Basics of Starting a Franchise Business

Buying a franchise is a choice that a lot of first-time entrepreneurs opt for in order to provide their business with a head start. On the one hand, running a franchise provides you with an independence that you've always dreamed of, while, on the other hand, it gives you an assistance of having a major brand name behind you. This alone is what provides franchises with a somewhat higher success rate than regular startups and small businesses. Combine this with the fact that buying a franchise often costs less than starting your own business and you'll see no reason why not to do so with your next idea. Here are several basics for you to consider before doing so.

Ask some basic questions
The first thing you need to do is inquire a bit about the franchisor that you're about to reach out to. You need to know what they are like, how much will it cost and how much time it will take until your business starts making some results in this particular industry. Other than this, you need to answer some less general questions like what are your keys to success, what is your end game and what are the risks. Due to the fact that you're starting a franchise, it's also worth asking what kind of help you can expect from a franchisor.

Get the funding
In the previous section, we mentioned the issue of cost, so, now that you know how much money you need in order to get everything started, you can look for a way to secure funding. Going to a bank or a credit union is the most logical first step, yet, there are other ways to tend to the issue of crowdsourcing. Keep in mind that doing so is an option even on a limited budget. For instance, dipping into your 401(k), looking for SBA loans and other methods might be worth taking a closer look at.

Look for some professional guidance
The next thing you need to understand is the fact that starting a franchise is a lot less unique process than starting an independent business. While this statement may have a negative connotation, this is actually a good thing, seeing as how a first-time entrepreneur can get a business model to follow. In fact, some companies are so well-versed in franchising that they have a specialized team that helps franchise companies stand on their feet. This is one example of the perk of having a protection of a larger brand name behind you.

Different franchisors offer a different kind of assistance but this shouldn't hold you back as an entrepreneur. Think about it, as a first-timer, a newcomer to the business world, you're already at a disadvantage. This means that you need all the help you can get. So, prior to starting out, make sure to inquire what kind of help is the franchisor willing to provide. This may end up being a huge factor for your franchise's future success.

Standard business expenses
Keep in mind that, while you're enjoying the protection of someone else's name, you're still running a business on your own. This means that you have to provide the location, the equipment, the signs, the inventory, and the working capital, on your own. Nonetheless, your franchisor might be willing to help. You see, the way in which you run your business affects their reputation as well, so they might offer you a slight “allowance” to do some improvements on the infrastructure of the building. This will help with the uniformity of the business which, down the line, benefits their brand. Also, while this will help you out financially, it won't be enough on its own for any kind of major business operations.

Don't postpone it
Sure, a grand opening is a huge deal and some guides suggest that you might even want to spend as much as 20 percent of your first year's marketing budget on it, however, timing is what matters the most. Don't postpone it, due to the fact that your business needs to become operational (and profitable) as soon as possible.

Conclusion
Of course, it's only fair that we mention the fact that starting a franchise also has some downsides. First of all, you're limited in form of creativity, due to the fact that you can't deviate from some features of the business model. Moreover, a controversy or an issue plaguing another franchise may affect your business even if you're doing everything right. Nonetheless, if you pull off everything that we've just talked about, you might find that it's all still worth it.

Burlington hopes to phase out tax to attract business

BURLINGTON, Vt. (WCAX) It's no secret it can be expensive to live and shop in Burlington. But there's an extra cost you may not even realize you're paying. Every time you shop at a store in Burlington, a business tax is being passed on to you. Business owners say they have to raise prices to pay the antiquated tax. But as our Neliana Ferraro learned, the Burlington City Council hopes the tax won't be around for much longer.

"I mean, the list of taxes is as long as your arm," said Mark Bouchett of Homeport in Burlington.

Business owners in Burlington are weighed down by a lot of taxes and fees. Homeport on Church Street, for example, has to pay an additional 1 percent sales tax, a meals and rooms tax, a Church Street Marketplace fee.

"The reason why we complain about them is not because we don't want to pay them; we don't pay them. Our customers pay them," Bouchett said.

That sometimes means upping prices for you.

All businesses also have to pay the business personal property tax. Owners have to tally their assets-- that's computers, counters, signs, display cases, dumpsters, heavy equipment and even things as small as calculators.

"It's a tax that's difficult for businesses to comply with and we get huge complaints from our business community about this," said Mayor Miro Weinberger, D-Burlington.

The Burlington City Council hopes to phase out this business personal property tax between now and 2026.

