens--and yet I hope I don’t get a chance to find out how good the Lifelock service is.

In the meantime, however, I’ve been pleased with a few small things they have done, and I like their low-key sales attitude.

The literature from the company readily admits that many of the steps they take on my behalf--ordering credit reports, removing my name from credit card solicitation lists, placing an anti-fraud warning with the national credit bureaus--could be done directly by me for free.

But, they argue, regular repetition of these steps reduces the likelihood of identity theft. And they will remember, while I may forget. Seems logical to me. If they can reduce the volume of unsolicited credit card pitches, that’s almost worth the money right there.

I’d be curious if readers have used other identity protection companies, have pursued the do-it-yourself-for-free solution, or don’t think identity theft matters much to small businesses. Also, has anybody out there ever had Lifelock pay up to undo the damage of identity theft? Leave your comments below...

That's the New York Times's word in a recent article for what characterizes the retail era in which we find ourselves. Forget concerns about a severely under-average holiday season, in which the worry was not that no one would buy but just that fewer would than usual; that's so, well, last month. (And which proved prescient, even for Walmart.) The fears now are of a total meltdown.

And so in response, forget mere coupons, which we wrote about a month ago; retailers, in their desperation, are getting extremely creative. Pharmacies-giving-out-free-antibiotics creative. After all, as the paper of record puts it, "Sales of 50 percent off stopped capturing the attention of customers weeks ago." Yes, mere sales, too, are so last month.

Where do small businesses fit into this? As we've argued before, when the going gets tough, the tough get creative; and creativity--demanding, as it does, near-infinite flexibility--can be a small business's avenue for trumping its big-box competition.

The Times argues that the desperation at this point has at least as much to do with a need to clear out current winter inventory as a desire to boost revenue, much less the bottom line. In fact, concerns about profit itself have nearly gone out the window, as, after all, purveyors of "buy one/get two" deals--yes, you read that right--and 90%-off Playstations aren't exactly making any money. Such bargains, represent loss leaders. Vendors are willing to strike these deals in order to help liquidate inventory ('tis better to have sold and lost money than never to have sold at all) and, if they're lucky, to coax customers in and maybe--just maybe--get them to buy one of the few items left that actually are being sold with a profit margin attached.

So why all the creative deals? Why not just slap a discount on everything? The answer is marketing. The paper talked to Duke behavioral economist Dan Ariely, who pointed out that consumers are more drawn by such exotic arrangements than simple mark-downs. Hence, three suits for the price of one (at Jos. A. Bank) rather than all suits 67% off. Hence, a free scooter with your new pick-up at a California Ford dealer rather than subtracting the cost of the scooter from the price.

Amid all the discounting--for from the business's perspective, that is what all of these deals are--is the sense of trying to balance your, well, balance sheet so that prices are low enough to undersell your competition but not so low as to drive you out of business. Because finally, during this time of flux and instability, you are also looking to pick up market share, so that when things do get better--and, yes, they will--you are amply positioned to make up what you're probably losing right now.

Although it ran over two weeks ago, this Wall Street Journal article on the community banks--those small (under $1 billion in assets), locally-focused financial institutions that we've covered extensively--is still very, very much worth your time. It does a phenomenal job of portraying the delicate situation that these small banks, the vast majority of whom were prudent enough to avoid the unwise investments and overleveraging that has done in so many larger, more prominent institutions, now find themselves in: "They walk a fine line," the article says. "Holding to lending standards that are too strict can worsen the local economic toll. Being too lenient can run afoul of newly nervous bank directors and regulators, or endanger the bank's own survival."

We thought of it while reading this post from The New Entrepreneur advising small business owners to check this list, courtesy of non-profit journalism venture ProPublica, to see whether their bank (large or small) has taken any of the $700 billion given out under the infamous Troubled Assets Relief Program. "I was surprised by how many small regional and community banks were on the list," blogger John Tozzi writes.

The complicated thing, as we've written before, is that the money really represented something like a double-edged sword for most of these community banks. Many of them didn't truly need it (unlike several of the nations largest banks, which needed the extra infusion of capital like a person in the desert needs a drink of water); and in fact, many had good reason not to take it: among other things, taking it places you on lists like ProPublica, which are then linked to by blogs like The New Entrepreneur and BizBox, and all of a sudden you're a bank that needed the money--even if you didn't--and you look bad and tenuous and maybe you start to lose scared customers, etc. (Fear kills.)

On the other hand, if one community bank wasn't going to take it, another would, and given the extremely bank-friendly terms on which this capital is invested, and given the dryness of the current credit market, we're looking at a potential significant competitive disadvantage to those banks that refused the money.

In other words, being on this list may mean your bank made unwise decisions, and that you ought to look elsewhere; or that it made unwise decisions, but has learned from them and now has the extra capital it needs to tide it over to better times; or that it did not make unwise decisions but took the money for other reasons. Similarly, banks that do not appear on the list may not for any number of reasons that should point you in any number of directions.

So check out the list, and do look for your bank--you should always be as abreast as possible of your bank's condition, and never more than during these tumultuous times. That said, there is no one heuristic method for determining the health of your bank (or lack thereof). Ultimately, your gut--the same gut that likely helps you make other important business decisions every day--is going to have to be your guarantor of last resort.

A couple months ago, when last we checked in on Small Business Administration-backed loans, things were looking bad: a combination of the slumping economy (lowering demand for credit), the credit crunch (lowering the supply of credit), and an utter lack of any sort of regulation or govermental directive requiring banks to maintain some lending to small businesses had led to these loans' having declined 30%, in total loans, and 13%, in loaned dollars, from fiscal year 2007 to 2008. (It is important to remember that banks, not the SBA, initiate and actually make all SBA-backed loans, the most common type of which is the 7(a) loan; the agency guarantees anywhere from 50%-90% of each one.)

Since then, the SBA changed two rules (allowing banks to use the Libor rate in addition to the prime one and to bundle loans with differing rates into the same security for sale on the secondary market) in an effort to grease the small-business-lending wheels. Even the Federal Reserve has gotten in on the act, pledging to buy up to $200 billion in now-crappy securities backed by now-crappy types of loans, including small business ones, in an effort to encourage banks to make loans with those past ones off of their hands.

So things are improving right?

Well, the Fiscal Year 2009 first quarter (which was October to December 2008) numbers have come in. The results? A little under 9,000 SBA-backed 7(a) loans were made--a 57% drop from the previous fiscal year's first quarter. These loans totaled $1.94 billion--a 40% yearly drop.

In other words: no, things are not improving.

First: what's causing the drop?

Dropping demand for credit is certainly part of the problem. We're in a recession, investment and plans for growth are way, way down, and so most small business owners are trying to borrow as little as they can; which means they are turning less to SBA-backed loans; which means the loans are going down. "Owners tell us that their primary concern is terrible sales," a National Federation of Independent Business spokesperson told CNNMoney.com. "Under those circumstances, why would they want to expand? They just aren't doing that right now."

Another problem is the general, extreme cutbacks at banks. They are tightening lending like nothing else right now.

Moroever, as we've pointed out before, there's a particularly insidious dynamic regarding the now-$350 billion in government capital that has been invested in banks. No, it's not the fact that banks are largely hoarding this new cash rather than lending it out, though that's bad, too. Rather, it's the fact that the bigger a bank you are, the more likely you are to take the money (and more of it); and the bigger you are, the less likely you are to be lending right now to small businesses, because you are looking at impersonal metrics rather than broader characteristics of an applicant's situation.

Robb Mandelbaum points to a couple of other things that may have caused this latest plummet. For one thing, sales staffs at banks have been decimated by layoffs, inevitably decreasing lending (and in particular, local lending, and therefore small business lending). The terrible resale market for these loans is another reason, although the Fed's $200 billion program is designed to resolve exactly that issue.

And so what can be done?

We say that at some point regulators and legislators are going to have to admit that the typical types of steps--which involve using government intervention to condition and encourage the private sector and the otherwise-free market to increase small-business lending; stuff like the Fed's purchasing of loan-backed securities and the government's investment of capital--simply are not working, and so a completely different approach is necessary. The government must do more than just coax the market to lend to small businesses. The government may soon need to step in and do it itself.

Revolutionary? Tell that to all the banks to whom the government has lent. Or American Insurance Group and Bear Stearns (indirectly via JPMorgan) or Citigroup, all of whom were saved because of favorable government loans. Or the Big Three automakers. We're not trying to lord this over the government--in fact, we were in favor of most if not all of those loans. We're trying to point that in this context any sort of free-market objection is really quite, quite silly.

Where have you gone, Chuck Schumer? Why aren't you clamoring for your plan of direct lending to small businesses? For now, we guess we'll have to do the clamoring.

Just some things we think you should check out.

Amish entrepreneurs. A booming population and limited farmland have conspired to push many Amish in Pennsylvania, Ohio, and Indiana to go into business for themselves. "Though they still drive horses and buggies, remain off the power grid and wear simple, handmade clothing, some are using computers and power tools and talking on cellphones at their jobs." [NYT]

Crooked veteran entrepreneurs' non-profit. An investigation has revealed that the Veterans Corp.--a federally-chartered non-profit ostensibly dedicated to helping military veterans start their own businesses--has spent only 15% of its federal money since its 1999 inception, and only 9% of it last year, on, you know, actually helping military veterans start their own businesses. Where did the rest go? Executive salaries, lavish perks, etc. Your tax dollars at work. [WSJ]

Green still attracting green. Despite the credit crunch, generally slumping economy, and significant falloff in venture investment, capital probably will still flow to green-tech start-ups. [Inc.]

Healthcare reform probably on the way. And not just because it was one of Barack Obama's top campaign pledges. The financial crisis and economic recession will likely highlight healthcare's status as a pocketbook issue for individuals and business, prompting reform. [NFIB]

Get your customers drunk! Well, not really: we wouldn't advise that (unless you run a liquor store). But consider "A Testimonial Gathering Party" to remind your clients and customers why they like you--or, really, to get them to remind themselves. [Brand Flakes For Breakfast]

Q: With the economy as ugly as it is, I’m looking for the most cost-effective branding channels possible. Are social networking sites like Facebook and Twitter worth the time and effort?

