Richard LaBar has long ditched his heavy laptop in favor of a lightweight iPad mini.
“I won’t travel without it,” says LaBar, who totes the 7.9-inch tablet (from $329) as owner of LaBar Golf Renovations, based in Bernardsville, N.J. LaBar, 43, uses the pint-sized tablet from Apple for e-mail, Web browsing and picture-taking. There’s only one shortcoming: “The touch-screen isn’t the best for typing.”
So LaBar picked up the Ultrathin Keyboard mini ($79.95) from Logitech, a fitted cover that protects the iPad mini’s screen from scratches and cracks, and houses an integrated Bluetooth keyboard for when you need to type lengthy e-mails, notes or word-processing documents. “Not only am I much faster on a real keyboard, but I make fewer errors – plus the keyboard also props up the iPad mini’s screen while I type, which is handy.”
There’s no shortage of business-related tablet and smartphone accessories. A few noteworthy examples:
Power play
There’s nothing worse than when you’re traveling on business and the gadgets you rely on run out of power. Instead of a bulky battery case that weighs down your phone even when you don’t need the extra juice, consider an external power solution you can plug in as needed. New Trent’s Travelpak+ ($54.95) is a compact 7,000mAH charger that can power up a typical smartphone about three or four times. Dual USB ports mean it can provide power to two devices at the same time. A built-in AC adapter lets you plug it into a wall when you need to top it up before throwing into a carry-on. It also doubles as a nightlight when plugged into the wall, if desired.
Memory maximizer
When it comes to storage, your smartphone or tablet is probably maxed out at 64 gigabytes of built-in memory. But what if you could extend that to 1-terabyte? The Seagate Wireless Plus ($199.99) is a pocket-size hard drive with a unique trick up its sleeve. After you connect it to a PC or Mac and drag and drop files onto it, press a button later on and this battery-powered drive creates a wireless connection with up to eight people. Now, everyone can stream content at the same time – via any Wi-Fi-enabled smartphone, tablet or laptop – and even access something different, if they like (such as a movie, song, photos or documents). On-the-go real estate brokers or insurance adjusters might also like the ability to wirelessly save photos and videos from a smartphone or tablet to the drive, to free up more space on your portable device.
Lost and found
Keep losing your keys or misplacing your smartphone? Perhaps you need the Cobra Tag Universal ($49.99). This second-generation product – which works with free apps for iPhone or Android devices – clamps onto your keys, purse, luggage or whatever else you don’t want to lose. Simply open the app, tap the screen and you’ll hear a loud chirping noise to help you locate your stuff. Or press the button on the Cobra Tag Universal and your Bluetooth-enabled smartphone or tablet will chime or play a song from your collection. The most underrated feature, however, is your Cobra Tag will sound its alarm if it loses a connection with your device – such as accidentally leaving your Android tablet in a cafe. The app can also send you a text, e-mail, tweet or post that your phone or tablet can’t be located and show you a map where it is.
Mightier than the sword
If you still prefer to take notes the “old school” way, the Livescribe Sky Wi-Fi smartpen ($169.95) is a digital pen that records everything it writes or hears. Write or sketch on special paper with tiny dots (Starter Notebook included) and all your notes are recorded by the pen’s minuscule camera at its tip. The notes can then be wirelessly uploaded to your secure Evernote account on a smartphone, tablet or personal computer. Alternatively, you can connect the Livescribe smartpen to your PC or Mac via USB cable, which also charges up its internal battery at the same time. An optional app will transcribe your handwriting into digital text. A built-in microphone and 2GB of memory means it can hold up to 200 hours of audio and thousands of pages of notes. A 4GB Livescribe Sky model sells for $199.95.
Copyright © USA TODAY 2013, Robert Deutsch
Thursday, June 27, 2013
Wednesday, June 26, 2013
Reports Reflect Fed’s Message of Stronger Economy
The U.S. housing recovery is strengthening. Factories are fielding more orders. And Americans’ confidence in the economy has reached its highest point in 5½ years.
That brightening picture, captured in four reports Tuesday, suggests that the economy could accelerate in the second half of the year. It underscores the message last week from the Federal Reserve, which plans to slow its bond-buying program this year and end it next year if the economy continues to strengthen. The Fed’s bond purchases have helped keep long-term interest rates low.
Investors appeared to welcome the flurry of positive data. The Dow Jones industrial average rose 100 points to close at 14,760, and broader stock indexes also ended the day up. Those gains made up only a fraction of the markets’ losses since Chairman Ben Bernanke said last week that the Fed will likely scale back its economic stimulus within months – a move that would send long-term rates up.
But the rising confidence of U.S. consumers shows that most Americans are focused on a better job market, said Beth Ann Bovino, chief economist at Standard & Poor’s.
“Maybe households agree with the Fed: the economy is improving,” Bovino said.
