Should we still be wary of our economy?

Posted by admin on March 12, 2012
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Last week my teenage daughter and I visited orlando Kingdom in Orlando. The Haunted Mansion? Really fun, but not very scary. Space Mountain? Very good, but in comparison with most roller coasters also not very scary. That dude inside creepy Donald Duck costume who kept hugging my daughter even with I finished utilizing the picture? OK, that has been a little scary.

But not as scary as the economy. Now it is going on five full years since we had a “good” economy. And, just by a lot of the data, we’ve still got a considerable ways to go. Regardless of what positive news we hear it’s typically offset by something unsettling. Small enterprises know this. And we’re scared. Which explains why we’re still not hiring yet still not overly optimistic.

Exactly what are we so scared about? I could name 8 things right off the bat.

#1. Gross Domestic Product

Gross Domestic Product was recently revised upwards for the fourth quarter and everyone said that was nice thing about it. But can many of us take a breather? That’s like saying the wait for Stitch’s Wild Ride is “only” Thirty minutes. The attraction still sucks. First off GDP was 3% at the conclusion of 2011 which is projected to be about the same for 2012. Meanwhile China just revised their GDP downward to 7.5%. What a bunch of show-offs. An excellent growth rate will be about 5-6%. If my business were only growing in a 3% rate I wouldn’t be so thrilled over it. Wait, five-years since the recession and my opportunity is still only growing in a 3% rate, which probably explains why I’m not really so thrilled about the economy at this time.

#2. Debt And Deficits

Currently our national debt stands near $15 trillion which can be about equal to the size of our entire economy (GDP can be about $15 trillion) along with the amount I allocated to a half day admittance to the Magic Kingdom. We’ve not had a 1:1 ratio of debt to output since The second world war. In Europe, Greece, Italy and Portugal have higher ratios and appear what kind of terrible situations are happening for many years. This is why I avoided Epcot altogether. That can watch such suffering? Even Fed Chairman Bernanke said we were heading towards a “massive fiscal cliff”…and he is not talking about Splash Mountain either.

To have deficits manageable small business owners realize that we’re looking at a combination of future tax increases and/or significant cuts in spending. We’re already looking at significant tax increases being released 2013 since the effects of healthcare reform get ready. And more cuts in defense, construction or other government spending programs will require money away from those small businesses that rely on those industries. The choice is to keep spending, which can be even less palatable. This may seem to ultimately result in the same fate that the friends in Europe are fighting: lack of credibility in their governments and a Disney park in France that sells alcohol for God’s sake! Not forgetting higher interest levels and a falling currency. Oh, and looting and rioting inside the streets. Kind of like the scrum leaving Main Street after the fireworks show ended.

#3. Inflation and Interest

The majority of us are respectful of Chairman Bernanke’s success in staving off a financial meltdown when our banking system was almost collapsing. But look at the Fed’s balance sheet: they have got $3 trillion of assets on reserves, a huge jump over recent times. This means that banks manage to inject massive numbers of money into our system and they may do this if the economy gets hotter and credit worthy businesses start actually getting financing, let alone more parents willing to take their kids to Disney (in which they will need significant loans).Of course, if demand does increase the Fed’s strongest weapon to control this inflationary threat should be to raise rates of interest. The St. Louis Fed warned a week ago of a potential inflation inferno. Will Disney be required to charge even more for a hotdog than they do already? This is what’s truly scaring everyone.

#4. The Stock Market

Amazingly stock market trading has almost doubled by reviewing the low of a few years ago. Because the value increases our confidence goes up. We feel wealthier. We’re more open to spending, hiring, investing. But, like our discovery that those “shops” on Main Street were really just facades hiding one giant gift shop selling just Disney souvenirs, this fast rise is a touch…unsettling. We’ve seen our wealth go high and then reduce the a matter of days. The truth is, this happened as recently as last summer. We’ve become watchful about these markets. We’re concerned that most this money starting U.S. stocks is only because of the Fed’s easy monetary policy which it’s a temporary safety from the current troubles in Europe. Aside from past unexplained drops, we no longer trust the bankers and executives who are running these publicly held companies anymore than I trust that fifteen yr old pimply kid “checking” the security bar on my small Space Mountain ride. When things come off as too good to be real they often aren’t. Or perhaps in the case of Disney, shiny things cost an arm along with a leg. The violent fluctuations inside the markets in the last few years always scare us.

#5. Energy

Gas prices always rise and small business owners are watching this trend fretfully. What’s most upsetting to my clients is watching our elected leaders (in addition to those leaders looking to be elected) show that they can really do something over it. These guys will need to have taken a number of too many trips on Peter Pan’s ride. Drilling for offshore oil or building another pipeline to Canada might have an impact…in Tomorrowland. Higher energy costs affect small companies in mere about every way. We find ourselves paying more for your cars utilized by ourselves and our key employees within our businesses and also at home. Our electric bills are threatened to rise, although (thankfully for North Dakota) the declining price of natural gas should hopefully save this in check. But countless products that we replace on our businesses – materials for production, packaging supplies, equipment – are common reliant on petroleum based ingredients. Our employees, facing rising costs of just living, may soon pressure us to boost their compensation. Will we pass these costs to our customers? It’s scary.