A: As with most things, it depends. Facebook, Twitter, LinkedIn, and other social connectivity Websites have the power to reach millions of people and allow others to find you for basically nothing. You simply set up your account, create your profile, and start inviting other members to link to you or become your “friends.” In the case of Twitter, the “micro-blogging” service where members can send quickie “This is what I’m up to” messages to friends and subscribers, you can create running feed of your activities. Sounds like a great way to reach out, make new contacts and market yourself for free, right?

Well, not in every case. If you’re in a so-called “prestige” profession like law, medicine or mental health, it can seem frivolous or even downright unprofessional for you to be promoting yourself via sites like Facebook. Our social contract dictates that doctors, psychologists, CPAs, lawyers, and the like are supposed to be “serious,” and therefore going viral online could do you more harm than good.

On the other hand, if you’re in a profession that’s identified with creativity (graphic design, architecture, writing, contracting) or personal communication (realtor, consultant, entrepreneur), then self-promotion via social networking may be perfect for you.

In sum, if your Personal Brand will be enhanced by being seen as personable, approachable, tech-savvy, and even cool, then social networking can be a huge asset. Just remember that, as positive as all of those attributes sound, depending on what you're selling they're not always what potential customers or clients are looking for.

Keep in mind also that there are also different networks for different kinds of brands. Facebook, Twitter, Friendster, and the like are mostly youth-oriented, so they’re better for someone either in a creative, hip line of work or for someone who's part of the under-30 cohort. On the other hand, networks such as LinkedIn and Ryze are targeted more at more experienced professionals who are expressly interested in making business connections. This makes them more of a resource for people who want to be perceived as “Let’s talk deal,” rather than “Hey, check me out.”

Basically, social networking might be right for you, but you need to do some homework. If you’re comfortable showing up for work in khakis, jeans, or a Che t-shirt, think Facebook and Twitter. If you wouldn’t think of going to work without a suit on, think LinkedIn.

And no matter what you do, make sure there’s nothing on any social network from years ago that could come back to embarrass you and harm your brand. Police your online brand relentlessly. Those pix of you in an adult diaper at a New Year’s Eve party 15 years ago may have been funny then (they're probably still funny now), but they’re probably not going to amuse someone whose divorce you’re handling.

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.

We always hear about how small businesses are the engine of, yes, national economic growth, but especially of national job creation. In other words, small businesses take up a disproportionate share--more than their sizes would suggest--of U.S. employment and employment growth.

The flip-side of having greater responsibility for rising employment, however, is that small businesses are also likely to play an outsize roll in rising unemployment. Well, the Labor Department reported that unemployment rose to 7.2% (the highest in 16 years) in December. And it appears that small businesses are bearing much of the burden of having to lay off workers (and do the same with less).

Independent Street reports that small and midsize businesses accounted for a higher percentage of the employment decline than did big businesses, according to a report--the first time that occured since that monthly survey began in 2000.

Independent Street points out some of the troublesome implications of this dynamic. For starters, it means the bleeding hasn't stopped, but we already knew that. But really, it probably means that lots of small businesses--and lots more small businesses than big businesses--are really on the ropes: layoffs, after all, are last-ditch moves, not first steps, when dealing with declining business.

Hopefully this news will, if nothing else, attract attention to how important small businesses' ability to stay afloat is to the larger economy. It's a shame it had to come to this, though.

An interesting comment popped up on a post we made late last week concerning the continuing--actually, both continuing and accelerating--decline in Small Business Administration-backed loans. We suggested that these declines may mean that the SBA, which generally backs loans made by banks to small businesses without originating the loans themselves, may in fact need to be given the power to make direct loans to small businesses. The comment argued that the SBA may have that power already.

The comment was written by one Colin Tooze, who identifies himself as being affiliated with the American Society of Travel Agents--actually, he appears to be its Vice President of Government Affairs. In arguing for the SBA to initiate a direct-lending program (perhaps along the lines proposed by Sen. Chuck Schumer?), Tooze points to a previous instance in which the SBA actually made direct, low-interest loans to small businesses in need: immediately after the attacks of Sept. 11, 2001, when the agency extended credit to many small businesses whose welfares were affected by those events--among others, "literally hundreds of small business travel agencies," who struggled massively as customers couldn't rush fast enough (you remember, right?) to cancel existing trips and stop planning for future ones.

According to Tooze, these post-9/11 loans were made as so-called Economic Injury Disaster Loans. Under this program, the SBA can directly extend loans to eligible small businesses (as well as small farmers/agricultural cooperatives and certain non-profits). The loans cannot exceed $2 million or 30-year terms, and are extremely favorable: their interest rates may not exceed 4%.

In November, Tooze's group, the ASTA, contacted both outgoing SBA Head Sandy Baruah as well as Barack Obama's transition team requesting direct lending to small businesses under the same model.

The ASTA, by the way, seems perfectly situated to make this case. By their own account, they have in the past been beneficiaries of direct SBA lending. At least in our personal experience, travel agencies tend to be small businesses, and so we suspect that most of the group's members are owners or employees of small companies. Finally, travel agents are likely to hold one among those occupations most threatened by the likes of the recession we are currently facing: they are a (in some cases) non-essential feature of a non-essential activity (vacations), and thus are likely to be hit extremely hard when most people are searching for ways to cut back on expenses.

Think of things this way. The current economic climate--brought on as it was by forces well, well outside the control of any travel agent, or travel agents' group, or most other sorts of entrepreneurs--is simply something of a disaster.

Then check out the SBA's own information on its Economic Injury Loan program. A small business is eligible for these loans if, among other conditions, it has "suffered substantial economic injury, regardless of physical damage, and is located in a declared disaster area."

Now look around. Unemployment is skyrocketing. Credit seems more scarce than gold (whose price, by the way--an historical indicator of investor pessimism--is currently near its all-time highpoint). Bankruptcies big and small are everywhere you look. This whole economy is a disaster area.

Under this established SBA program, eligible borrowers must demonstrate that they cannot secure credit via its "normal lending channels". Given the state of the credit markets--and, for that matter, of SBA 7(a) loans--that shouldn't be difficult. They also may ask only for money that they would otherwise have were it not for the relevant "disaster". Given the size of the current economic earthquake, that shouldn't be hard, either.

So not only is there precedent for direct SBA lending to small businesses (recent precedent, to boot); and not only is that precedent very much analogous to contemporary times. In addition, that precedent can be cited by the Obama administration to start up again without Congressional approval. The program's already in place. All that's left is the willingness to act.

Mr. President-elect (soon-to-be Mr. President), whaddya say? With the stroke of a pen, you could free up government cash to go not just to the biggest of banks, but also to the smallest of retailers. And, yes, perhaps to a few travel agencies as well.

We're having trouble with a post that appeared on Independent Street today, "Entrepreneurs Fight Death Tax Resurrection". For starters, there is its title: the term "death tax" is a politically-charged pejorative, not an objective description of a levy on a dead person's estate (the tax on income is called the income tax, the tax on payroll is called the payroll tax, and so on). But more worrisome is how the post subscribes to the false premise that small business owners have some special skin in the game when it comes to repealing the estate tax.

The estate tax doesn't by definition apply only to small business owners; it by definition applies only to rich people. Simply put, estates of individuals worth over $3.5 million, or of couples worth over $7 million, will be taxed at 45% in 2009 under current law. The main arguments for are that it generates extra revenue--$25 billion in 2005, the blog says--from those both rich enough to afford it and dead enough not to miss it, and it encourages investment and philanthropy over saving and passing on to heirs--in short, it encourages economic activity. The main arguments against are that the money in the estate is what's left over from money that, presumably, has already been taxed once, and that people should have the right to pass on what they've spent a lifetime developing to whomever they choose without the government taking a chunk of it away. It's a legitimate and important argument. But it's hard to see how it specifically implicates small business owners over other groups.

Really, the whole thing is eerily reminiscent of the Joe the Plumber thing from October, when an Ohio resident made the case against Barack Obama's plan to let expire George W. Bush's top-bracket income tax cut from the perspective of small business owners. As we pointed out at the time, those who would be affected by the expiration (which, incidentally, Obama has since suggested he may not go through with due to the current recession) are those who make over $250,000 in a year--a group that has only a small overlap with small business owners. In other words, reasonable people can and did differ over the wisdom of letting those cuts expire; but it is unreasonable to suggest that the expiration is an affront to "small business owners". And here, too: estate-tax repeal is simply not primarily an "entrepreneurs' issue".

Is there a smaller extent to which it is? Perhaps--and this is what's giving us some pause.

Unsurprisingly, Independent Street attributes the bulk of small-business opposition to the estate tax to the National Federation of Independent Business, which consistently advocates policies that lie on the right side of the political spectrum. According to the blog, "They argue the estate tax not only unfairly dings the estates of small-business owners and family farms, but also dissuades them from investing in their business (or starting a business at all). Business owners must purchase life insurance to cover the cost of the tax or keep enough liquid assets to pay for it, according to a 2005 analysis by the Congressional Budget Office.

Let's take these one at a time. Well, actually, we already took the first one: while we agree that there's a case to be made that the estate tax "unfairly dings," well, rich people--it is, as its critics allege, essentially double taxation--there is simply no basis for implying, as this argument does, that the category of rich people is synonymous with small business owners.

Secondly, the argument that the estate tax discourages investment in one's business is ludicrous. For one thing, by taxing large estates at such a high rate, the estate tax actually encourages the use of wealth while its owner is still alive. For another, nobody ever decided to forego making more money just to reduce tax liability. Even the most confiscatory tax leaves you with something.

The third argument, however, is a point well-taken. To the extent that the contours of an estate tax place an extra burden on those whose wealth is generated from a self-owned business, that is a playing field that needs to be leveled.

Beyond that, though, this is a debate that needs, for the sake of fairness and getting it right, to be made outside the confines of a supposed appeal to entrepreneurs' interests.

Business Week blogger John Tozzi wrote last week about the impending implementation of the Consumer Product Safety Improvement Act in February, and we wanted to get to it before he posts the fruits of his inquiry to the Consumer Products Safety Commission, which he said we should expect sometime this week. Basically, the law requires increased vendor testing of products (for lead, for harmful chemicals) intended for children. Seems like an unalloyed good (no pun intended), but in fact, it could see small business owners--including those hand-crafting their own goods--subjected to regulations designed for bigger businesses with more cash lying around for testing.

It's a tough question. On the one hand, the testing regime should in theory be good for business, as their existence makes it more likely that customers will assume your products are safe and therefore will be more likely to buy them; meanwhile the fact that they are subject to everyone will not give one company an advantage over another.