The Conference Board said its consumer confidence index jumped this month to 81.4, the highest reading since January 2008. The New York-based research group said consumers appear more encouraged by economic conditions and more optimistic about where the economy and job market are likely headed over the next six months.
Last month, U.S. employers added 175,000 jobs, which almost exactly matched the average increase of the previous 12 months. Steady job growth has gradually reduced the unemployment rate to 7.6 percent from a peak of 10 percent in 2009. And rising home and stock prices since the recession ended four years ago have made many Americans feel wealthier.
The combination has kept consumers spending this year despite higher Social Security taxes and steep government spending cuts that took effect this year.
The survey was completed June 13, so it didn’t reflect the past week’s plunge in stock prices. The market turmoil might lower July’s consumer confidence. Still, many economists say they doubt that any drop in confidence would be dramatic.
For most Americans, the biggest investment is their home. And a steady rise in prices is allowing them recover much of the wealth they lost during and immediately after the Great Recession.
U.S. home prices jumped 12.1 percent in April compared with a year ago, according to the Standard & Poor’s/Case-Shiller 20-city home price index. That was the biggest year-over-year gain since March 2006.
For a fourth straight month, prices rose from a year earlier in all 20 cities in the index. Twelve cities posted double-digit price gains.
More buyers and a limited supply of available homes have lifted prices in most cities. Higher prices have, in turn, fueled further sales and encouraged builders to ramp up construction. A more sustainable housing recovery is contributing to economic growth and creating more jobs.
Sales of new homes rose in May to a seasonally adjusted annual rate of 476,000, the Commerce Department said. That was the fastest pace since July 2008. Though sales of new homes remain below the 700,000 annual rate that most economists consider healthy, the pace has jumped 29 percent from a year ago.
Last week, the National Association of Realtors said sales of previously occupied homes in May surpassed the 5 million mark for the first time since November 2009.
At a news conference last week, Bernanke noted that the strength in housing was a key reason the Fed had raised its outlook for growth next year and is moving toward slowing its pace of bond buying.
The Fed’s bond purchases have helped fuel the housing gains by keeping mortgage rates down. As recently as early last month, the average rate for a 30-year fixed mortgage was 3.35 percent, just above the record low of 3.31 percent. The average remains historically low at 3.93 percent.
Many investors worry that many consumer and business loan rates, which have already started to rise, will jump once the Fed scales back its bond purchases. More expensive loans could slow the housing recovery and sap the economy’s momentum at a critical moment.
Even so, Mark Vitner, an economist at Wells Fargo, said the reports point to underlying strength that should enable the economy to withstand jittery financial markets.
“The economy is strong enough now that it can handle a couple of rough days on Wall Street,” Vitner said.
The weakest part of the economy this year has been manufacturing, which has been held back by a recession in Europe and tepid growth in other overseas markets. But factory activity may start to rebound, according to a report from the Commerce Department. The department said orders for durable goods rose 3.6 percent.
Most of the increase was due to commercial aircraft orders, which tend to fluctuate sharply from month to month. Still, businesses also ordered more computers, communications equipment, machinery and metals.
As a result, a category of orders that’s viewed as a proxy for business investment plans – which excludes the volatile sectors of transportation and defense – rose 1.1 percent. That matched similar gains in April and March. This category hadn’t risen for three straight months since 2011.
Paul Ashworth, chief U.S. economist at Capital Economics, said he still thinks economic growth is slowing in the April-June quarter to an annual rate below 2 percent. That would be down from a 2.4 percent annual rate from January through March.
But Ashworth said the pickup in orders should help drive a stronger economy in the July-September quarter. He said growth could exceed an annual rate of 2.5 percent in the final three months of the year.
That brightening picture, captured in four reports Tuesday, suggests that the economy could accelerate in the second half of the year. It underscores the message last week from the Federal Reserve, which plans to slow its bond-buying program this year and end it next year if the economy continues to strengthen. The Fed’s bond purchases have helped keep long-term interest rates low.
Investors appeared to welcome the flurry of positive data. The Dow Jones industrial average rose 100 points to close at 14,760, and broader stock indexes also ended the day up. Those gains made up only a fraction of the markets’ losses since Chairman Ben Bernanke said last week that the Fed will likely scale back its economic stimulus within months – a move that would send long-term rates up.
But the rising confidence of U.S. consumers shows that most Americans are focused on a better job market, said Beth Ann Bovino, chief economist at Standard & Poor’s.
“Maybe households agree with the Fed: the economy is improving,” Bovino said.
The Conference Board said its consumer confidence index jumped this month to 81.4, the highest reading since January 2008. The New York-based research group said consumers appear more encouraged by economic conditions and more optimistic about where the economy and job market are likely headed over the next six months.
Last month, U.S. employers added 175,000 jobs, which almost exactly matched the average increase of the previous 12 months. Steady job growth has gradually reduced the unemployment rate to 7.6 percent from a peak of 10 percent in 2009. And rising home and stock prices since the recession ended four years ago have made many Americans feel wealthier.