"Across Vermont and across the country, you have seen municipalities move away from this particular tax," Weinberger said.

The tax can sometimes discourage businesses from coming to the Queen City and staying competitive.

"My son just closed a business down the street for just these types of reasons," Bouchett said.

He had to make a tough choice to close Juice Box in Burlington and keep the one in Berlin.

Bouchett says jumping to another city is always an option for Homeport, too.

"It's always on the table," he said. "It's on the table for us every day."

Many communities don't collect this tax anymore. There are only 30 towns in Vermont that still have it in place. In Chittenden County, only Winooski and Burlington make businesses pay the tax.

There will be public hearings over the next few weeks where you will be able to give city leaders feedback on the proposal. They'll make adjustments and bring the final plan up for a vote on Town Meeting Day.

Top Five Small Business Mistakes And How To Fix Them

Our business culture revolves around studying successes. Read any tech blog and you will drown in a sea of stories of founders who made it. Therein lies the survivorship bias.

As entrepreneurs, we over-attribute success to things done by the successful. We need to also study the strategies that did not work to make better business decisions. Let's take a short break from the winners and learn from the wisdom of what Nassim Taleb, author of The Black Swan, calls the “silent grave.”

The five mistakes below are so common that every entrepreneur has made at least one of them.

1. Not Knowing Who Your Best Customers Are

When you're starting a new business, any customer is a good customer. But as you grow, you need to be more strategic by looking at your data.

Identify who your best customers are by looking at return on investment (ROI), who you love working with and which people are easy to work with. Factor in hidden costs like customer service resources for those customers.

Keep an updated list of customer personas that you revisit at least once a quarter. The smartest businesses owners understand their ideal customer is always evolving.

Your goal then becomes to adjust your marketing efforts to bring in more prospects that match your ideal persona.

Pro tip: The trick is to make sure to create, share and solicit feedback on these marketing personas. You want to do this efficiently. Here is a great example of how one company creates these personas.

2. Blowing Through Your Marketing Budget Too Fast

Even the most seasoned tech entrepreneurs fall into this trap. I have seen far too many small businesses do a little keyword research, set up some Facebook Ads and call it a day. Sure, the ads received clicks. But they did result in customers?

Do small tests and keep an eye on ROI.

Identify two to three marketing channels that you want to test. Allocate a small budget to these tests and track conversions to ensure they are profitable. Only then scale them to spend your budget on channels that worked.

Pro tip: Always have retargeting campaigns set up for prospects that visit your website. The cost to keep those campaigns going is cents on the dollar as compared to your base ad campaigns.

3. Not Understanding The Importance Of Having Working Capital

Far too many small businesses defer looking at the finances on a regular basis. Unless you raised $100 trillion dollars from venture capitalists (VCs), your leeway for throwing things at the wall to see what sticks is much shorter. Without the needed working capital, a business owner won't be able to grow their company or pay bills, employees and vendors.

Identity if you need extra working capital besides the cash you already have. If you do, you can either trim down on the needed resources, seek out investors or apply for a business loan.

Each option has its pros and cons.

Getting a business loan can seem overwhelming at first. There are many options you need to be aware of. The biggest benefit with a business loan is that you maintain full ownership of your company and call all the shots.

Pro tip: Get your financial documents in order prior to seeking funding. That will speed up the process so you can focus on the business.

4. Hiring The Wrong People

Be aware of the halo effect: The pitfall of liking a potential candidate based on a few traits while glancing over red flags and missing skills.

Your job as the owner of a tech business is to hire people smarter than yourself.

Craft job postings that are unique to what you need in a candidate and fits your company's culture. Don't copy another company's job description.

Pro tip: Always ask for references and follow up with them. Small businesses often overlook this when starting out. Reference checks remain one of the best sources of information about candidates.

5. Underpricing Your Product

Speak to any small business and 9 out of 10 times they will say, "I wish I charged more from the start." You should test out different pricing strategies to maximize profitability.

You will also see a side effect of increasing the prices of your software or services -- better customers. The lower your prices, the more likely you are to attract prospects that eat up customer support resources. Contrary to common belief, customers who are willing to pay more money are often easier to work with.

Pro tip: Use an A/B split testing tool like Optimizely or VWO to safely try out different pricing and conversion rates.

Conclusion

Every business owner makes mistakes. The key is being aware when something is not working and taking conscious steps to fix it. Even though every industry is different, most problems you come across have been solved for in the past by another entrepreneur.