On the other hand, there is an advantage--if you're bigger, and therefore can save money on testing due to economies of scale. Additionally, you could argue that requiring testing actually saps some of the appeal of products sold by, and specifically products made by, small vendors: their aura of homemade-ness and organicness, which the testing requirements mess with.

So stay tuned. Hopefully we'll be able to relay what the CPSC--and perhaps the Small Business Administration?--have to say about all of this.

"I think for a lot of people the entrepreneur thing always looks desirable, but it's not necessarily for everybody. I believe what people say about starting your own business, or being a writer: it's not something you should really do unless you feel really compelled to do it. That's the situation I was in."

Our guest today is Doug Seibold, president and founder of Agate, a small Chicago-based book publisher. In a litte over five years, Seibold has expanded to four employees and four imprints, has acquired an older and larger publisher, and is on the verge of releasing e-books.

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: Please tell us briefly about your business.
Doug Seibold: Agate is a five year-old diversified independent publishing company. I started it--I incorporated in '02, and we began publishing our first books in '03.

What made you want to start your own company?
I started the company at a difficult juncture in my own career. I'd been trying to start a company from about seven or eight years previous to that. I had an idea that I would go out and try to raise money from investors--this was in the mid-to-late '90s, when enthusiasm for what people called "the dead tree business" was particularly low. I was starting a family at the time, and I was cautious.

I had been working in publishing in Chicago since '86, which is itself a difficult thing, because if you make a decision to build a career in publishing outside of New York, it's by definition going to be a contrarian or on-the-margins thing. I'd worked in magazine publishing, in trade publishing, in commercial ventures. I had worked for a small press in the earlier '90s, and that's what really agreed with me. I had also been a book reviewer for the Chicago Tribune. I found that the rhythm of book publishing--you work for a long time with a particular project, and lots of projects at once that are in various states of fruition--really suited me a lot more than, say, monthly magazine publishing.

How did you go about starting up?
I was out there with my business plan for all that time, trying to get people interested. I kind of had a "If you can't beat 'em, join 'em" experience. I got recruited to work at an online education dot-com in '99. I had a typical sort of dot-com experience: we were very well-funded, and we grew rapidly, which is what you're of course supposed to do with the money, I built up an editorial staff of a little less than three dozen people in nine months. Then, over the following nine months I laid off all but two of them.

Then 2002 came along and I'd saved a lot of money as a job-search warchest. But then I looked at my life, I was about to turn 40, and I realized that a lot of my ideas were still valid, and my wife was supportive of the notion.

What were some of those ideas?
A lot of my ideas about publishing had to do with the idea of the entire field as a sort of an ecosphere. The key was really less about the kind of content as opposed to the scale at which you operated relative to other players in the space. As in a lot of other businesses, there's a bunch of giant multinational conglomerates that are the big players, and they leave a lot of waste behind them. My feeling was a company that functioned efficiently at the appropriate scale could do a lot of business by being cost-effective and opportunistic. Not too little, but not too grandiose: growing at a careful, natural pace. And that ended up being about what we've done.

How big is Agate?
Right now, four employees, but I usually have two interns.

Could you describe exactly how you grew?
I started out publishing two types of books: African-American fiction, and nonfiction. I'd gotten a lot of exposure to the African-American media world through the company I used to work for. I thought that, for a company like Agate, the African-American world represents an ideal small market to get into: it's perennially under-served, and there's also a great deal of commitment and attachment to good, quality stuff that comes to African-American people and is respectful of their interests--there's a real hunger for it. I thought a company like mine could compete in this market, and I think that's still somewhat the case. Our most important books have been under that.

In the dot-com world I was working with a company trying to create an all-star MBA curriculum. So our second imprint is related to business-related nonfiction. Our most successful book was a book called The Chicago School, about which there'd never been a book-length study. By the same author we're about to bring out a book about Ben Bernanke.

Tell us about some of your other books.
Our first book, which came out in '03, was by a writer named Jill Nelson, and it was basically a book that she had had in a drawer. And we had worked together before. It was a comic novel about two middle-aged black women who started a male brothel serving female customers. It was called Sexual Healing. It was not a home run, but it was a very solid effort. We sold a lot of books, we sold rights in four markets around the world, we sold film rights, we sold paperback rights. The success of that first book allowed me to bootstrap it from there, and it's been my own resources ever since then. By '04, we'd gotten to about the size I felt was appropriate.

Another book we did was a novel by Denise Nicholas called Freshwater Road, in 2005. It was one of the very, very few novels that's ever been published about the civil rights movement from the point of view of a black main character.

What's it like competing in an industry dominated by a few large companies?
It's like independent film or music. There are opportunities for us. The big guys turn down projects because they simply can't publish that much. They can find the things that have the most obvious commercial potential, but that leaves a great many equally worthy projects. That creates opportunities for us.

For me, I believe that you've always gotta be trying to grow--that's one of the basic fundamental things about any business, is pursuing growth. I have made the choice to keep reinvesting in growth rather than to take money out of the company.

How do you secure financing for Agate?
I've had a series of good relationships with my banks. I started out working with a small bank. I had an idea--I actually interviewed a number of bankers at local banks, and I basically went to them and said, "I'm not gonna ask you for any money right now, but I'm probably going to ask you in a year or two, and I want you to get to know me so that it's not about numbers but just about appreciation for what I'm doing." And I had a great relationship, and he ended up extending credit to me.

Then, I was recruited by a big bank, a multinational conglomerate bank. They basically were looking for locally-based businesses in the area, and they came in and essentially made me a tremendous offer--a broad range of banking services, extended line of credit. It's been really positive. They can do more for me. I was frustrated that I've had to work with a rotating cast of people. But for the most part they've been extremely supportive of what I'm doing, and they've basically allowed me to expand the company and take the appropriate amount of risk.

Where are you currently trying to grow?
In '06, we had started a third line of business, something a little bit different for a small publisher. It was a service creating textbook-like content for online education ventures: either creating digital textbooks that would be completely customized to one of our client's courses, or other supplementary materials, or even entire courses. In book publishing, they call this packaging. We create material, and our client publishes it. We called it ProBooks.

We were able to generate some really terrific cash-flow, and what we did was we bought another company, which was something I had wanted to do for a while. With the new cash-flow and our bank, we were able to structure a deal where we were able to buy a small press, an older and bigger one. The company we found it turned out was right in Chicago--Surrey Books. What that gave us then was we kept Surrey as an imprint of Agate.

So basically, by '07 we had grown to have four distinct lines of business that were all quite diverse. They were all distinct niches.

Did that prove helpful or harmful?
As things got tougher, that diversity proved to be really important. As certain aspects of the business slowed down, we were able to get enough revenue and opportunity in other parts that we kept the company flush. It also allowed me to make sure I had plenty of work for my growing staff. I took care to hire people who were generalist enough to work in all of these areas. This is a very unusual thing for small publishers: you're typically not in both the textbook and not-textbook worlds.

To me that's one of the big challenges for small business. To what degree do you go to your niche?

Are you glad you went into business for yourself?
I think for a lot of people the entrepreneur thing always looks desirable, but it's not necessarily for everybody. I believe what people say about starting your own business, or being a writer: it's not something you should really do unless you feel really compelled to do it. That's the situation I was in. I was so unhappy working for other people. I knew I had problems with the people I'd worked for, the different bosses I'd had--that it wasn't their problem. I had a boss problem. Understanding that about myself was important in realizing that I really needed to do this. And paradoxically, even though my professional life is filled with a lot more stresses now, I feel a lot more composed, because I have so much control over what I do. I feel like I have a material effect on what happens to my company. I get to be the one who ultimately makes the decison. I feel much more comfortable with that.

Also the fact that I have an enormous amount of flexibiltiy, not only in terms of how I integrate my work life and my personal life, but also how I run the business. I've done things that have been very unconventional, which I've been advised not to do but have worked out for me, partly because they reflect the unique expertise I have. That's a great feeling.

I think that the flexibility thing has been very important to me in terms of building my staff. The people I've hired have all appreciated the opportunity to come to an environment where there's a lot of flexibility. Because of that, I was able to hire better-quality people than I could have afforded because I was offering a more flexible environment, where they could do gratifying work and basically have control of how they arrange their time. I could not have competed with them on the open market.

How exactly have you extended this flexibility to your employees?
We have a virtual office: everyone works at home. We meet once a week in person--I think it's essential that we're face-to-face at least once a week, and we devote most of that day to meetings, getting everyone on the same page. But I hired people who I knew could be responsible for their purviews.

How do you make the virtual office work?
Most stuff [is done] by email and phone. We don't use a lot of sophisticated software--we don't really need to.

How has this set-up helped you, besides its ability to attract good employees?
It allows us to have an incredible amount of flexibility. Keeps costs low. As the company has grown, I have really realized the tremendous value of being able to do it this way, and I've begun to dread the point where we'd have to do it less. My hope is that we'll always be in a place where our physical plant costs are less than they would be, even if we do grow to the point where we need a conventional space.

We're pretty globalized. Printers in China, typesetters in India, authors all over North America. We work with a distributor called PGW, a division of Perseus, through which we have worldwide distribution.

What are your future plans for Agate?
We're about to start a big e-book rollout. 40-50 of our titles are going to be available. It's what any company has got to do to try to move forward: find new ways to reach readers with our books.

Last month, we noted that alternative-energy companies, particularly those not clearly established, were struggling massively in a climate that combines scarce credit with low oil prices (making alternative fuel sources less economically viable). It was important to watch how such endeavors fared, we said, both because they themselves make up a healthy dose of the small start-ups out there, but also because they serve as something of a microcosm--perhaps a leading indicator--of how start-ups in other industries might be expected to do as well.

But a Wall Street Journal article today reports that, even now--actually, especially now--investment in alternative energy is actually booming. The reason? There are wide expectations that various policies of the incoming Obama administration will prove quite the boon to those businesses marketing energy sources that don't emit much carbon. In fact, just a few days ago the man himself said that he wants the U.S. to double its production of alternative energy. In three years. So you can see why investors may want to throw their money in that direction.

"Start-ups across a variety of areas--solar power, biofuels and energy conservation among them--are getting increased financing from venture capitalists and lenders at a time when other small companies are cutting back and being turned away by investors," the paper notes. "And many are hiring more staff, boosting marketing efforts and expanding geographically." So much for being a leading indicator: clean-technology investments leaped 40% dollar-wise, to $8.4 billion, in 2008 over 2007, even as venture financing generally declined in terms of volume.