The combination has kept consumers spending this year despite higher Social Security taxes and steep government spending cuts that took effect this year.
The survey was completed June 13, so it didn’t reflect the past week’s plunge in stock prices. The market turmoil might lower July’s consumer confidence. Still, many economists say they doubt that any drop in confidence would be dramatic.
For most Americans, the biggest investment is their home. And a steady rise in prices is allowing them recover much of the wealth they lost during and immediately after the Great Recession.
U.S. home prices jumped 12.1 percent in April compared with a year ago, according to the Standard & Poor’s/Case-Shiller 20-city home price index. That was the biggest year-over-year gain since March 2006.
For a fourth straight month, prices rose from a year earlier in all 20 cities in the index. Twelve cities posted double-digit price gains.
More buyers and a limited supply of available homes have lifted prices in most cities. Higher prices have, in turn, fueled further sales and encouraged builders to ramp up construction. A more sustainable housing recovery is contributing to economic growth and creating more jobs.
Sales of new homes rose in May to a seasonally adjusted annual rate of 476,000, the Commerce Department said. That was the fastest pace since July 2008. Though sales of new homes remain below the 700,000 annual rate that most economists consider healthy, the pace has jumped 29 percent from a year ago.
Last week, the National Association of Realtors said sales of previously occupied homes in May surpassed the 5 million mark for the first time since November 2009.
At a news conference last week, Bernanke noted that the strength in housing was a key reason the Fed had raised its outlook for growth next year and is moving toward slowing its pace of bond buying.
The Fed’s bond purchases have helped fuel the housing gains by keeping mortgage rates down. As recently as early last month, the average rate for a 30-year fixed mortgage was 3.35 percent, just above the record low of 3.31 percent. The average remains historically low at 3.93 percent.
Many investors worry that many consumer and business loan rates, which have already started to rise, will jump once the Fed scales back its bond purchases. More expensive loans could slow the housing recovery and sap the economy’s momentum at a critical moment.
Even so, Mark Vitner, an economist at Wells Fargo, said the reports point to underlying strength that should enable the economy to withstand jittery financial markets.
“The economy is strong enough now that it can handle a couple of rough days on Wall Street,” Vitner said.
The weakest part of the economy this year has been manufacturing, which has been held back by a recession in Europe and tepid growth in other overseas markets. But factory activity may start to rebound, according to a report from the Commerce Department. The department said orders for durable goods rose 3.6 percent.
Most of the increase was due to commercial aircraft orders, which tend to fluctuate sharply from month to month. Still, businesses also ordered more computers, communications equipment, machinery and metals.
As a result, a category of orders that’s viewed as a proxy for business investment plans – which excludes the volatile sectors of transportation and defense – rose 1.1 percent. That matched similar gains in April and March. This category hadn’t risen for three straight months since 2011.
Paul Ashworth, chief U.S. economist at Capital Economics, said he still thinks economic growth is slowing in the April-June quarter to an annual rate below 2 percent. That would be down from a 2.4 percent annual rate from January through March.
But Ashworth said the pickup in orders should help drive a stronger economy in the July-September quarter. He said growth could exceed an annual rate of 2.5 percent in the final three months of the year.
Copyright © 2013 The Associated Press; Christopher S. Rugaber, AP economics writer; and Martin Crutsinger, AP economics writer.
Floridians’ Confidence Keeps Growing
Florida’s consumer confidence keeps inching higher, according to a University of Florida monthly survey. In June, state consumer confidence rose one point from May to 82 this month – another post-recession high.
June is the fourth consecutive month to show a rise in the sentiment of Floridians.
Four of the five components measured in the survey went up, while one remained the same. Respondents’ overall opinion that they’re better off financially now than a year ago rose three points to 70, while their belief that their personal finances will improve a year from now remained at 82.
Their outlook for U.S. economic conditions over the coming year rose two points to 83. The survey-takers’ long-term view for the nation’s economic health over the next five years rose one point to 83.
Finally, the survey shows that consensus of whether now is a good time to buy a big-ticket item such as a television went up two points to a post-recession high of 93.
“The last time perception of current buying conditions reached this level was April of 2007,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “That was the beginning of the collapse in the housing market.”
Several things help explain Floridians’ current optimism. The stock market reached record highs by early June. In addition, the state’s May unemployment rate was 7.1 percent compared with the national 7.6 percent figure.
This decline from April’s 7.2 percent jobless figure occurred as Florida’s labor force was increasing, which meant it was due to an increase in jobs, McCarty said. Home prices have also kept rising. The median price for an existing single-family home is $171,000; the last time it was that high in Florida was September 2008.
Most consumers still aren’t registering any fears about the effects of sequestration, McCarty said. They’re more concerned that interest rates may rise now that the Federal Reserve has said it may reduce the amount of Treasury bonds and mortgage-backed securities it’s been purchasing to spur the economy, a fear McCarty considers “overstated” because changes, if any, will occur very gradually.