Failure serves as the greatest lesson in business and in life. If you remain persistent about recognizing and proactively fixing problems, the world is your oyster.

Where friendship met business

On a Saturday night in late September, hip-hop artist Michael Casper was set to play his first show in an inconspicuous house on 36th Street. His managers, sophomore music industry students Sean Lewow and John Van Liere, had carefully crafted the moments leading up to Casper's performance, even changing the set list so that certain friends could catch Casper's performance before leaving. But right as Casper was supposed to take the stage, he was nowhere to be seen.

Lewow sprinted down 36th Street searching for Casper, who had gone to the grocery store, while Van Liere tried to stall the lineup and persuaded the audience to wait. At the time, the stress sent them both into a frenzy. But recalling the incident several weeks later, in between bouts of laughter, Lewow and Van Liere saw it as just another part of the job — running their own A&R company, Bottom Feeder Management.

"We were just yelling at each other all night," Van Liere said. "At the end of the day he played a great set, and we all had a really fun time. We got mad at each other for a second and then five minutes later we're back at it talking like normal. That's how it goes."

Lewow and Van Liere met at a parents' mixer for music industry majors at the Thornton School of Music and immediately realized that they shared similar goals and visions. In high school, both Van Liere and Lewow put on shows for charity, and Van Liere also admired his partner's work ethic, which he said set him apart from others in the music industry.

"Everyone always has lofty goals and aspirations, but a lot of people don't actually do anything about [them]," Van Liere said. "We instantly gravitated toward each other because we were both really doing it."

Lewow and Van Liere began bouncing business ideas off of each other until they settled on a promising one called the "Thornton Collective." Initially, they aimed to leverage Thornton's connections to help student musicians release their work in the real world, but soon found that many talented artists outside of campus who were also looking for representation.

"And then we were like, why are we doing this through the school? We can just do it ourselves," Van Liere said.

Thus, Bottom Feeder Management was born. The company's six-person team comprises Lewow, Van Liere, three videographers from Ouros, a creative collective and an audio engineer. Currently, managing two artists — Casper and Joe Avio — is a full-time job. The team worked on Casper's debut single "Teenage Apathy" and his upcoming music videos, as well as Avio's debut album release in November.

"We want to create someone that has an aura, a name that people recognize, and can use that status as more of a cultural figure to do good," Van Liere said. "We're not creating music — we're creating worlds."

Understanding the artists as friends and individuals allows Lewow and Van Liere to tap into the artists' most authentic, nuanced personas. Their focus on building relationships trumps the goal of creating a hit track, which is why they spent months getting to know Avio and Casper before agreeing to work with them.

"I'd say for us it's very much a relationship game," Lewow said. "At the end of the day, they're our best friends."

However, that focus on personal relationships can cause tension.

"It gets tough, but only because people are … really passionate about waking up each morning and getting involved in this stuff," Lewow said.

Despite the stresses of the job, they're able to work through difficult moments — like the incident at Casper's first show — by prioritizing their friendship above all else.

"[We're able to look past these instances] because at the end of the day it's not important," Van Liere said. "If [Casper is] five minutes late to his set, we're freaking out in the moment, but then afterward … why would I let this stupid thing carry on?"

Lewow and Van Liere are in the same fraternity, live in the same house and share the same social circle. Despite this physical proximity, they say their ability to cooperate stems from their complementary personality traits. Van Liere handles internal logistics, working on production and creative direction, while Lewow handles external logistics, such as interfacing with professionals and in-house public relations.

Over the past semester, they've had to adapt to the changing music climate brought on by Spotify and other music streaming services, as well as learn to recognize and overcome their own personal flaws.

"We started with a blank piece of paper, and we're drawing a roadmap for ourselves," Van Liere said.

As the company evolves, Van Liere and Lewow's goal is to make Bottom Feeder live up to its name — harvesting talent at the figurative bottom of the barrel and looking for up-and-coming artists whose careers could benefit from professional representation.

"We want to get [Casper] out of … working 9 to 5 every day at a Chinese restaurant," Lewow said. "He's the most creative, just beautiful human you'll ever meet. And Joe, he's slaving away at school … but at the end of the day, he needs to be a professional musician."

The phrase "at the end of the day" is one that Lewow and Van Liere use often. Perhaps the defining aspect of their company is their clear, unadulterated understanding of their motivations.

"These artists have become my livelihood," Lewow said. "At the end of the day, they are our very close friends and that gives us that added attachment to them … these people deserve to succeed, and it is our job to help them get there."