Much of the explanation for this boost lies in just how enthusiastic Barack Obama and his people appear to be to encourage alternative-energy growth. It's not just subsidies and it's not just regulatory coercion that are being planned: it's both. A carbon tax or cap-and-trade regime, one of which will likely get the full support of the administration, will increase the cost of emitting greenhouse gases, if not put a ceiling on it; rules designed to reduce federal government buildings' carbon footprints will provide an obvious, and extremely large, customer for companies that market pioneering clean technologies; oh, and then there's the proposed ten-year, $150 billion government investment to create five million green jobs.

In fact, Indepenent Street reports today on one way the Obama administration has already begun giving a direct boost to small green-technology companies: it has, where possible, contracted out to such places for tasks related to the upcoming inauguration. (Invitations, for example, were made on recycled fiber by a small Brooklyn printer.) That is, literally, only the beginning, and only the first of many, many drops in the bucket.

The one thing missing from the picture are high oil prices, to make alternative energy sources economically competitive in an open market. Oil is low low low, and it's widely projected not to stabilize above $50/barrel for another year or so. The trick is to understand that, with all of these regulatory inducements and direct government stimulus, it's not an open market; it's a market being tilted towards clean sources. The real question, then, is whether a critical mass of alternative fuel technologies can be developed during this advantageous regulatory period so that, when said period ends, the technology is at that point cheap enough to compete with oil economically. It's a bet that, apparently, venture capitalists, other investors, and lenders think is worth the gamble.

Denny's, the fast-food chain semi-famous for its "real breakfast," is for the first time becoming a Super Bowl advertiser, the New York Times reports. It's forking over quite a hefty amount--as much as $3 million--for the privilege of having NBC air a 30-second spot sometime during the third quarter.

You may ask if that isn't insane, particularly with the economy being as it is--why, having held off all of these years, is Denny's only now spending a ton of money on this spot? You may also ask why you should care, and why BizBox does care.

What Denny's appears to be doing is taking a page from the advice of just about every marketing guru out there, which is: in bad economic times, don't cut your marketing budget if you can at all help it; and in fact, if you can at all do it, try to increase it.

This advice likely proves hard for many small business owners to swallow: when the alternative to cutting marketing (which seems to lie outside the absolute requirements of running your business anyway) is to lay off your workers or to go under, marketing seems like the logical place to start slimming down.

But the reality is that it is exactly the tough economic times when you must be marketing yourself, as potential customers are going to be more picky about where they spend their money; these are also the times when you can most efficiently and easily cut in on your competitors and improve your market share. Which is why, as we've said, there is essential unanimity among marketing experts that slashing ad budgets is a terrible idea right now.

Small business owners aren't going to be buying Super Bowl spots, of course. But it might be worth it for them to follow Denny's lead at their own scale.

We all know getting a business off the ground is a daunting task. Selecting a name, creating a business plan, and choosing services are only the beginning. There are also tax and business laws to consider, office equipment to purchase, and hundreds of other hoops you need to jump through before you even see your first customer. Luckily, there are a lot of resources out there for you, online and off. Unluckily, those vast amounts of resources are overwhelming and contradicting. Where do you start? What advice best fits your business model?

About a year ago, I found myself faced with these questions. I had made a New Year's resolution for 2008 to start a part-time computer consulting business, and was eager to get started. I had never started a business before and was overwhelmed by all the information that was out there.

Around that same time I was also really into reading blogs about many different subjects and interests. Since I enjoyed writing and thought I could do a decent job at it, I decided to give blogging a shot. I jumped headfirst into creating a blog about my experiences starting a business, and it’s been the best tool in my business start-up arsenal.

You may think that you need to be an expert in your field to start a blog, but that couldn't be farther from the truth. I had never started a business before. My solution to this obstacle was to be perfectly honest about that fact. I simply wrote about my efforts and gave advice based on those experiences. Most of my readers actually like that they have an opportunity to follow me through my trials and errors as a new entrepreneur.

What exactly can writing a blog do to help you start a business? Here are few of the ways that, personally, blogging has helped me start my business:

Goal-setting. Writing all of my ideas into blogposts forced me to really plan out my start-up activities. With the overwhelming amount of information out there, it was hard at first to know where to begin with my business planning. My blog forced me to organize my thoughts. In order to have fresh content for my blog, I had to make sure I was constantly completing tasks and thinking about how they affected my business.

Accountability. When you have hundreds of visitors reading what you're up to, it forces you to want to succeed, and it makes it much, much harder to quit. And that goes for much smaller tasks along with the One Big One. Now, every time I say I'm going to do something, I feel as though I not only need to get it done for me, but for my readers as well.

Venting. Starting a business for the first time can be frustrating. A blog provides a great way for you to vent your frustrations to sympathetic readers. For example, I had some issues with registering a domain name for my business and, after writing an article about it, I received emails from others who had been in similar situations. This helped ease my mind and continue onward.

Invites Mentors. Not having friends or acquaintances that had started a business like mine, I didn't have any role models, or mentors, to turn to for advice. Since starting my blog, however, I've been contacted by numerous people who have successfully started their own computer consulting businesses. They often provide valuable feedback and support either via comments on my blogposts, or through email.

If you don't think blogging is quite up your alley, at the very least you can try contacting other bloggers who are in a similar situation as you. There's a good chance that no matter what business you're starting, there's someone blogging about it! (For starters, you can check out my blog, Your Friendly Neighborhood Computer Guy, to see how I’m doing with my business.)

And if you do decide you want to take the blogging plunge--and I hope you do!--I recommend www.problogger.net and www.coppybogger.com for help with the ins and outs of blogging.

When, in December, we reported on the results of the National Federation of Independent Business's November small business optimism survey, we semi-rejoiced at the news that the group's index had hit its fourth-lowest reading in survey history--a notable improvement over the October number, which was the third-lowest ever.

December's numbers (full report here) are...well, they're worse. The optimism index is now at its second-lowest reading in the survey's 35-year lifespan (which makes us wonder just how miserable things were in February 1980). "December was not a good month" is the NFIB's pithy conclusion. Merry Christmas, indeed.

Let's dispense with further (un)pleasantries and delve into the numbers.

Net -6% of surveyed small business owners plan to increase their workforces in the next three months, slightly lower than November's figure. Seasonally adjusted, the average firm lost .86 workers in December. That number's never been larger. Newsflash: hiring is dismal.

51% reported having made capital investments over the past half-year, a fall from November's 56%, and only 17% reported having plans to do so in the next half-year, an extremely sharp four-point fall.

While the overall optimism index purports to take all of these different figures into account in order to calculate one single measure of "optimism," there actually is a question that directly implicates that currently elusive outlook: net -13% expect business conditions to improve over the next half-year; in November, this was net -2%. (Yet, amazingly, this figure was even lower in the first half of last year.)

At least there's not inflation. While this would ordinarily be considered good news, it looks like what we're getting is less a lack of inflation and more a presence of disinflation, with net -6% reporting higher average selling prices--that's six points off November's figure, and an astounding 38 off last July's.

Why do you go into business? To make money. Net -42% reporter stronger profit trends. November's net -38% was at that point the second-lowest in survey history. But December's figure isn't the new second-lowest; it's the all-time low. 53% reported lower profits over the previous three months, where only only 12% reported higher ones (figures are seasonally adjusted).

Net -29%, seasonally adjusted, reported higher sales over the past three months. November's figure of net -25% was, at the time, the lowest ever. You know where that leaves December's number.

Finally, the credit numbers confirmed that the decrease in lending and Small Business Administration-backed loans is definitely in part a demand-side problem: only 33% of those surveyed reported regular borrowing, an extremely low figure historically speaking.

And yet...that 33% is one of the few figures that "improved": November's equivalent was 31%. Of course, November's was the worst ever.

In the past, we've been able to glean more substantial silver lining from the NFIB's figures, but the task may just be too difficult for December's numbers. Let's just be thankful that 2008 is behind us, and hope that small business owners' collective optimism--which is to say, the economic conditions that undergird their outlook--recognize the changing of the calendar year and give us all a fresh start. And a break.

Longtime Rep. Barney Frank (D-Mass.), who chairs the U.S. House of Representatives Financial Services Committee, has emerged as one of the key players in crafting the federal government's bailout efforts, most notably the Troubled Asset Relief Program. (The New Yorker ran a good, long profile of Frank last week.)

We're pretty glad that he has accrued the power he by all accounts has, because it means people will pay attention to (and likely pass) his new bill, submitted last week, to amend TARP in certain ways. We count two bill provisions that, if enacted, will help small business owners as the government prepares to invest (likely) the second half of the originally appropriated $700 billion. (Indeed, yesterday the Senate voted to authorize the second $350 billion.)

The bill...

1. "Directs the Treasury to promptly make funds available for smaller community institutions, few of which have received funding to date," reads one section. Such institutions, moreover, "will not be penalized and may receive funding on terms comparable to institutions that received funds prior to this Act."

2. "Makes permanent the increase in deposit insurance coverage for banks and credit unions to $250,000, which was enacted temporarily as part of the Emergency Economic Stabilization Act and is scheduled to sunset on December 31, 2009, and includes an inflation adjustment provision for future coverage."

To take the last first: all the way back in October, we identified the Federal Deposit Insurance Corporation's decision to increase dramatically (albeit temporarily) the amount per ordinary depositary accounts it insures--from $100,000 to $250,000--as one of the most clearly pro-small business moves the federal government undertook during its massive bailout. (Small businesses are the type of entity that most frequently possesses accounts that the new rule was designed to include.)

As for the provision about the community banks, well, the community banks are something of BizBox's heroes: they like lending to local small businesses; they were prudent and wise over the past several years, when the big banks were on their irresponsible, overleveraged spree; and they tend themselves to be among the small businesses of the financial services industry. Additionally, and as the bill itself notes, they largely "have been shut out so far" of the government's bailout efforts, which hurts both them and the small businesses who need them for credit. The provision aims to rectify that.

The bill comes at a crucial point in the federal government's $700 billion plan to bail out the nation's banks. Half of that money is, well, gone: it's been lent to the banks--half to nine of the nation's largest, the other half to a whole host of banks--in exchange for preferred shares. Now what remains is to dole out the other half. It would sure be a pity if we didn't learn from the first go-round and invest the second half more efficiently and wisely than the first.