“It’s also worth noting that conditions are not the same as they were in 2008 when the Fed began making these purchases,” McCarty added. Though the current housing market is being helped by lower interest rates, there has also been a low rate of new construction and an increase in population. These two factors led to pent-up demand.
Even if current home sale prices decline a bit, McCarty thinks there’s little to worry about. “The underlying quality of loans is now very different from 2008,” he said. Current home buyers typically have good credit scores and put 20 percent down on their homes, both of which reduce the likelihood of another massive number of foreclosures like the ones that led to the last recession. “The Fed has seen the economy through dangerous economic times,” McCarty said, “but the economy is now operating normally. There was nothing normal about 2008.”
© 2013 Florida Realtors®
June is the fourth consecutive month to show a rise in the sentiment of Floridians.
Four of the five components measured in the survey went up, while one remained the same. Respondents’ overall opinion that they’re better off financially now than a year ago rose three points to 70, while their belief that their personal finances will improve a year from now remained at 82.
Their outlook for U.S. economic conditions over the coming year rose two points to 83. The survey-takers’ long-term view for the nation’s economic health over the next five years rose one point to 83.
Finally, the survey shows that consensus of whether now is a good time to buy a big-ticket item such as a television went up two points to a post-recession high of 93.
“The last time perception of current buying conditions reached this level was April of 2007,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “That was the beginning of the collapse in the housing market.”
Several things help explain Floridians’ current optimism. The stock market reached record highs by early June. In addition, the state’s May unemployment rate was 7.1 percent compared with the national 7.6 percent figure.
This decline from April’s 7.2 percent jobless figure occurred as Florida’s labor force was increasing, which meant it was due to an increase in jobs, McCarty said. Home prices have also kept rising. The median price for an existing single-family home is $171,000; the last time it was that high in Florida was September 2008.
Most consumers still aren’t registering any fears about the effects of sequestration, McCarty said. They’re more concerned that interest rates may rise now that the Federal Reserve has said it may reduce the amount of Treasury bonds and mortgage-backed securities it’s been purchasing to spur the economy, a fear McCarty considers “overstated” because changes, if any, will occur very gradually.
“It’s also worth noting that conditions are not the same as they were in 2008 when the Fed began making these purchases,” McCarty added. Though the current housing market is being helped by lower interest rates, there has also been a low rate of new construction and an increase in population. These two factors led to pent-up demand.
Even if current home sale prices decline a bit, McCarty thinks there’s little to worry about. “The underlying quality of loans is now very different from 2008,” he said. Current home buyers typically have good credit scores and put 20 percent down on their homes, both of which reduce the likelihood of another massive number of foreclosures like the ones that led to the last recession. “The Fed has seen the economy through dangerous economic times,” McCarty said, “but the economy is now operating normally. There was nothing normal about 2008.”
© 2013 Florida Realtors®
Tuesday, June 25, 2013
Consumers More Confident in June
The Consumer Confidence Index surged 7.1 points higher in June – its third consecutive monthly increase. The Index now stands at 81.4, up from 74.3 in May. The Present Situation Index that measures attitudes about current conditions, increased to 69.2 from 64.8. The Expectations Index that gauges attitudes about conditions six months from now improved to 89.5 from 80.6 last month.
“Consumer confidence … is now at its highest level since January 2008,” says Lynn Franco, director of economic indicators at The Conference Board, which creates the monthly Consumer Confidence Index. “Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year. Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up.”
Consumers saying current business conditions are “good” held steady at 19.1 percent, while those saying business conditions are “bad” decreased to 24.9 percent from 26.0 percent. Consumers’ appraisal of the job market was also more positive. Those claiming jobs are “plentiful” increased to 11.7 percent from 9.9 percent, while those claiming jobs are “hard to get” edged up to 36.9 percent from 36.4 percent.
Consumers’ expectations regarding the short-term future improved again in June. Those expecting business conditions to be better over the next six months increased to 20.3 percent from 18.7 percent, while those expecting business conditions to worsen decreased to 11.4 percent from 12.2 percent.
Consumers’ outlook for the labor market was also more optimistic. Those anticipating more jobs in the months ahead improved to 19.6 percent from 16.3 percent, while those anticipating fewer jobs decreased to 16.1 percent from 20.0 percent. The proportion of consumers expecting their incomes to increase dipped slightly to 15.2 percent from 15.6 percent, while those expecting a decrease declined to 14.4 percent from 15.3 percent.
Nielsen conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was June 13.
© 2013 Florida Realtors®
“Consumer confidence … is now at its highest level since January 2008,” says Lynn Franco, director of economic indicators at The Conference Board, which creates the monthly Consumer Confidence Index. “Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year. Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up.”