7 Ways I Overcame Mommy Guilt to Start My First Business

Being a working mom and starting your own business are arguably two of the most stressful and rewarding accomplishments of a woman's life. Combine the two by starting your own business working from home and you've got a whole new set of emotions on hand, one of which is likely to be "mommy guilt."

It's that overwhelming feeling when you are working extremely hard to start your business and you feel like you're neglecting your responsibilities as a mom. I know the feeling all too well -- I have four children under the age of 10 and I started, and still successfully run, my business from home.

Was it easy? Not at first. My mom guilt was at times overwhelming, but the good news is that I found ways to overcome that guilt by creating balance with time management, planning and even involving my children in the business.

"Lean in" to distraction.

Inevitably, when you're in "go" mode (aka highly productive time) someone you love will try to get your attention and the quick answer is usually "Honey, not now, I'm busy" to try to get the distracting person to go away as quickly as possible. When these distractions are caused by your children, it can cause increased mommy guilt and resentment.

For me, I find the more I resist the distraction, the longer it lasts. So, I decided to "lean in" to the distraction. If someone wants to snuggle with me, I give them a great big hug. If someone has a question, I give them my full attention and address the question and then we both happily return to what we were doing.

If I'm in the middle of something I really can't stop doing, I'm up front with my children about it. We make a plan together for a later time when we can engage in what they needed in that moment.

Make a game out of quiet time.

One of the biggest challenges I've experienced has been trying to figure out how to keep the kids quiet when I'm on the phone. They are, after all, young kids who like to have fun. I made a sign for my office door, but I knew the two younger kids weren't going to read it and understand, so I made a game out of learning what the sign meant.

The "Mom's on the phone game" consisted of us walking up to the door together, seeing the sign, covering our mouths and tiptoeing away, all while seeing who could be the quietest. Gamification for the win.

Make a to-do list for work and home.

Prioritizing your to-dos with a clean, effective list can help you manage what needs your attention the most throughout the day. Often, people make to-do lists that focus on either business or home life, but when you work from home it can be hard to differentiate between the two.

Instead, I suggest combining your lists. Consider adding things like grocery shopping, going to the bank or walking to check the mail. These home items are simple things that can be done with the kids and provide quality time together.

Create million-dollar moments.

Quality tends to be more important that quantity, and that's true when it comes to relationships with family, especially children. Even if we spend every waking moment with our kids, if we're stressed out and resentful all the time, are we really doing them a service?

Looking back, have you ever had a moment with the kids where you might say "I wouldn't trade that for a million bucks"? If you reflect on some of your favorite moments, you'll start to notice a common thread in them. Maybe it was a moment where everyone was getting along, or when you were enjoying something beautiful outside.

When you know what these moments are, you can start replicating these experiences more often. Even if all you have is five minutes, you can still inject that spirit of warmth, acceptance and playfulness into time with the kids. When you plan your schedule for work time, be sure to include a conscious effort to plan moments with the family as well.

Involve the kids in your business.

It may sound strange but involving my children in the business is one of the biggest ways I overcame my mommy guilt. My oldest has an entrepreneurial spirit and a wealth of creative ideas, so I started involving him in business decisions or brainstorming sessions whenever the opportunity came up. By involving him, he feels like he is part of what I am creating.

Remain sane.

Become a success magnet by staying sane at all times. If you break down, the business will break down. If you're raising a family and building a business at the same time, the stakes are high. Your sanity, peace of mind and general well-being are the greatest predictors of your success.

One of the best things you can do to maintain your sanity as a parent is to stay focused on your own business and quit trying to change your kids. Love them while they learn from their mistakes.

Turn parenting into a business asset.

Parenting can be a fantastic business school because as a parent you're always selling. You have to figure out what makes something attractive to someone else, and it pays to notice what works and what doesn't.

I believe the most effective thing you can do as a parent is the exact same thing you can do as a business owner: Be in tune with what your kids (or customers) want most at any given time and figure out how to effectively communicate that what you're offering is going to get them what they want.

Overcoming mommy guilt is something that can take some time and practice until you find a rhythm that works for your life. During all of this, don't forget to take some time for you -- step away from the computer, turn off your cell phone alerts/notifications and enjoy the day.

Business owner complains poor mail service hurts business

While most concerns about the mail service in the Lake Charles area have come from residential areas, a local man says it's causing problems for his business.

At Southland Coins they buy and sell precious metals, rare coins, and collectibles.