From small businesses' perspectives, Frank's bill appears to do just that. So we hope that it is passed. And then, if TARP proves inadequate to giving Main Street the help it needs (and the help that would put it on the same level as the banks and the auto industry), we hope Frank and Co. will be open-minded about what comes next.

Via Fresh Inc., we get this great NPR segment exploring the fall in Small Business Administration-backed 7(a) loans. It also specifically discusses an important recent change in the rules covering the Community Express 7(a) loan, and its implications for all loan applicants as well as female and minority applicants specifically. It's stuff we covered, last month, here.

Fresh Inc. juxtaposes the NPR program with this post in which their colleague Robb Mandelbaum discusses the 7(a) drop-off.

We're fans of Mandelbaum's blog, and that post in particular provided a solid, comprehensive, and fair-minded run-down of what ails the SBA's 7(a) program; in fact, we relied on the post in a post we wrote last week.

But one of Mandelbaum's prescriptions for improving SBA-backed loans focuses on those Community Express loans: "As the Obama Administration and Congress debate new ways to invigorate SBA lending, it should look hard at expanding Community Express," he writes. We think this is deeply misguided.

The problem, as both NPR and we have argued, is that the Community Express loans have risen only because of express rule changes that have fundamentally changed the character of the loans themselves. Community Express loans used to be designed for women- and minority-owned small businesses; post-changes, they are designed for small businesses located in "distressed" or "underutilized" communities, regardless of who owns the businesses.

We're not exactly against that sentiment. At the same time, we do believe in the original purpose of the Community Express loans. So actually, we hope that the incoming administration will not rely on Community Express loans to increase SBA lending. We hope, instead, that those loans will revert back to their original purpose.

There are plenty of ways to increase SBA lending--here's just one--without yanking a crucial program away from female and minority entrepreneurs, whose endeavors we should be encouraging. So leave Community Express alone; fix the 7(a) program, but fix it some other way.

This isn't exactly the biggest news surrounding Apple right now, but it is worth noting--and applauding--that Apple seems to be rethinking its iPhone application store policy, which in turn will hopefully work out well for the myriad entrepreneurs currently toiling in their garages in the hopes of striking app gold.

Right now, as our readers know, Apple must approve any app that enters the store. Not only that: it very much errs on the side of restricting new apps, particularly when they compete with Apple-produced or -sanctioned software.

So imagine our surprise--and delight!--to see on MobileCrunch that Apple now allows the purchase of Internet browsers from the app store, despite their apparently being in direct competion with the Safari program included on every iPhone.

It's a step in the right direction, and we hope similar, further steps follow. It certainly makes the company look more appealing, from a marketing standpoint. And it could reassure tomorrow's Steve Jobs that right now Apple is a company worth doing business with.

Light posting today, for Martin Luther King Day, and tomorrow morning, for Inauguration Day. Check out these links in the meantime.

Few areas of the country have been hit harder by the housing collapse and subsequent economic downturn than Southern California's "Inland Empire". Yet many area small businesses have managed to keep thriving, thanks to innovative partnerships with local universities and nonprofits. [NYT]

BizBox contributor Rohit Bhargava tells us what he would tell any CEO as 2009 dawns. [Influential Marketing Blog]

What now? Fortune makes seven small business-related predictions for 2009. Among them: action on health care, an easing of the credit crunch, and continued unemployment/layoffs. [Fortune]

The U.S. House Small Business Committee hosted several entrepreneurs at a hearing last week. Topic: what the government can and should do to help. [Sharon McLoone, Independent Street]

Not even the holiday season provided much relief to small retailers. How do they deal with the cold and un-festive months ahead? [MSNBC]

Well, since they're even excited in Oklahoma, it seems alright for BizBox, too, to announce its excitement. We'll be vigilant in watching the new administration propose and attempt to pass an economic stimulus plan, continue no doubt to fabricate bailouts for God knows what other industries, deal with the energy and health care crises, and more--all issues that promse to have profound effects on the country's small businesses.

Our vigilance will start...this afternoon. This morning, here's wishing you a happy Inauguration Day, and here's wishing our new president good luck. So help him, God.

No woman is an island. Still, when it comes to your own business, partnering with others can nonetheless be one of the most difficult decisions you have to make. No self-respecting entrepreneur wants to share the risks and rewards of his or her business with an outsider, no matter how much they could add to the bottom line. But in tough economic times, remaining competitive may depend on thoughtful and strategic partnerships.

As an entrepreneur, it is always important to find and focus on your niche, the one thing that you do better than anyone else. However, in times like these, it’s equally important to be flexible and diversified enough to satisfy changing customer demand. Being open to partnering with other small businesses can be a great way to diversify your offerings and increase revenue.

The right partnership can bring many benefits to your business, including:

Market Expansion. Your new partner can expose your product or service to a broader range of potential customers. You will, of course, be expected to do the same for them.

Cost Reduction. Partners can share expenses and pool resources, including everything from advertising to rent.

Product Diversification. When appropriate, a partner’s products may complement your own, and each of you can offer a broader range of product to your customers, extending the reach of your brand and increasing revenues.

However, if you decide to pursue a partnership, be sure you are partnering with businesses that share your ideology and customer demographic.

For example, a floral shop might consider partnering with businesses that cater to its same demographic and whose products could be sold in its shop or vice versa; some potential businesses would be a gift shop, an art gallery, a bakery, a book store, or a coffee house. By offering these other products, the floral shop would able to offer more to its customers, possibly share in the margin of these new products, and reduce its marketing expenses. And by placing flowers in other store fronts, the floral shop can gain more customers and increase its revenues and brand exposure as well.

When looking for a partner, be sure to ask yourself these following questions;

Do they share a similar customer demographic?

Can they offer strength in my weaker areas?

Will partnering with them expand my customer base and increase my revenues?

Is this partnership going to elevate my company’s brand?

Will this arrangement be short or long term?

Go forth from here and find your ideal partner(s) and tell us about it at nedandshell@nedandshell.com, or in the comments. We’d love to hear how you are making your business work. Check out www.nedandshell.com for more useful articles for starting your own dream business.

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.

For those of you wondering, in the frequent words of a different president, "What's next?", a good place to start is this Fortune article about a trip President Obama made to Ohio last week to talk up his $825 billion stimulus plan--especially the part about boosting manufacturers, including small manufacturers, who start converting over to "green jobs".

Obama visited Cardinal Fastener, located in the Cleveland suburb of Bedford Heights. It is a small manufacturer that makes parts for bigger companies, including Caterpillar, John Deere, and auto and steel companies. Of course, those two categories should give you a clue as to how Cardinal Fastener's business prospects would be looking if it had not also actively sought out a new customer base. Companies that have relied and continue to rely on the U.S. auto and steel industries are dying, if they're not already dead.

But Cardinal Fastener is thriving.

Because Cardinal Fastener also makes parts for wind turbines, Cardinal Fastener is growing--and it expects those green-related products to account for roughly 90% of its growth in the coming year.

And as if market trends alone weren't favoring companies in the green industry already, Obama's stimulus plan includes $54 billion that is to be targeted to that industry in order to double domestic alternative energy and, the process, create 500,000 new jobs. "We think [Obama's initiative] is going to give us at least a 50% growth rate in 2009," Cardinal Fastener's owner told Fortune.

This company should be an object lesson for how easy it can be to get in on the green action. There isn't anything inherently green about Cardinal Fastener's business itself: it appears to be a manufacturer like most other manufacturers. The difference is it was smart enough to become a part of a supply chain that includes, on a different link, genuine green businesses (such as wind-power companies).

In other words, if a small Rust Belt manufacturer can become a part of the green industry, then so can your company.

And given market trends, and given who as of five hours ago became the new president of the United States, it seems like moving in that direction is a good idea.

"You are what you eat," the phrase goes. While the notion that you need to stay fit and keep healthy has been around for awhile, that phrase itself didn’t enter he American consciousness until 1942, when Dr. Victor Hugo Lindlahr published his book You Are What You Eat: how to win and and keep health with diet.

So what does this have to do with you as a business owner? If you’re in the service business, the equivalent thing to say would be that you are your client list. You can’t be all things to all people, and maybe–-just maybe--you don’t need to accept just anyone as a client. Why not work with people who you enjoy, are not toxic, and reflect your values. You’ll be more effective and have a better quality of life. And so will your employees which be reflected in staff morale.

How do I know? Because I recently fired a client who committed the cardinal sin: abusive treatment of my staff. The income didn't matter. The prestigious nature of the client didn’t matter. Because I learned long before the MasterCard commercials: staff morale, priceless!

It’s easier said than done, of course, particularly in this economy. But stop and think about it. What’s on your plate?

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.

A couple weeks ago, BizBox contributors Peter Montoya and Tim Vandehey discussed how social networking Websites like Twitter, Facebook, and LinkedIn can help you build your business and cultivate your personal brand. Briefly, their answer was: if you are in the right industry and you are a savvy user and network, then absolutely yes.

A post we came across recently about one small business's success with LinkedIn--a social networking Website specifically geared towards business-to-business--seems to bear this out. Josh Morgan of Don't Eat The Shrimp told the story of his success with LinkedIn. Basically, someone posted to LinkedIn asking for suggestions for a Bay Area PR agency with a special background in education; Morgan humbly put forth his own business; and--whaddya know!--soon enough he had himself a new client.

But read the whole thing.

As Robb Mandelbaum reports in an important new post, the Bush Small Business Administration made a decision, only last week, to reopen the comment period for a rule that would enforce a law that sought to expand greatly the number of industries in which 5% of all federal contracts would be set aside for small businesses owned by women. In other words, the rule has been, at the very least, unexpectedly postponed.

The rule, which we covered here, would in essence increase the number of industries in which the 5% requirement applies from four to 31. The change had the support of Sens. John Kerry and Olympia Snowe, then the chairman and ranking member of the Senate Small Business & Entrepreneurship Committee (Snowe retains that position), as well as the interest group Women Impacting Public Policy (which has additionally teamed up with American Express OPEN--a.k.a. BizBox's sponsor--to establish "Give Me 5").

It will be interesting to see how Barack Obama's administration, including his incoming SBA head, Karen G. Mills, responds. Among Obama's very first orders of business has been to reverse Bush administration executive orders--concerning coercive interrogation procedures, for example--with which he disagrees. It would certainly be nice to think that the postponement of this new rule is among those, especially since Obama has already been criticized for appearing to be unserious about addressing the federal government's small business procurement problems.

