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Last fall when the government passed what was then a $700 billion economic bailout package, largely intended to prop up failing institutions such as AIG and Citibank, one could hear the collective groan of small business owners across the country. Although they displayed a variety of reactions, most were perplexed by the idea that as self-sustaining entrepreneurs (already squeezed by the worsening credit crunch) they had to live and die by their own success or failure – while the government was going to take care of big businesses that had created the financial crisis to begin with.
President Obama seems to have been listening. Today, he announced a three pronged package intended to help small businesses. The program includes a $730 million chunk from the stimulus plan to reduce lending fees while increasing government guarantees on a portion of Small Business Administration loans up to 90%. It also seeks to increase bank liquidity by injecting $15 billion into banks in order to thaw the credit market and boost lending to small businesses.
In October, we spoke to a group of small business owners to get their reaction to the original bailout plan. Following the administration’s latest announcement targeted at small businesses, we reached out once again to get those owners’ take on Obama’s new plan.
Gina Schaefer, who is set to open her sixth Ace Hardware store in the Washington D.C. (area) says that while she thinks the speed at which the administration moved to do something signals that Obama does understand the important role that small businesses play in the American economy, she remains skeptical that it will spur the banks to make loans. “I don’t think it gives them more of an incentive then before,” she says. “It is always a guess as to whether a bank will take a chance on someone especially if they have no track record. The government says it is going to increase what they back and that is encouraging but it doesn’t mean you have a whole bunch of people that are seen as less risky to give to.”
Shaefer thinks however there is an upside if you are already in business. “If you have a track record and need an influx in cash this is definitely the kind of thing that will help – as long as businesses hear that message.
But I don’t think it is going to spearhead any kind of great revolution in this country for new business owners. The banks have traditionally been conservative and they are not going to hand out money any more freely because of this bill.”
Still she says that overall it is a positive move for the Obama Administration to make. “But if the banks weren’t in the predicament they are in they would increase their lending.” Of course Schaefer also notes that if the banks weren’t in the predicament they are in, the government might not have felt the need to hatch such a program in the first place.
Stay tuned we will continuously update reaction from small business owners.
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Last October when I spoke with Maryann Ferenc the owner of the Tampa, Fla.-based Mise en Place, a restaurant and catering event business about the government bailout, she found the whole thing rather distressing. At the time she told me: “As an independent business person for the past 23 years, there have been times when I had to close my businesses because of financial necessity. No one helped me, and I don’t think they should. I had to change my lifestyle when I made decisions that were less than fabulous. But I learned a lot and came out on the other side a better business person. It’s a good lesson for Corporate America to go through. People need to pay for their mistakes. We need to hold people responsible for the decisions they make…”
Fast forward to this week: Ferenc calls President Obama’s plan to help small businesses an opportunity as opposed to a bailout. “I think the fact that the plan is so accessible to the average small business person is a huge step forward,” she says. “Also I think it reflects a cultural shift and that is what we really needed because the big bailout to the major financial institutions happened without a cultural shift. The money was used by the same people with the same values and practices that got them in trouble in the first place.” Ferenc who received an SBA backed loan 14 years ago and hasn’t applied for another since then having found the process too onerous says that Obama’s package will encourage more lending by banks to small businesses. “They really have the incentive to do so and that kind of opens up an avenue that I thought was closed before,” she says.
Looking at the plan Ferenc says that she is particularly interested in looking at the health plan proposals, a possible loan for expansion, and is interested in finding out more about the capital gains listed that might benefit a small business. These are things, she says “that will get us through the rest of the year. In 2010 we will have something to look forward to instead of something dismal.”
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According to both Census Bureau data and anecdotal evidence, women are considered one of the fastest growing segments of American entrepreneurs. That said, two of the first, cosmetics moguls: Elizabeth Arden and Helena Rubinstein are getting a fresh look in a new PBS documentary. Scheduled for broadcast on March 23, the 90-minute The Powder & the Glory, (based on the book War Paint by Lindy Woodhead) tells the story of how these two pioneering women and their namesake companies hatched what is today a $150 billion beauty industry.
Theirs is the quintessential American success story. Elizabeth Arden and Helena Rubinstein, both immigrated to the U.S. 100 years ago, Arden was born Florence Nightingale Graham in Ontario, Canada while Rubinstein was born Chaya Rubinstein in Krakow, Poland. Each started with practically nothing and both reinvented themselves into women of glamour, sophistication, with business acumen to match. Arden opened her first salon in 1910 in New York while Rubinstein opened her first New York shop four years later having already rolled out salons in London and Paris. The two women would go on to compete with each other for 50 years.
According to the filmmakers:
“Operating in major cities all over the world, their competing companies defined the business of beauty, making cosmetics both newly respectable and, finally, indispensable. They developed advertising and marketing techniques that became part of the business landscape, and they themselves became household names and cultural icons. When they started their businesses, makeup was used mostly by prostitutes and performers, and businesses were run mostly by men. They changed the way we look at ourselves, built powerful businesses, and became two of the world’s wealthiest women.”
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Carmine Gallo, who writes a weekly communications column for business owners, just sent this guest post over:
As a corporate communications coach, I work with business leaders to improve their public speaking skills and fine-tune their business presentations. Two of my central tenets: keep presentations brief and know your audience.
So when I read Jena McGregor’s and Mara Der Hovanesian’s recent story about GE’s investor presentation, the beginning of one sentence horrified me. “The six-hour 176-slide presentation…” Surely this would give new meaning to the term, “Death by PowerPoint,” or so I thought. But after reading comments from analysts who had attended the presentation and watching some of the video online, I’ve come to the conclusion that in this case—and in this case only—176 slides was completely warranted.
You see, GE executives passed that key test for delivering a good presentation–know your audience. Analysts had been clamoring for months for GE to open the books on GE Capital and to show them EVERYTHING. Well, that’s exactly what the analysts got. Michael A. Neal, president of GE Capital, opened the session by saying, “We’re going to grind through it.”
I heard from one analyst who said he had been asking for total transparency and by the fifth hour, when his butt was glued to the chair, he started second guessing his request. But in the end, he asked for details and that’s exactly what he got. “I was grateful that GE lifted the veil,” he told me.
Again, I wouldn’t recommend 176-slide approach to anyone who wants to keep an audience engaged. In this case, however, it made sense.
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Use corporate credit to your advantage when you’re on the road.
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Background checks are great, but skilled interviewing is even more essential.
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The tenets of Biz 101 still apply, even if it’s non-profit.
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You’ll pay the price if you swing the wrong way when navigating the price point waters.
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They spend one-third of their time at the office. Is the environment worthy?
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The R-word has a scary ring to it. Here’s what the latest downturn really means to business owners.
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