Owner Malcolm Self explains his business relies on the mail service.

“The mail system is vital to my business, as we've gone more to a mail order type system. 99 percent of my business is mail order. So, that's the lifeblood of my business,” said Self.

Self is convinced the mail system is broken.

“We get mail every day. So when you don't get mail for two days, we could easily be talking about over $100,000 in checks that should be in the mail that we get, and if we don't have that, obviously we can't buy product from our clients,” Self said.

Self says it's been an issue for years and he's complained as recently as last week.

"When we went down there to complain one of the managers, his answer to our problem was that the carriers are just lazy,” Self said.

Self says he does not think the problem is with the carriers.

“I find most carriers are like salt of the earth. They're good people, they're hard workers, they want to do the right thing. So, I think the real problem may be higher up,” said Self.

Self does as much business as possible over the internet, but you can't send a package over a computer.

“We've noticed a dramatic problem with the packages we ship. We shipped a package several months ago to Pensacola, Florida that took over 30 days. And when you're dealing with precious metals that people have paid for, they want to receive it promptly and not wait 30 days,” said Self.

As the problems continue and solutions appear hard to come by Self wonders if the answer may be privatizing the mail.

Self says other dealers around the country have similar problems.

Investing In Tools To Optimize Workflows And Protect Reimbursement

Industry consolidation is omnipresent, and the belief exists that the US healthcare market will continue to consolidate. If the trend does continue, in just a few years the hospital provider landscape will look very different, down to 400 - 600 hospital organizations from the current 1600: a reduction of approximately 70%1! Similar changes are also expected in the U.K. In a survey of U.K. hospital executives, 76% will look for collaboration partners in the next three years2. Consolidation is fueled by the quest to achieve better outcomes at lower costs. However, the reality is that the expected economies of scale are not yet being realized. Optimizing clinical operations is critical to delivering less expensive care and enabling growth. By eliminating unwarranted variations and enabling automated, standardized workflows, healthcare providers are able to consistently deliver the highest quality of care, improving the patient experience, and making care easier to access across the care continuum.

Typical hospital systems were not designed to operate across a multi-facility setting. In today’s environment, combining operations to leverage synergies is much more complex than a simple combination of the individual institutions. Such consolidation is having a significant impact on imaging service lines due to disparate hospital processes, systems, and siloes of data. Historically, workflow lists were based on modality and anatomy, an approach which is no longer feasible in today’s healthcare environment.

Running an imaging service line as a collection of numerous, unique hospital based Radiology departments can lead to variability of care across a system and a poor patient experience. Furthermore, inefficiencies and unwarranted variations can increase costs and negatively impact patient outcomes. For example, when a subspecialist is needed to interpret a study which was acquired at another facility, this can add time and cost, and, could delay the patient diagnosis and treatment.

Such care delivery challenges are further complicated by changes in legislative reform. Changes are not confined to the U.S. alone—they are observed world-wide, irrespective of the type of healthcare delivery model. In the U.S., providers are continually working to thrive under the shifting landscape and to comply with the sweeping legislative reform by the Centers for Medicare and Medicaid (CMS) known as the Protecting Access to Medicare Act (PAMA).

The American Clinical Laboratory Association recently deemed PAMA the most extensive reform of the Medicare Clinical Laboratory Fee Schedule since its establishment in 19843. Passed in 2014, some elements of PAMA have already been implemented. Other elements are delayed, but not indefinitely. Without adjustment and optimization, bottom lines will certainly be impacted, but providers can minimize the effect of reimbursement cuts by proactively investigating opportunities for efficiency gains.

Shifting Provider Landscape: Did You Know?

* PAMA is estimated to save Medicare approximately $4 billion in the first five years of implementation4.
* PAMA originally mandated that CMS fully implement the Appropriate Use Criteria (AUC) program by January 1, 2017, but CMS recently announced that it will begin the program on January 1, 20205.
* IDNs include hospitals or hospital systems, large medical groups, long-term care, outpatient centers, pharmacy, and/or managed care.

One component of PAMA that has yet to go into effect is the requirement that providers prove that advanced diagnostic imaging services, which include MRIs, PET scans, and CT scans, meet Appropriate Use Criteria (AUC). This requirement is important because it will help avoid unnecessary imaging services that do not improve patient welfare6, which some experts estimate account for 20-30 percent of high-tech imaging procedures7. CMS will require that a provider use a clinical decision support mechanism to demonstrate compliance with AUC expectations to avoid significant reimbursement issues.