Consumers saying current business conditions are “good” held steady at 19.1 percent, while those saying business conditions are “bad” decreased to 24.9 percent from 26.0 percent. Consumers’ appraisal of the job market was also more positive. Those claiming jobs are “plentiful” increased to 11.7 percent from 9.9 percent, while those claiming jobs are “hard to get” edged up to 36.9 percent from 36.4 percent.
Consumers’ expectations regarding the short-term future improved again in June. Those expecting business conditions to be better over the next six months increased to 20.3 percent from 18.7 percent, while those expecting business conditions to worsen decreased to 11.4 percent from 12.2 percent.
Consumers’ outlook for the labor market was also more optimistic. Those anticipating more jobs in the months ahead improved to 19.6 percent from 16.3 percent, while those anticipating fewer jobs decreased to 16.1 percent from 20.0 percent. The proportion of consumers expecting their incomes to increase dipped slightly to 15.2 percent from 15.6 percent, while those expecting a decrease declined to 14.4 percent from 15.3 percent.
Nielsen conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was June 13.
© 2013 Florida Realtors®
Monday, June 24, 2013
Role Reversal: Online Retailers Seek Physical Sites
For a growing number of Internet retailers, offline is the new online.
Across the country, retailers that existed only in cyberspace are now opening – or thinking of opening – traditional stores at a time when e-commerce’s explosive growth has spawned a slew of dire predictions that brick-and-mortar retailing will become irrelevant or even extinct.
Online giant Amazon is actively exploring a store concept. Specialty retailers like Warby Parker, which sells eyeware, and Bonobos, a men’s clothing company, already operate stores.
In Minnesota’s Twin Cities area, Sigma Beauty, a fast-growing, four-year-old online makeup retailer, recently opened its first outlet at the Mall of America.
“I feel that everything we’ve done with this company was backward,” joked Simone Xavier, who launched Sigma with her husband, Rene Xavier Filho. “But we wanted to put a face on the brand, and we wanted people to touch and feel the product.”
Moving from websites to storefronts may seem counterintuitive, as online retailers enjoy lower costs than brick-and-mortar chains like Best Buy and Target, which have to pay store leases and hire salespeople. Plus, more and more shoppers are buying products online, using their laptops, smartphones or tablets.
For the first three months of 2013, e-commerce sales jumped 13 percent to $50.2 billion compared to the same period a year, according to comScore. The double-digit growth in online sales has often come at the expense of physical retailers, which is why companies such as Best Buy and Target are spending millions of dollars to upgrade their websites and mobile software.
But today’s retailer will gladly record a sale any way they can get it, said Jeff Green, a Phoenix-based retail consultant.
“It is strange to see e-commerce sites open physical stores,” Green said. “But when you think about, it’s not surprising. The most successful retailers are going to have a combination of bricks-and-mortars and digital sales. For online retailers, you might as well get to the sale as close as you can.”
Bricks-and-mortar retailing may seem outdated, but the physical store still offers a credible and safe place for customers to examine the product, ask questions, buy and, if necessary, return it.
“It’s about taking the risk out of buying,” said Steven Dennis, a retail consultant and a former top executive with Neiman Marcus and Sears. That’s especially true of certain products like clothing, shoes, handbags and eyeglasses, where consumers still prefer real store interaction vs. a purely digital experience.
In some cases, consumers may think a deal is too good to be true. For example, Warby Parker markets itself as a place where consumers purchase designer eyeglasses for as low as $95. That low of a price might prompt shoppers to suspect there must be a catch – either the product is poorly made, or the website is a scam altogether. Opening a store would help alleviate those fears, Dennis said.
But don’t expect online retailers to completely shed their digital roots. It’s one thing to open one experimental store in a suburban shopping center to showcase your products; quite another to operate dozens of stores in big malls or large cities, which requires money and expertise that are often beyond the reach of Internet firms.
“If you’re going to a high-traffic area and paying a decent amount of rent, it puts the pressure on you to know what you are doing,” Dennis said.
Take Sigma Beauty. Founded in 2009, the New Brighton, Minn.-based Internet makeup retailer quickly grew, thanks to its international reach and deft use of social media like YouTube. The company expects to generate $25 million in sales this year compared to $18 million in 2012.
Opening a store was never part of the plan, Xavier said. “The cost of maintaining and building the store is humongous. I was very hesitant.”
Added Filho: “Financially, it doesn’t make any sense. You’re going to lose $1,000 per day.”
But when the couple learned of available space at the Mall of America, they quickly jumped on it.
For one thing, Xavier said, although Sigma Beauty sells to customers in more than 100 countries, very few people in Minnesota are aware of the company.
In addition, a retail space provides an ideal place for Sigma Beauty to host events like “beauty parties” in which the company recruits celebrity makeup experts from YouTube to offer personal makeup tutorials. But running a store requires a whole new mind-set, Xavier said.