On the other hand, Obama the former Constitutional law professor may take note of a recent federal appeals court ruling--which Mandelbaum points us to--that held that a Pentagon program for divvying a certain number of contracts out to "small disadvantaged businesses" was unconstitutional. That decision, and the Constitutional logic behind it and precedent it sets, could have profound, mortal implications for the procurement rule.

It will be interesting to see how all of this plays out. We'll certainly be watching

In my last column, which was my first as a BizBox contributor (thanks for all the supportive emails!), we started talking about the “entrepreneur’s lament.” I noted that in my law practice representing business owners and my experience running businesses, it seems that entrepreneurs tend to lament, or feel sorrow or regret for, the following:

o Focus. Pursuing new ideas to the detriment of the core business.
o Work/Life. Missing out on real life while pursuing business passion.
o Employees. Inability to find great help and keep them.
o Partners. Challenges in finding or maintaining good business partners.
o Money. Inability to find necessary financing for growth or survival.
o Burnout. When one morning you just can’t do it anymore.
o Boredom. When there’s not much more to build.

We covered focus in the last column. Today we move on to one of the most difficult challenges faced by just about any entrepreneur: the infamous “work/life balance” lament.

Work/life balance is not just important to relieve the guilt of not being home. It will improve how you approach business. I find that those who find their balance are happier, more efficient, more productive, and more focused.

But the work/life balance lament is also, yes, about having enough time at home; and, like it or not, these decisions are often harder for female entrepreneurs than male ones, especially if there are kids in the house. Women tend to feel more responsible for child-rearing. The world is littered with stories of men who went for the "100% of their time at work" approach, leaving behind (ex-)wives and unhappy children. Certainly there are women in that category, but, frankly, not as many.

So how can one avoid becoming “Uncle Daddy,” whom the kids see only once in awhile, or only via webcam? Can you be there as a Mom for every soccer game and school presentation? The answer: yes, if you respect the difference between working hard and working smart.

As a lawyer, I have never put in as many total work hours as I have in the last few years. This is for many reasons. As a published author, I am in demand for speaking around the world (I also spent a bunch of Saturdays recently preparing the second edition of my book). I am running a growing law firm. I am overseeing my client matters and practice group.

But with all that, I time-shift where necessary in order to be home to see my family as much as possible. If that means working from 10 pm to midnight, so be it. Already, I’m up at 6 o'clock and on the computer for an hour before my son wakes up.

Additionally, I do something that is often hard for entrepreneurs: I delegate. Yes, I know many entrepreneurs hate the “D” word. But it is critical not only for helping a business grow, but also for creating some semblance of a true work/life balance for the entrepreneur. In the next column we will talk about the challenges of finding the right people to work for you--briefly, accept that no one will do things as well as you do, and work on finding ones who can do them well enough.

Lastly, try to work from home every once in a while. These days, virtually all that I do can be done remotely, and that is typically true for most entrepreneurs. Not always, just occasionally. You’ll like the 12-second commute and be even more productive than when everyone in the office needs your attention. Oh yeah, and you’ll see the family.

This is not just about spending time with family, by the way. It includes “me” time, too--whether working out at the gym, a game of tennis with a friend, just easing back and reading a book, or watching a movie. When traveling, add an extra half day or day to the trip with no meetings planned. Sneak in a round of golf, a massage; relax in the hot tub, take a nap. The business will survive, and you may find yourself doing some good brainstorming when removed from the daily grind. It’s downtime that helps recharge you for what is to come.

And in this extraordinary economic climate, with all the challenges most of us face in our businesses, we need all the recharging we can get!

Next time: Can you find--and keep--great employees?

David N. Feldman, founding partner of Feldman Weinstein & Smith, is the author of Reverse Mergers and blogs at Reverse Merger & SPAC Blog. He can be reached at dfeldman@fwsllp.com.

No, this isn't just wishful thinking for a nation concerned with increasing joblessness. Hiring during a down job market is, if you can afford it, a savvy idea, argues an Inc.com piece.

In short: right now is a "buyers' market"--the normal equilibrium of those looking for jobs compared to the number of jobs is totally out of whack, with job-seekers more willing to compromise on position and on salary than they have been in quite some time. And, once you hire them, they're guaranteed to be especially motivated employees.

Plus, yes, you'll be helping the economy. Think of it as patriotic duty!

It's an important question for small businesses. As Independent Street reminds us, and as we noted when we reported that the federal government had failed to fulfill its legal contracting obligations, 23% of all federal contracts are supposed to go to small businesses. Now, not all of these small businesses are small: depending on the industry, such a company can pull in as much as $15 million a year, for example. But it's an important issue. In fact, there's one group--the American Small Business League--that exists more or less solely to try to force the goverment to follow its own rules.

Given that fixed 23% figure, as goes the total number of contracts, so should go the number that are thrown to small businesses. So the question is: is that number poised to rise or to fall with the dawning of a new year, the deepening of a recession, and, of course, the introduction of a Democratic presidential administration? You'd be surprised how two-way the argument is.

On the one hand, Democrats generally like to spend more, and Obama has proposed a $825 billion stimulus plan--just at the outset--that includes hundreds of billions of dollars to be doled out to and spent on the promotion of "green jobs," the construction of new infrastructure, and other vast projects (including, importantly, money to the states). The economic philosophy of John Maynard Keynes is never more in vogue during recessions, so look for continued stimulus spending ultimately targeted towards increasing consumer demand over the next year and beyond.

On the other hand, as this great post on washingtonpost.com (our sister site) makes clear, in recent years federal contracts have ballooned, likely beyond where they should have--this is due to inefficiencies and waste--and Obama has come in promising to trim the federal government's fat. In the previous fiscal year, federal contracts amounted to $532 billion; compare that to the then-record $465 billion in only the previous fiscal year, much less to the $13 billion thirty years ago.

Moreover, the department of the federal government that quite possibly accounts for the plurality of this waste is the Pentagon--among the only departments that are actually potential candidates for less funding and contracting during a typical Democratic administration.

So you can see that a plausible case can be made either way: federal contracts truly could go up or down, and small businesses' share with them. Ideally, you would probably see an overall increase, coaxed by wisely targeted stimulus dollars and tempered by cuts where taxpayer money is being spent imprudently and wastefully.

Of course, another way to increase small business contracts is to ensure, no matter the total in federal contracts, that small businesses are getting their fair--and legally mandated--share. Surely Republicans and Democrats alike can get behind obeying the law.

Being a business owner, some new research that MetLife recently unveiled immediately got my attention. It was about the four key types that employers embody when it comes to workplace benefits investments and strategies.

At the recent National Business Group on Health’s 22nd National Conference on Health, Productivity and Human Capital in San Diego, MetLife Vice President Ronald Leopold, M.D., unveiled proprietary research that identifies the four categories employers fall into regarding their attitudes towards benefits. Dr. Leopold calls these employer profiles: “Traditional,” “Standard," "Flexible," "Progressive".

Here is a summary of the four employer profiles that were found across all industries and across companies of all sizes:

1. Traditional. 17% of employers demonstrate a commitment to the legacy of employee benefits. Health insurance and retirement plans are the cornerstones of their programs, and they tend to fund more of these core benefits than other companies do. While they may also offer voluntary benefits, these employers do not appear to focus heavily on matching those benefits with the specific needs of their employee populations or delivering or communicating them in a targeted way.
2. Standard. 28% of employers recognize the essential nature of health insurance and retirement plans. However, these employers often do not fully fund these benefits. They sometimes serve as a channel through which employees can gain access to group rates on a voluntary basis, though.
3. Flexible. 23% of employers are very aware of their competition (those they hire against and compete against in the marketplace); their consideration of the trade-off between offering choices and shifting costs leads them to support a wider range of benefits programs through self-directed education, communication, and decision-support tools.
4. Progressive. 32% of employers believe that the richness and diversity of their benefits platform provides a competitive advantage. They seem focused on meeting the diverse needs of their workforce, and provide benefits beyond basic health and welfare offerings. They are among the first employers to offer benefits and programs that address work/life balance.

While the focus of MetLife's research is to help employers understand what their profile is so as to maximize the return on their benefits investments, it may have broader implications, too. Perhaps one of these profiles--traditional, standard, flexible, progressive--describes your overall management philosophy and style. Is it working?

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.9

The New York Times Business Section's weekly interview this past Saturday was with Dev Patnaik, a consultant and author of Wired To Care: How Companies Prosper When They Create Widespread Empathy. As that subheadline indicates, his idea is for companies to cultivate an atmosphere in which employees can feel a sense of empathy--a sense of "stepping outside of your company and getting your entire organization to get a sense of what the outside world thinks and feels, as opposed to just what those inside your organization think and feel." In this way he argues, companies can better match their products and services with their customers.

Patnaik argues that, with a few exceptions--he cites JetBlue, I.B.M., and Nike, among a few others--American companies have lost a step in the empathy department, and have found themselves "trying to get the customers to identify with their product rather than getting their own employees to identify with their customers."

Patnaik's thinking sounds sensible, but it's clear that--at least in the interview--he's talking mainly about big companies, where the number of employees is so vast and a typical worker is so insulated from a typical customer, making empathy an especially tall order. What he doesn't note--and what we will, if he doesn't mind--is that small businesses have a built-in advantage as far as empathy is concerned. If managed correctly, smallness leads to greater interaction and subsequent identification with the customer.

In one sense, the customer and the company lie on opposite ends of the commercial dividing line; but in another sense, the customer and the small business sit on the same side, with the big guys on the other. The trick of empathy for the small business, then, would seem to be to move its culture one where the former paradigm reigns to one where the latter does.

From a business perspective, there are enough disadvantages to being small as compared to being big. It sure would be silly for you not to exploit your advantages, no? Ensuring a healthy sense of empathy seems like a prime way to do so.

Last week we talked about LinkedIn, and how that business-to-business social networking site can help you get customers thrown your way.

But even the most expansive social networking site has about an ounce of the reach that the Internet ocean known as Google possesses. Searching on Google is the Yellow Pages, word-of-mouth, and a walk down Main Street all rolled into one. As publicity for your business, it has an absolutely unique and unbeatable combination of universal accessibility and the selection bias: anyone can use it, but those most likely to find you are those who are looking for something like you.