So, what’s the answer? Hospitals looking to prosper in light of these changes need to start with a long term plan – or the “why” for an imaging service line. Optimized workflows coupled with clinical decision support software can enable a healthcare system to streamline operations today while planning to effectively integrate and create the right structure to effectively deliver care long term.

The use of simulation modeling, at a departmental or hospital level, can help healthcare providers identify the optimal way to transform their processes and meet their long term goals. For example, by using digital twins, different scenarios can be compared and assessed in a cost-effective way, allowing providers to implement operational excellence by analyzing potential layouts and processes. As a "what-if" tool, Workflow Simulation predicts the operational and financial impacts of the proposed solutions through quantitative feedback to help decision makers quickly identify the optimum solution. In addition, this approach can be used to conduct virtual stress tests to examine the robustness of current operations in certain situations including higher patient volumes, more complex patients or staffing shortages.

Why Trump's Tax Reform Will Spark Continued Small Business Growth

When President Donald Trump signed the Tax Cuts and Jobs Act on December 22, 2017, the new legislation was met with mixed reviews. In today’s volatile and highly partisan political environment, it’s no surprise that some celebrated it as a landmark accomplishment while others criticized the plan as possessing gaping holes.

From where I stood, as the CEO of sweetFrog Frozen Yogurt, I was delighted that the new tax was signed into law. In fact, I was proud to play a small role in the process, as I had asked for much-needed tax reform in a November 2017 Op-Ed that ran in Virginia Business. I firmly believed that small business owners needed tax reform to thrive, and I was happy to see our government work together to pass mission critical legislation.

Now, regardless of what you think of President Trump as a man and a leader, I’d like to offer some reassurance that the Tax Cuts and Jobs Act will help small-business owners build on the fantastic momentum generated by the American economy in 2017. The stock market is up, jobs are up, sales are up, and this tax reform may help small business owners do even better in 2018.

Here are four reasons why I believe Trump’s tax reform will provide economic jet fuel for small business owners from coast to coast:

Tax rates have been reduced.

As you likely are aware, small businesses will be receiving a deduction of 20% for qualified business income. But, back in the day (that is, before December 22, 2017), income from a small business would pass through to the proprietor on their own taxes, and these individuals were sometimes saddled with income tax rates as high as 39.6%.

The new tax rates are certainly fairer to the business owner, which should encourage more people to take the leap and start their own business. There have always been countless reasons that interested entrepreneurs have wanted to join the sweetFrog family, but, at the same time, I can’t help but think that we and every national franchise now have another selling point. We can remind interested owners that they’ll pay a lower rate on their taxable income than they would have if they had purchased a franchise a year earlier.

But, that deduction does more than just help the business owner. It helps the business itself, and now owners will have more money freed up to hire more people and to invest more in infrastructure.

How Amazon Is Impacting Small Business Finance

As has proven the case throughout 2017 and the early part of 2018, small business loan approval rates for big banks hit another new high last month, according to the Biz2Credit Small Business Lending Index™ (February 2018 figures). Big banks, defined as institutions with assets of more than $10 billion, are granting more than one-quarter of the small business loan applications they receive. The 25.4% approval percentage, up one-tenth of a percent from January 2018, represents another new post-recession benchmark for big banks.

We have come a long way from the doldrums of the credit crunch in 2010-11. During the second half of 2011, for example, loan approval rates never went past 10 percent. Thus, more than nine-of-ten small business funding requests were rejected by big banks. In fact, banks were denying the requests of long-time customers with whom they had deposit relationships.

As this happened, small business borrowers looked for other funding options. Some found willing lenders in small banks, others in credit unions. Entrepreneurs also looked to non-bank “alternative” lenders and quickly learned that they could search for the best deals on small business funding online, just as they had embraced Amazon and other sites for online shopping.

Gradually, the economy improved, and we saw big banks and other funders steadily increase the number of funding requests they granted to small business owners. Approval percentages reached double digits since January 2012 and have not dropped below 10 percent since. Less than a year ago, big banks crossed the 20 percent benchmark, and now more than one-quarter of applicants receive funding.

The solid economy of the past year is a big reason for this good news. Consumer confidence is high, as is small business owner optimism. At the same time, fuel prices are still low, and more jobs than expected were created by the economy in February, according to the most recent Jobs Report issued by the Labor Department. Meanwhile, the Federal Reserve has begun to raise interest rates from the near-zero levels of a few years back. This makes lending more profitable for banks.