“Online, it’s very easy,” she said. “People can purchase products anywhere, anytime. You are not restricted to the hours of the malls; you’re not restricted by the weather. Everything in the society around us affects the (store) sale.”
Copyright © 2013 Star Tribune (Minneapolis) Distributed by MCT Information Services.
Across the country, retailers that existed only in cyberspace are now opening – or thinking of opening – traditional stores at a time when e-commerce’s explosive growth has spawned a slew of dire predictions that brick-and-mortar retailing will become irrelevant or even extinct.
Online giant Amazon is actively exploring a store concept. Specialty retailers like Warby Parker, which sells eyeware, and Bonobos, a men’s clothing company, already operate stores.
In Minnesota’s Twin Cities area, Sigma Beauty, a fast-growing, four-year-old online makeup retailer, recently opened its first outlet at the Mall of America.
“I feel that everything we’ve done with this company was backward,” joked Simone Xavier, who launched Sigma with her husband, Rene Xavier Filho. “But we wanted to put a face on the brand, and we wanted people to touch and feel the product.”
Moving from websites to storefronts may seem counterintuitive, as online retailers enjoy lower costs than brick-and-mortar chains like Best Buy and Target, which have to pay store leases and hire salespeople. Plus, more and more shoppers are buying products online, using their laptops, smartphones or tablets.
For the first three months of 2013, e-commerce sales jumped 13 percent to $50.2 billion compared to the same period a year, according to comScore. The double-digit growth in online sales has often come at the expense of physical retailers, which is why companies such as Best Buy and Target are spending millions of dollars to upgrade their websites and mobile software.
But today’s retailer will gladly record a sale any way they can get it, said Jeff Green, a Phoenix-based retail consultant.
“It is strange to see e-commerce sites open physical stores,” Green said. “But when you think about, it’s not surprising. The most successful retailers are going to have a combination of bricks-and-mortars and digital sales. For online retailers, you might as well get to the sale as close as you can.”
Bricks-and-mortar retailing may seem outdated, but the physical store still offers a credible and safe place for customers to examine the product, ask questions, buy and, if necessary, return it.
“It’s about taking the risk out of buying,” said Steven Dennis, a retail consultant and a former top executive with Neiman Marcus and Sears. That’s especially true of certain products like clothing, shoes, handbags and eyeglasses, where consumers still prefer real store interaction vs. a purely digital experience.
In some cases, consumers may think a deal is too good to be true. For example, Warby Parker markets itself as a place where consumers purchase designer eyeglasses for as low as $95. That low of a price might prompt shoppers to suspect there must be a catch – either the product is poorly made, or the website is a scam altogether. Opening a store would help alleviate those fears, Dennis said.
But don’t expect online retailers to completely shed their digital roots. It’s one thing to open one experimental store in a suburban shopping center to showcase your products; quite another to operate dozens of stores in big malls or large cities, which requires money and expertise that are often beyond the reach of Internet firms.
“If you’re going to a high-traffic area and paying a decent amount of rent, it puts the pressure on you to know what you are doing,” Dennis said.
Take Sigma Beauty. Founded in 2009, the New Brighton, Minn.-based Internet makeup retailer quickly grew, thanks to its international reach and deft use of social media like YouTube. The company expects to generate $25 million in sales this year compared to $18 million in 2012.
Opening a store was never part of the plan, Xavier said. “The cost of maintaining and building the store is humongous. I was very hesitant.”
Added Filho: “Financially, it doesn’t make any sense. You’re going to lose $1,000 per day.”
But when the couple learned of available space at the Mall of America, they quickly jumped on it.
For one thing, Xavier said, although Sigma Beauty sells to customers in more than 100 countries, very few people in Minnesota are aware of the company.
In addition, a retail space provides an ideal place for Sigma Beauty to host events like “beauty parties” in which the company recruits celebrity makeup experts from YouTube to offer personal makeup tutorials. But running a store requires a whole new mind-set, Xavier said.
“Online, it’s very easy,” she said. “People can purchase products anywhere, anytime. You are not restricted to the hours of the malls; you’re not restricted by the weather. Everything in the society around us affects the (store) sale.”
Copyright © 2013 Star Tribune (Minneapolis) Distributed by MCT Information Services.
Five Questions For Small Business Owners To Ask
Whether the summer means tourism slam, business as usual or slow goings, every entrepreneur should make time for a midyear checkup on their small business, experts say.
“Running a business is a day-to-day process,” said Gregg Thompson, North Carolina director for the National Federation of Independent Businesses. “But it’s much more than (that). It’s a longer-term planning process.”
June and July are months when businesses should assess the year so far and begin planning for the next six months and beyond, Thompson said. But even the prospect of an assessment sounds daunting and potentially expensive.
So The Charlotte Observer spoke with a handful of small-business owners and consultants for their best tips and strategies for a midyear analysis that won’t break the bank – or consume those long-awaited vacation days.