Which is why we were so excited to hear about GetListed.org. It's basically a tool (a free tool!) for figuring out how good your Google is--how high your business sits once Google's vaunted algorithm gets done with its job, what your reviews are like, where your citations are...basically, everything the everyday entrepreneur needs to know about how his or her business is faring on the all-important search engine. The blog Search Engine Guide has more. Check it out. Get yourself to the top of the queue.

Among the things we discuss most is how to secure financing for your business, which most of the time means: how to get someone--usually a bank or some other sort of financial institution--to lend you money. If you read the papers (or this blog), you know that right now is not the single easiest time in world history for persuading somebody to lend you money. Credit is scarce; and, like any other scarce commodity, that means those in a position to sell (or lend) can usually make extra demands on those needing to buy (or borrow).

We're not here to tell you not to accede to any additional condition. But you should always make sure you understand what any given condition is, and how it could impact a potential loan. You can't make wise decisions if you don't have the right facts in front of you.

Forbes has a neat primer on some of these conditions that we recommend. Some of the advice is (or should be) common knowledge: for example, yes, loans where interest is demanded monthly are more expensive than those where it's demanded annually; similarly, a loan that requires you to prepay your interest--by docking the interest amount from the principal on which you are paying interest in the first place--is something of a gyp, as it effectively charges you a higher rate.

The article has more complex pieces of advice when it comes to, say, short-term versus long-term loans--specifically, on knowing beforehand if you'll only need the loan for a short period of time. And it reminds you to factor any fees onto your eventual interest payment, since that is what a fee may as well be.

"Don’t let lenders make you think they are doing you a favor if you are a sound credit," the author concludes. We agree, to a point. Your credit should play a major role in the relative favorability of the loans you are offered. And certainly you should know that banks offering you one of those gimmicks may be trying to pull a fast one; and letting them you know what they're up to can be a very effective negotiating technique.

On the other hand, the credit markets are incredibly weak right now. And while it's true that any bank that actually tells you it is doing you a favor is lying to you--capitalism leaves very little room for business-to-business favors--the fact is that loans that seem like shams during normal times actually may be more appropriate--in the sense of, the best you're going to be able to get--during the present.

So always, always know what you're considering getting into. There's never an excuse not to, and there's never a downside. But in times like these, and barring true grand thefts (usurious rates, for example), try to avoid blanket policies of rejection. Keep a keen but open mind.

Yesterday, we brought news of GetListed, a (FREE) service that lets you know how your Google is, as the phrase goes.

Given the recession, we feel as though we can't tell you about too many inexpensive, helpful services. Today's offering--which comes to us via Drew McLellan--is marketsplash, by Hewlett-Packard. It's not free (although, actually, you can nab 100 free business cards out of the deal), but it is an inexpensive, DIY site that lets you design your own marketing materials for your business.

We especially like the encouragement to put a personal touch on your business cards, your envelopes, your Website...everything you use to market or advertise your company. If you are not making your marketing personal, then you are foregoing one of the chief advantages of the small business.

On the whole, the National Federation of Independent Business does great work. As the single most powerful organization dedicated to looking out for small businesses in Washington and in state governments around the country (we constantly get press releases from them over some pending bill in one state legislature or another), we clearly believe they are a force for good. They may have a slightly conservative bent, but, well, so, likely, do entrepreneurs and small business owners on the whole.

But there's a slightly conservative bent, and then there are the espousing of Republican talking points (just as there could hypothetically be a slightly progressive bent, which would be acceptable, and the espousing of Democratic talking points, which would not). And all too frequently, we see the NFIB offer little more than Republican talking points, combined with a determination to make a non-small business issue a small business issue. We've seen it with the auto bailout. We've seen it with the estate tax. And we saw it with their post-election agenda.

Nowhere do we see it more than when the group raises the issue of the Employee Free Choice Act--so-called card check legislation (the link is to Wikipedia: we're trying to be neutral)--as it does in a new press release.

We're not here to take a position on the merits of card check: reasonable people can and do differ. We are here, however, to call a foul on the NFIB.

The release's tone is hysterical: "a job-killing piece of legislation," it calls the bill. And it nominally casts the NFIB's opposition as part of the NFIB's broader (indeed, sole) goal of looking out for the nation's small businesses: passage "will harm small businesses already near the breaking point in this economic recession."

But, oddly, the release proceeds to lay out a case against card check that is decidedly not an appeal to the interests of small business owners, but rather to the interests of workers. Not that we don't have compassion for workers--indeed, we suspect it is our and everyone else's automatic care for the jobless that persuaded the NFIB to make its case on these terms--but looking out for workers is not really the NFIB's job, and the NFIB knows it. So what's going on?

Frankly, we get the feeling that the NFIB's opposition to card check is predicated not on an honest calculation of small business owners' welfare but rather on a broader ideological worldview. Ideological worldviews are fine for political parties, of course, as well as for individual citizens. However, when broad ideological worldviews are espoused and advocated for by groups specifically designed to look out for a single interest--we call them "interest groups" for a reason, you know--then that group, it seems to us, is doing its constituency a disservice.

Are we wrong? We'd like to see a press release (preferably one less hysterical) that clearly, calmly, soberly, and devastatingly lays out what makes card check so bad for the country's small businesses. It should acknowledge the other side's arguments and good faith while showing why the other side is misguided and even dangerously wrong. Send us that press release, and we will link to it with our seal of approval (if not our endorsement--we're trying to stay neutral on the issue itself). But please, no more of the same.

The Document Imaging Blog--which, being administered by imaging software company eCopy, admittedly has some skin in this game--has a nice little check-list that lets you efficiently examine the way your business uses paper (which is to say, how it could use less). We definitely recommend a look.

We still insist that paper is fast becoming the new papyrus. The fact is, and their obvious bias aside, the blog is correct to write, "Businesses only operate as efficiently as they process information and paper--a physical object--takes longer to move from department/person to another (for signatures, review, editing, etc.). Manual processes are more time consuming, error-prone, and costly than electronic processes." Now that electronic options are available, it is only a matter of time before your competitors are exploiting them, lowering their costs, improving their efficiency, and strenghtening their bottom lines. If you haven't already started thinking critically about the way your company uses paper--if you haven't ceased to accept it as a premise and started to think about changing the way your business does business--then it is well past time for you start.

Courtesy Fortune (it's a few months old, but all its advice still applies). For all we write about alternative ways to secure financing--community banks, credit unions, seller-financing, Small Business Administration-backed loans, and God knows what else--the banks are still in business (thanks, Uncle Sam!), and they still should be among your first stops when you're looking to obtain some credit.

The main point is to call ahead and do some investigative work. You know how they say that every job interview is a two-way interview--the prospective employer wants to size up the prospective employee, but the prospective employee wants to see if he or she should be interested in the job? Similarly, the bank is going to want to know whether you're worth lending to, but you should look to see if the bank is worth borrowing from, as well as likely to lend to you, before you apply.

Principles to remember when sizing up a bank include:
Size matters. Some banks--particularly smaller one--are not going to lend more than a certain amount regardless of your credit-worthiness. Find out if what you're looking for is simply too large a sum.
What do you do? Most banks (again, particularly smaller ones) focus their business lending on specific industries. It's not hard to understand why: if you have limited resources, it's much wiser to focus on a few industries and master them rather than spread yourself thin. But if your industry happens to be one that your potential lender does not do much business in, then your chances of getting a loan from them are likely slim to none, with slim ambling out the door.
Geography is destiny. The Community Reinvestment Act can incentivize or disincentivize banks from lending to you depending on where you and it are located. You may want a bank that is within your zone for this reason.

Don't be shy about asking questions, and persisting in asking questions until you get clear answers. Happy loan-hunting!

"It's a hard, dedicated life, and it's very easy to get burned out, but you have to love what you do. I love baking, and I love that people love what I bake, so there's so much gratification."

Our guest today is Teresa Velazquez, co-owner (with her husband, Tony) of Baked and Wired, a popular bakery in Washington, D.C.'s Georgetown neighborhood. Velazquez has seen the rise of coffee and cupcakes, and adjusted her business accordingly (pie, incidentally, is next). Here, she tells what it's like working alongside her husband, and reports that Barack Obama may soon be a fan of her cupcakes.

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 Baked and Wired's origins.
Teresa Velazquez: We opened in April of 1991. At that point, we were, I think, the first bakery/coffee house [in D.C.], cause after us Cake Love opened. Our concept when we opened was more on the bakery side than the coffee side--we weren't very educated in coffee. I think coffee was still pretty new then. As the years progressed--I would say in the last, maybe, two years--we really got serious about coffee: we got a new roaster, a new espresso machine, we trained people in espresso. Also, about a year and a half ago we expanded the space.

We originally had a graphic design place. It was kind of my idea to say, Can we cut out some space for a bakery? And we just kind of did it--I had never cooked anything before besides a pan of brownies!

Then, more recently, we expanded the space, and opened a new lounge area, put in a marble bakery top.

You're saying "we". Who owns the business?
My husband and I both own the business. He has his own architectural practice, too. He oversees all the money aspects--which is great, because I just kind of want to be in the kitchen and bake.

What is it like working and owning a business with your husband?
We've been together for like 24 years. I started working at his architectural firm, and about a year or so later, before we were even married, we opened the coffee shop. So we have worked together every day, and lunched together every day. For us, it's not a hard thing. He still has his architectural practice, and he handles the money side, and we have a meeting every morning, to decide what we're going to do that day, to talk about long-term strategy. I guess we've done it for so long that it would be weird not to work together.

Sometimes it's hard to turn off your business life--becuase you have kids and family, and you have to not always talk about business.

We know about our strengths. He's a very organized person--he knows how much a cookie costs to make. And I'm more the producer. There's always a lot of stress involved, because it's hard to run a business, but we've always worked together, so I think we've managed to have a life, have a business, and work together and raise our kids. It would be weird if we weren't working together.

What made you want to be a baker in the first place?
I was just always the one at grandma's helping her make cakes. My mom owned a bookstore, and my dad worked, and there was always a list of household jobs, and my job was usually to make dinner for everybody. I always had a real love for it.

But what made you want to open your own bakery?
You just kind of start looking for holes in the market. We'd been in Georgetown, so we knew that there was a need, because the only place we had to go was the quick deli across the street with frozen muffins and bad coffee. We thought, "We can't be the only ones who want a fresh piece of banana bread."