Another reason that lending figures have climbed is because of the revolution of online retail that is led by Amazon. There is a lot of demand to fund commercial real estate. While mall construction has essentially halted, ecommerce has caused a boom in the construction of warehouses and other industrial buildings. Additionally, companies involved in transportation and logistics are servicing Amazon and other online retailers.

Many of the loans processed by small banks are SBA loans, which lowered the down payment requirements for commercial real estate from 20 percent to 10 percent. That has spurred SBA lending, one of the nation’s leading experts in small business finance. Another factor is that SBA loan defaults are less than one percent. Meanwhile, the SBA’s 75 percent guarantee is still in place.

Senate report predicts small businesses will spend more on accountants after tax law

A new report from Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, discusses how small businesses will face more uncertainty and complexity from the Republican tax law and will ultimately need help from their accountants to figure out the pass-through deduction.

The report, “Tax Code and Small Business: Even More Bizarre and More Unfair than Before,” predicts small business owners will be spending more money on tax professionals than on growing their operations. The pass-through provisions of the bill provide a 20 percent deduction to businesses, but only up to a certain income level for certain types of professional service providers, such as accountants, lawyers and doctors. The deduction starts to phase out when the net income of one of the owners reaches $157,500, or $315,000 for joint filers, and it ends entirely once income reaches $207,500, or $415,000 for joint filers.

“Republicans claim to want less government intervention, but with their new tax law they picked winners and losers—architects are in, accountants are out; engineers made the cut, doctors did not—leaving business owners wondering whether or not they were blacklisted,” said Wyden. “What good is a deduction if money spent in annual fees to your accountant far exceed the tax break? Main Street job creators will be lucky if they figure out how to calculate their deduction any time soon.”

The report notes that the text of the pass-through deduction spans nine pages, cross-references more than 20 other sections of the tax code, and directs the Treasury Department to issue volumes of new regulations. It also cites a recent letter from the AICPA asking for more guidance about the provision: “And if there is any question whether the new law and regulations will add additional burden to small business owners, just look to the 19-page letter sent by the American Institute of Certified Public Accountants highlighting issues that require ‘immediate guidance’ for taxpayers to be able to simply ‘comply with their 2018 tax obligations."

Wyden’s report quoted the founder of an IT consulting business in Washington D.C., who has been telling his colleagues and friends in the small business community to “speak to their accountants because there is no way to make any sense of how the law will impact folks.”

Wyden pointed to a separate recent report from Businesses for Responsible Tax Reform that found a majority of small business owners don’t believe the tax law will help grow their business. When asked if they would hire a new employee as a result of the new tax law, 69 percent of the business owners polled said they would not, while only 25 percent said they would. When asked if they would be giving their employees raises due to the new tax law, 59 percent said no, while 31 percent responded that they would. The poll found that 54 percent of small business owners said the tax law favors large corporations over small businesses (40 percent disagree), and 50 percent believe the wealthy and corporations will benefit most from the tax law, while only 20 percent believe the middle class and small businesses will benefit. In addition, 55 percent of respondents don’t believe the tax law puts small businesses on a level playing field with big businesses, with only 31 percent believing it does.

The poll surveyed 385 small business owners in the election battleground states of Arizona, Tennessee, Maine and Nevada, and skewed more Republican than Democratic, with 41 percent of respondents identifying as Republican, 31 percent as Democrat and 28 percent as independent or other.

The majority of respondents opposed the fact that the corporate tax cuts were made permanent while cuts for pass-through businesses were on temporary, with 58 percent saying they oppose eventually ending tax cuts for pass-throughs like S-corps, LLCs and proprietorships in 2025 while making corporate tax cuts permanent, while only 34 percent saying they support it. That response was understandable, as 86 percent of the respondents identified as being pass-through businesses such as S corporation, LLCs, sole proprietorships or partnership, while only 5 percent of the respondents said their business was organized as a C corporation.

Surging small-business sentiment closes

The numbers: The index of small-business optimism from the National Federation of Independent Businesses rose 0.7 point in February to a reading of 107.6, the second-highest reading in its history.

What happened: The index of sentiment among small-business owners has been on a tear ever since tax cuts were enacted. The headline number was stronger than the 107.1 reading forecast by economists surveyed by Econoday, and puts the index within a hair of its all-time record, set in 1983.