Here are five questions to ask about your business:
1. Am I networking enough?
Joe Garen, senior operations manager of Vine American Kitchen, a restaurant that opened late last year in Ballantyne, N.C., said the hours he recently spent passing out free jambalaya, chocolate-chip cookies and menus at the annual Ballantyne Business Bash were fruitful. Summer can be a slow time of the year, especially if you’re new on the scene, Garen said. But that’s just another reason to make sure you keep your name circulating. “You don’t let your guard down,” he said. “You’ve got to stay up on your business. … Stay sharp.”
Someone’s more likely to seek out a restaurant where they know someone, Garen said, and summertime business events and family-friendly festivals facilitate that one-on-one interaction. “You exhibit what you have, you have fun, and you generate business,” Garen said.
2. Am I playing off the news?
David Tobin, one of the founders of Tobin Starr and Partners, a Charlotte, N.C.-based architectural and design firm, said he starts every meeting with a discussion of local and national news. Those few minutes help them stay apprised of the marketplace, which, in turn, has generated a lot of business, Tobin said. His firm designed the NASCAR Hall of Fame building in Charlotte and has big-name clients, such as Brixx Pizza and Pandora Jewelry.
These updates were especially important when the economy crashed and many of the private-sector gigs dropped off. Tobin Starr and Partners relied on news to find opportunities for public-sector jobs, such as the renovation they recently worked on at the University of North Carolina-Charlotte.
“It’s important for us to pay attention … to even try to participate,” he said. “We’d be in much worse shape if we simply sat at our desks and did our work … and before we know it, we’ll be looking up at our desk and our phones won’t be ringing.”
3. How are my financials?
At the midyear mark, it’s important to take a look at profits and losses over the first six months – and consider an outside opinion, said Carol Daly, a consultant with the Rock Hill, S.C.-based Winthrop Regional Small Business Development Center.
For a quick, budget-conscious tune-up, consider free resources through local nonprofits and publicly funded business incubators. The Winthrop Regional Small Business Development Center, for example, has a certified financial planner on staff who can sit down with a business owner, quickly run through the finances for the last two to three years, and highlight problem areas and solutions, Daly said.
It’s not an alternative to an in-depth analysis from a business’ financial consultant or CPA who knows the operation intimately, but it’s often beneficial to get fresh eyes and new ideas, Daly said. “We’ve seen some places close … that we’ve all known needed help, that we even tried to reach out and help,” Daly said. “But they always say, ‘Oh no, we’re doing fine. We’ll see it through.’ Then they close up two months later. Had they asked for help sooner, they probably wouldn’t have.”
4. What is my competition doing?
It doesn’t cost any money, but a few simple Internet searches can go a long way toward helping your business better compete in the marketplace, said Dawn Newsome, founder and owner of Moonlight Creative Group, a Charlotte marketing agency that predominantly works with nonprofits.
Start with your own “brand checkup,” Newsome said. Have you gotten any positive or negative press? Are customers talking about your brand? Are they saying what you want them to say? This will give you a point of reference and a way to analyze your goals for the next six months, she said.
As for the competition: See what’s being said about them. Visit their websites, blogs and social media pages. See what they’re touting, and the medium they used to do it.
“It’s not like you’re spying,” Newsome said. “You’re just staying current, making sure you know what’s going on in the industry. You may learn some trends that you weren’t aware of that you want to get up to speed on.”
5. How do I get ready for fall?
It may be the last thing on your mind as you consider the office policy on flip-flops, but it’s crucial to look ahead at upcoming events and holidays in the next six months, especially if you want to save money.
Consider what you want your staffing to look like and how many people you’ll need to hire, Daly said. Do you need to install security cameras, revamp the layout to decrease shoplifting, or budget for part-time security? Don’t let those considerations sneak up on during the busiest, most stressful time of year.
Copyright © 2013 The Charlotte Observer (Charlotte, N.C.) Distributed by MCT Information Services.
“Running a business is a day-to-day process,” said Gregg Thompson, North Carolina director for the National Federation of Independent Businesses. “But it’s much more than (that). It’s a longer-term planning process.”
June and July are months when businesses should assess the year so far and begin planning for the next six months and beyond, Thompson said. But even the prospect of an assessment sounds daunting and potentially expensive.
So The Charlotte Observer spoke with a handful of small-business owners and consultants for their best tips and strategies for a midyear analysis that won’t break the bank – or consume those long-awaited vacation days.
Here are five questions to ask about your business:
1. Am I networking enough?
Joe Garen, senior operations manager of Vine American Kitchen, a restaurant that opened late last year in Ballantyne, N.C., said the hours he recently spent passing out free jambalaya, chocolate-chip cookies and menus at the annual Ballantyne Business Bash were fruitful. Summer can be a slow time of the year, especially if you’re new on the scene, Garen said. But that’s just another reason to make sure you keep your name circulating. “You don’t let your guard down,” he said. “You’ve got to stay up on your business. … Stay sharp.”