Have you seen Baked and Wired grow substantially?
Even over the last six months, it's become this kind of destination place for people to go. People come in to try cupcakes, which are so incredibly popular these days.

How do you market the bakery? Do you advertise?
We have never marketed Baked and Wired. We opened. Thomas Jefferson Street is tucked away, but everything around it is a business district. We just opened, and people came. And we got written up in the Washingtonian, in the Post, and people start hearing about you more and more. Everything's growing and moving so fast that we haven't had time to [advertise]. You have Yelp, which everybody gets on, and spreads the word--Yelp is probably our biggest marketing factor out there right now. It's totally free.

A while ago the Post had a thing called the Cupcake Wars in the food section, pitting two places against each other each week. And we had the higher score. The Post came out on Wednesday, and I swear, from Thursday on through we couldn't produce enough food.

Our big competitor these days is Georgetown Cupcake. And there became this sort of cupcake war between the two of us, but really only between the bloggers. Which helped people who hadn't heard of us before hear about us! The whole computer/blogger age has been our greatest advertisement.

How has the slumping economy affected your business?
It hasn't affected our business at all. We know a lot of people who own restaurants, and their businesses are down. I think that for us, since you can get a pretty latte with a heart on it, and you can go buy yourself a cupcake or a slice of pie, and you've spent eight bucks, and then you can say, "I deserve that, I had a really crappy day"--I think because of the price range we're in, it's not much to make someone's day better.

Our profit margins are less now, because our produce costs more, our supplies are more, you get hit with gas surcharges--in that area it's hurting. We really can't raise our prices anymore. What we have to do is just tighten up, make sure our staff is tight, make sure there's no overflow, no waste. We're just really conscious about how much we can do. But business has been great.

Have you been able to secure necessary financing?
Everything that we have done in the store, like when we did the whole expansion, we pretty much labored ourself--I was painting the walls. But we financed that all ourselves, so we never had to go out and get a loan. I think that would be a lot harder these days.

What do you like about owning your own business?
I think for both of us, it's being in control of your own destiny. Especially these days: we've had a lot of good customers, whom we've had for many years, and one woman--she just got laid off.

You're in charge of making sure you can pay the mortgage and you can pay the kids' tuition. But then on the other hand, you're not relying on anyone else.

I come from a family who owned their own businesses, and so did Tony. We'd much rather be in control of what we do. Out of my six siblings, almost all of them own their own businesses. My little brother works in the corporate world, and he wants out of it so bad. He doesn't feel fulfilled--he needs to have control over his own life. We're really hard workers. We work probably seven days a week. It's a hard, dedicated life, and it's very easy to get burned out, but you have to love what you do. I love baking, and I love that people love what I bake, so there's so much gratification.

What's Baked and Wired's next move?
Since all of us are so sick of this cupcake craze, we are going to really market the pie scene. We're going to get homemade pie out there!

Our new super-big news is, one of our customerss works for the Daily News, he's the White House correspondent, and his office is down the street. He is going to deliver a couple boxes of cupcakes to the White House this week. He said they told him it may take a while to get to Obama, but he's going to give it to the staff, and hopefully it'll make its way to him.

Employers, take note. Today, Barack Obama signed the Lily Ledbetter Fair Pay Act, which allows workers to sue alleging pay discrimination any time within six months of receiving a paycheck that reflects the purported discrimination. Previously, according to a recent U.S. Supreme Court ruling involving Ms. Ledbetter, the statute of limitations clock started running after the first allegedly discriminatory paycheck, and did not restart with each new one. (Ledbetter had sued her employer, Goodyear, for pay discrimination on the basis of gender, but her case was thrown out since it had not been filed within 180 days of the first offending paycheck, even though the discrimination had allegedly persisted for years. Ledbetter actually will not be able to collect damages under her eponymous law, though she said the law's passage represents "an even richer reward".)

The Bush administration had opposed the bill--critics assert that it will encourage lawsuits, and could also provide an incentive to employees who are being discriminated against in pay to hold off on suing in an effort to put themselves in a position to collect more damages down the line.

To the extent that the new law does produce frivolous actions, we hope--and trust--that the courts will strike them down, and establish precedent discouraging them. But it is difficult to feel sympathy for employers who have been paying some people less than others not because of relevant experience, education, or skills, but because of characteristics like gender or race. The new law does encourage lawsuits: it encourages people whose employers have been discriminating against them to sue to get them to pay for well-deserved damages. We're not sure that's such an infelicitous development.

BizBox prides itself on its decent and fair readership. So if there are any stragglers out there who are currently, well, discriminating against their employees, we'll just say that we hope they consider passage of this law yet one more reason to, y'know, stop.

When the bailout of the Big Three automakers was being debated last December, we pointed out that the welfares of the Three also impacted the welfares of thousands and even hundreds of thousands more, many of them small businesses. Fortune has a new article that examines this in-depth, taking a look at several small businesses who are involved in the Three's supply chain and find themselves quite imperiled indeed.

One of the types of businesses, many of which are small ones, that are poised to lose the most even in the event that the Big Three make it out of all this alive are dealerships--hell, General Motors's own recovery plan involves cutting thousands of dealerships loose. We were interested, then, to see this post on Independent Street linking to this Journal article on two California towns that have actually taken to offering favorable loans to local, struggling dealerships.

As a blog dedicated to screaming about how small businesses have not received government help proportional to big companies or commensurate with their macroeconomic importance, we are, naturally, thrilled. (!!!)

The reason why the towns are doing this is obvious. As the mayor of Victorville, in San Bernardino County, told the paper, "The last thing we want is for them to shut down, leaving an empty building, an eyesore in the auto park, and more people unemployed." The dealerships are also massive sources of sales-tax revenue, according to the article, as well as prominent sponsors of everything from Little League to rodeo (apparently they do rodeo in SoCal). The town's fortunes are bound up with the dealerships', in other words.

What's the broader lesson to take away from this? An analogy can be made between these towns, who are small enough and low enough to the ground to perceive the needs of small businesses like these struggling dealerships, and the community banks, who are small and attentive enough to recognize the value of small business loan applicants, and extend them credit where big banks (who are analogous here to the federal government) won't.

So from a policy standpoint, what should small business advocates be pining for to encourage further arrangements like these California towns'? We're open to suggestions, but the first thing that pops into our head is: aid for the states.

Any stimulus package eventually passed will have this anyway, of course, because many states are facing dire budget situations; and states are likely to spend the money immediately, which is a key requirement for an effective stimulus measure. In fact, liberal think-tank the Center for American Progress put together a nice chart detailing how much each state is slated to get under the stimulus bill passed by the House of Representatives.

But states are also where lots of towns get some of their operating budgets from. And it appears that small businesses may increasingly depend on the cities and towns to survive these lean times. So we're going to be loud and proud on this one: more stimulus money to the states! It's the best hope small businesses have for the (indirect) bailout they deserve.

Earlier this week, we offered some pointers on how to recognize whether you're being offered unfavorable terms for a loan. We didn't advise you to reject, blanketly, all loans made under such terms; we merely urged you to exercise due diligence and caution.

As Econ 101ers know, there are, broadly speaking, two ways to raise capital. One is to go into debt--hence our primer on shaky loans. The other way is to sell ownership--allow outside investors to purchase a stake in your business or endeavor. As with loans, such investments can be offered under terms that run the spectrum from favorable to unfavorable. Yesterday, the New York Times ran a good piece advising you to be wary of investors bearing strings attached--even in this economy, where financing can be exceedingly difficult to secure.

"Especially in this weak economy, entrepreneurs may feel pressured to comply," the author reports. "And many times, complying is the smart thing to do because investors usually have more industry experience than the entrepreneurs they finance. Some entrepreneurs also cling to irrational ideas. But agreeing to such requests just because an investor offers cash is not always the best thing for the business."

Frequently the zealous investors are professional investors: namely, venture capitalists, who may have generous sums on the table but will require extensive say as to the future direction of your burgeoning company.

About these and other types of investors, the article makes a fairly brilliant point: frequently--and often explicitly--investors and business owners have divergent interests. This is because many investors look to get their money in, increase it, and then quickly sell out so that they can look to the next project; in some cases, investors must get their money out within five years. The small business owner, on the other hand, is typically in it for a longer haul--sometimes for the long haul. Additionally, for small business owners it frequently isn't about, or isn't all about, money; that is something that simply cannot be said for professional investors. In other words, frequently investors' and owners' interests are not aligned in zero-sum relationship, and so giving both power over the direction of a single endeavor can be a recipe for friction at best, and indecisive disaster at worse.

So sometimes the right move, according to the article, is to spurn these offers and attempt to bootstrap. The trick, then, is to be realistic, and to adjust your expectations: you simply will not be able to grow at remotely the same rate if you're bootstrapping than you would if you had accepted VC funding.

On the other hand, the article adds, many pro investors have been around the block in ways and for amounts of time that owners have not, and can therefore bring valuable experience and wisdom to the table. In spurning them, entrepreneurs may not just be forsaking money; they may also be forsaking valuable advice and guidance.

Ultimately, the article advises what we, too, are inclined to advise: no blanket rules; a ton of diligence and prudence. Don't automatically accept outside investment just because it's a big enough amount, and don't automatically reject outside investment just because it comes with too many strings.

On the theory that some of you will likely spend some (hopefully not too much!) of your weekend beginning to deal with...sigh...taxes, we thought we'd leave you with this stellar Independent Street post on avoiding "red flags" in your tax returns--the sorts of red flags that prompt the IRS to conduct one of its delightful audits.

The two that caught are eye, for varying reasons, were:
-"Keep personal and business expenses apart." This seems to be simultaneously the most obvious and the most difficult, and probably also the most important.
-"Avoid the home-office deduction." Independent Street reports that, in most cases, it won't save you much money, and the paperwork required can be a real "hassle". We actually posted on this issue a few months ago. Independent Street's right: it is a hassle; it's no wonder that, according to the National Federation of Independent Business, only 2.7 million entrepreneurs of the 8.3 million who are eligible--who have a room in their home dedicated to their business--take the deduction.

Which is why we, and everyone else looking out for small businesses (including the Small Business Administration's Office of Advocacy) are in favor of a standard deduction. One proposal that has circulated would have a simple, optional $1500 deductible, which could be itemized.

Please get on this, New Administration. By tax time next year, we shouldn't have blogs advising (helpfully--it certainly isn't Independent Street's fault!) small business owners not to take a deduction to which they are perfectly entitled.