“The small business sector is very encouraged by the economic policies of the administration and the strength of the economy, willing to invest more and hire more if workers can be found to fill their open positions,” the lobby group said in a release.

Big picture: In February, only one of ten index components declined, and three were unchanged.

For the first time since 2006, taxes received the fewest votes as owners’ #1 business problem, NFIB said. In contrast, the lack of qualified workers was respondents’ biggest problem.

Reports of improved earnings trends were the highest since 1987, inventory investment was the strongest since 2000, and capital outlays were the highest since 2004.

“Small business owners are telling us loud and clear that they’re optimistic, ready to hire, and prepared to raise wages – it’s one of the strongest readings I’ve seen in the 45-year history of the Index,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are flourishing in a way we haven’t seen in over a decade.”

But as previously reported, some economists doubt that the recent uptick in sentiment will translate into much of a GDP boost, since small businesses have been hiring and spending on capital more than the dour sentiment readings from the industry group would suggest.

Cooperation leads to success in the Bennington shires

Ask Bill Colvin about the state of Bennington County's economy and he'll tell you, "There's definitely signs of improvement." Colvin, of the Bennington County Regional Commission, ticks off a list that includes downtown Bennington's Putnam Block Project, a stable manufacturing base and improved regional cooperation. The $54 million Putnam Block project will reshape the downtown, adding not only retail and commercial space but also housing with new construction.

A common theme voiced by Colvin and others is the new-found sense of cooperation among business and civic leaders.

In May, 130 people attended the first Southern Vermont Economic Development Summit in Brattleboro to brain storm on issues common to both Bennington and Windham counties - the two southern most counties in the state.

"There's a tremendous amount of excitement about doing regional economic development work around Bennington County … and partnering with Windham County," said Colvin, the commission's assistant director and community development program coordinator.

He said the state has given preliminary approval for a planning grant to devise a CEDS - a comprehensive economic development strategy.

Colvin said final approval is expected shortly with a formal launch of the project in October.

He said efforts are also underway to extend and improve cooperation between the northern and southern parts of the county.

Colvin said despite the proximity cooperation between the north and south shires "haven't always been a finely oiled machine, if you will."

One example of the new cooperative effort between the shires is the formation of a workforce in education committee chapter in Manchester.

Colvin's positive assessment is seconded by Wayne Granquist, chairman of the Southern Vermont Economic Development Zone, which comprises both Bennington and Windham counties.

Compared to three or four years ago, Granquist said there's a greater appreciation today for economic development in southern Vermont than there was before Vermont Yankee closed.

"There's a lot of work going on that's laying the foundation for that kind of growth," he said. "I don't think we've seen it yet but it's encouraging to see what is happening."

Granquist said there's no better example of a community coming together then the Putnam Block Project, which is being lead by local businesses and institutions.

"That's really important for downtown and the Select Board just approved the tax increment financing district," he said.

But Granquist also said there are other challenges that must be met.

As the second oldest state in the country next to Maine, he said Vermont has to find a way to keep and attract workers and their families.

He said that's especially true in a rural area where it's hard to attract millennials who want access to high-speed broadband while living in a place where there are lots of activities close by.

Colvin said the Putnam Block project can help build the type of infrastructure that can go a long way in attracting people to the area and also provide badly needed housing.

Industry

Manufacturing has had its up and downs in the county but Colvin said the outlook is positive.

"We helped to pull down one of the largest training grants in Vermont training program history for NSK," Colvin said, referring to the company that makes bearings for a variety of industries.

The $208,000 grant will help cross-train NSK's 325 workers in what Colvin said are advanced manufacturing processes.

He said in the last few years lower level jobs have been lost to the NSK plant in Tennessee. While the grant may not lead to new jobs, he said it does at a minimum secure the existing higher level jobs.

Vermont Composites is also doing well, according to Colvin. He said the company, part of the Kaman Composites group, is building an addition onto its Performance Drive building. He said the addition was made necessary when the company won a contract for a new product line.

Although the company hasn't said it would hire more workers, Colvin said "new line, new addition suggests new jobs."

In the north shire of the county, Colvin said business is humming along at Mack Molding in Arlington.

Perhaps the most pressing problem for companies is finding workers, which Colvin said is an ongoing statewide problem.

Mack Molding is the county's largest manufacturer with 560 employees in Vermont (and another 600 at its locations in North and South Carolina).

"Business is really, really good," said Jeffrey Somple, president of the plastic injection molding and contract manufacturer. "We've probably got more new products under development right now than in the last 10 years."

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