#6. Europe

You realize those happy little European kids singing in “It’s A tiny World”? Well, they just don’t look anything like the rioting mobs I’m watching on television every night. But, that way stupid song that can a full A day to get out of your brain, our friends in Europe won’t disappear completely as easy either. In reality, the Baltic Dry Index, that closely watched metric which measures the expense of freight from the Baltic Sea, fell to its lowest monthly average in the past twenty-five years. Fogged headlights scarier: our super smart economists have no idea why. Hmm…could it perhaps are the banking and fiscal crisis that’s affecting our major trading partners there? The fate of Europe affects small enterprises here. The GDP from the European Community alone is approximately $18 trillion. Meaning less business activities with us. As well as if the pizza shop guy isn’t selling pizzas to customers in France, he’s probably selling pizzas to customers who help companies that are selling something to France. Or even in this case, selling less of something to France. Which means that guy could possibly be eating out a little less often, or at least cutting back on the pepperoni.

#7. Unemployment

Question: Is anyone really paying $15 for the photo taken of these while on the Buzz Lightyear Space Ranger Spin ride? Absolutely no way! Not with unemployment all the way to it is. Today the payroll company ADP reported that this country added 216,000 more jobs to the economy. What a good sign. Unfortunately half them were hired to completely clean up the mess left by the 17 million annual people to the happiest place on earth. Plus it won’t be enough to significantly impact our unemployment rate, which is expected to remain at about 8.3% when released Friday. We still need five million more unemployed people than we had back prior to the start of the recession. We would need to add 250,000 jobs every month for the next 5 years just to get back to pre-recession levels. That’s about the same number of people who had been on the monorail with my daughter and that i on the way returning to the Magic Kingdom car park. Besides the affect until this has on our family and friends who’re out of work the business affect is that there are many folks not earning profits so that they can check out the mall and purchase our stuff. Meaning that the companies that buy my products aren’t doing enough business to warrant buying a greater portion of my products.Which has a lot to do with the current low rate of GDP (and my company’s revenue) growth.

#8. Overall Business Conditions

Small businesses proprietors know that overall business conditions aren’t great. They aren’t as scary as those talking mounted moose heads around the wall that come alive before the Country Bear Jamboree. But things aren’t good. Which explains why Intuit reported soon that our hiring has slowed. Although most regions reported rise in their manufacturing activity last month, the growth was tepid and still significantly behind pre-recession levels. Orders for durable goods declined substantially. Personal income and spending numbers were lackluster.Sure, consumer confidence was up but is anyone really paying manual intervention to that number?An even more telling statistic could be the Restaurant Performance Index, compiled every month by those self same guys who brought us Herman Cain. That is dropping. I select actual data on spending over surveys anytime. Want to really know what’s going on? Check out the recent Aruoba Diebold Scotti Business Conditions Index, that’s calculated by my hometown Philadelphia Fed. It’s like the Tomorrowland Speedway ride….meh. And that i haven’t even mentioned housing, have I?

I kid, but inspite of the downsides, I advise small businesses proprietors who are seeking happiness to visit Disney for a day. Pricier to be scared though….if you do not start thinking hard concerning the economy.

The Facebook IPO is close

Posted by admin on March 12, 2012
Posted in: Uncategorized. Tagged: , , .

Facebook’s recent filing has several commentators likening the social networking site, were only available in a Harvard dorm, to the search giant Google, founded by two Stanford PhDs less than a decade earlier. However for all their similarities – visionary student founders, explosive marketshare, tremendous valuations – there exists at least one difference that their respective alma matters will certainly take note of because the Facebook IPO grows near. While Stanford netted a $336 Million dollar pay-day from Google’s 2004 IPO, Facebook’s looming IPO will leave the trustees of Harvard with just a cameo in last year’s Oscar-nominated film.

Being an outgrowth of Stanford’s Digital Library Project, where founders Sergey Brin and Larry Page were researchers, Google’s underlying “PageRank” algorithm was property with the university. When Brin and Page left Stanford to spin-off off an amount become Google, they had to license we’ve got the technology from the university in a deal for 1.8 Million shares of the new company which today will be worth $1.1 Billion.

While Stanford’s gain from Google is unusual, technology-transfer agreements have long been the primary strategies which universities support and profit from startups. However, as Facebook illustrates, more student-founded companies are bootstrapping without university technology, leaving schools without profit — though that could be changing.

“The university happens to be a supplier of both technology and talent,” says Frank Rimalovski Md of the NYU Innovation Venture Fund “and its our obligation to foster and support that.” Rimalovski’s fund, that has been created by the university this season, makes seed and series A investments in startups with ties to NYU. Up to now the $20 Million fund has produced three investments a pair of which — Fondu and numberFire — were started by current students with no ties to college technology. “There’s definitely been a groundswell of entrepreneurial interest from students,” says Rimalovski “and if there’s another Zuckerberg walking around our hallways, we want to be as supportive even as we would of a faculty member focusing on a new cancer therapy.”

“Young people have always wanted to affect the world,” says Hugo Van Vuuren, a founding partner with the Experiment Fund (xFund), a fresh seed-stage investor housed at Harvard’s Graduate School of Engineering. What’s new, says Van Vuuren, is the fact that their checking out startups as vehicles to do so. Van Vuuren’s fund, that has been announced in January, has already made a quantity of small investments in high-profile startups like RockHealth, led by Halle Tecco (MBA 11′) and Omada, co-founded by Sean Duffy, currently on leave from Harvard’s MD/ MBA program.

“The culture on campus is unquestionably changing,” says David J. Miller, a researcher at George Mason University’s School of Public Policy who studies student entrepreneurship, “universities are under tremendous budgetary pressure in terms of outside funding and also from students paying tuition.” Rimalovski agrees saying “to be a real player as being a university today, you will need to engage students and faculty who’re increasingly considering starting companies.”

While university purchase of startups outside of technology-transfer is fairly new, college campuses have long been a breeding ground for brand spanking new businesses. Years before Brin and Page, Michael Dell was selling PC kits from his dorm at University of Texas-Austin and Bill gates was writing computer applications as part of his Harvard dorm. “The concentrate on tech-transfer is definitely misguided,” says Miller “when you gaze at the most successful entrepreneurs, technology isn’t a decisive factor — Bill gates was certainly not the best coder around.”

In case equity and exits aren’t enough to entice administrators into supporting their student’s startups, there may be another incentive for school’s to take note. Alumni certainly are a major source of income for universities, notes Rimalovski, and historically it has been entrepreneurs who have been the biggest contributors to raised education. From Ezra Cornell to Leland Stanford, lots of the countries foremost universities bear the names of famous entrepreneurs. “It’s a virtuous circle,” says Miller, plus it pays for universities to activate their most entrepreneurial students, even after they leave. “Michael Dell dropped out of UT after just one year and it has since given them over $65 Million.”

Climax not just about money,” says Miller “successful entrepreneurs give a kind of cultural return.” At University of Maryland, College Park, where Miller is compiling an instance study, the story of Under Armour CEO Kevin Plank 96′, who played football for UM before founding the $4.6 Billion apparel company, has already established noticeable effects on the students. “Once an excellent has a success story like this, there’s no returning to college,” says Miller.

While initiatives like those underway at Harvard and NYU remain few and far between, you’ll find likely to be many people watching. “If they grow to be successful,” says Miller “it will not long before rest of the school’s catch on.”

Meet the Youngest Self-Made Woman Billionaire

Posted by admin on March 12, 2012
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Sara Blakely, the founder of ubiquitous shapewear company Spanx, debuts on one of the covers of Forbes’ new Billionaires issue since the youngest self-made woman to earn the big “B” title at the age of 41.

Florida native Blakely started her first business in 1990: a babysitters’ club. But Spanx famously began when Blakely, at age 27, cut your feet off some pantyhose to wear under her cream-colored slacks for his or her figure-flattering properties. “I needed an undergarment that didn’t exist,” she told Forbes.

While holding down a day job, Blakely worked tirelessly to create her Spanx empire, shipping items in the wee hours of the morning and aggressively approaching Nordstrom and Neiman Marcus to start stocking her products.

Today, Spanx runs by a team of 125 and sells 200 products in 11,500 stores in 40 countries. Blakely has also netted a variety of celebrity fans, including Octavia Spencer, who says she wears three layered pairs around the red carpet, and Melissa McCarthy, whose pair got her in to a particularly embarrassing moment. You will find a line of Spanx activewear.

Not very shabby for a girl who once lugged faxes and copiers door-to-door as a salesperson while only having dreams about her starting her very own business.

She also credits her success to her non-traditional work philosophy. Blakely told Business Week in 2007 that she’s doggedly pursued failure through the years (yes, that is correct):

I failed the LSAT. Basically, only had not failed, I’d are already a lawyer high would be no Spanx. I do think failure is nothing more than life’s method of nudging you you are off course. My attitude to failure is just not attached to outcome, in not trying. It’s liberating. A lot of people attach failure to something broken out or how people perceive you. This way, it is about answering to yourself.

Also rounding your “Billionaires” issue? Standbys Bill gates, cell phone titan Carlos Slim and Warren Buffett.