Someone’s more likely to seek out a restaurant where they know someone, Garen said, and summertime business events and family-friendly festivals facilitate that one-on-one interaction. “You exhibit what you have, you have fun, and you generate business,” Garen said.
2. Am I playing off the news?
David Tobin, one of the founders of Tobin Starr and Partners, a Charlotte, N.C.-based architectural and design firm, said he starts every meeting with a discussion of local and national news. Those few minutes help them stay apprised of the marketplace, which, in turn, has generated a lot of business, Tobin said. His firm designed the NASCAR Hall of Fame building in Charlotte and has big-name clients, such as Brixx Pizza and Pandora Jewelry.
These updates were especially important when the economy crashed and many of the private-sector gigs dropped off. Tobin Starr and Partners relied on news to find opportunities for public-sector jobs, such as the renovation they recently worked on at the University of North Carolina-Charlotte.
“It’s important for us to pay attention … to even try to participate,” he said. “We’d be in much worse shape if we simply sat at our desks and did our work … and before we know it, we’ll be looking up at our desk and our phones won’t be ringing.”
3. How are my financials?
At the midyear mark, it’s important to take a look at profits and losses over the first six months – and consider an outside opinion, said Carol Daly, a consultant with the Rock Hill, S.C.-based Winthrop Regional Small Business Development Center.
For a quick, budget-conscious tune-up, consider free resources through local nonprofits and publicly funded business incubators. The Winthrop Regional Small Business Development Center, for example, has a certified financial planner on staff who can sit down with a business owner, quickly run through the finances for the last two to three years, and highlight problem areas and solutions, Daly said.
It’s not an alternative to an in-depth analysis from a business’ financial consultant or CPA who knows the operation intimately, but it’s often beneficial to get fresh eyes and new ideas, Daly said. “We’ve seen some places close … that we’ve all known needed help, that we even tried to reach out and help,” Daly said. “But they always say, ‘Oh no, we’re doing fine. We’ll see it through.’ Then they close up two months later. Had they asked for help sooner, they probably wouldn’t have.”
4. What is my competition doing?
It doesn’t cost any money, but a few simple Internet searches can go a long way toward helping your business better compete in the marketplace, said Dawn Newsome, founder and owner of Moonlight Creative Group, a Charlotte marketing agency that predominantly works with nonprofits.
Start with your own “brand checkup,” Newsome said. Have you gotten any positive or negative press? Are customers talking about your brand? Are they saying what you want them to say? This will give you a point of reference and a way to analyze your goals for the next six months, she said.
As for the competition: See what’s being said about them. Visit their websites, blogs and social media pages. See what they’re touting, and the medium they used to do it.
“It’s not like you’re spying,” Newsome said. “You’re just staying current, making sure you know what’s going on in the industry. You may learn some trends that you weren’t aware of that you want to get up to speed on.”
5. How do I get ready for fall?
It may be the last thing on your mind as you consider the office policy on flip-flops, but it’s crucial to look ahead at upcoming events and holidays in the next six months, especially if you want to save money.
Consider what you want your staffing to look like and how many people you’ll need to hire, Daly said. Do you need to install security cameras, revamp the layout to decrease shoplifting, or budget for part-time security? Don’t let those considerations sneak up on during the busiest, most stressful time of year.
Copyright © 2013 The Charlotte Observer (Charlotte, N.C.) Distributed by MCT Information Services.
Sunday, June 9, 2013
U.S Employers Add 175K Jobs, Rate up to 7.6%
The U.S. economy added 175,000 jobs in May, a gain that shows employers are hiring at a still-modest but steady pace despite government spending cuts and higher taxes.
The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate increased because more people began looking for work, a healthy sign. About three-quarters found jobs. The rest added to the ranks of the unemployed.
The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.
Investors reacted positively after the report was released at 8:30 a.m. Eastern time. Stock index futures rose.
“Today’s report has to be encouraging for growth in the second half of the year,” said Dan Greenhaus, an analyst at BTIG LLC.
Employers have added an average of 155,000 jobs the past three months. But last month’s gain of 175,000 almost exactly matched the average monthly increase of the past 12 months: 172,000.
The less-than-robust job growth might lead the Federal Reserve to maintain the pace of its monthly bond purchases. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The purchases have helped drive down interest rates and boost stock prices.
Stock markets have gyrated in the past two weeks on speculation that the Fed will start to taper its $85 billion-a-month bond-buying program — a step that could increase interest rates and cause stock prices to fall.
“I think the Fed will stay on hold,” said Nariman Behravesh, chief economist at IHS Global Insight. “They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.”
Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.
“Today’s report is perhaps the perfect number for nervous investors,” said James Marple, Senior Economist at TD Economics. “It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.”
Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.
Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.
But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.
The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.
Consumers appeared earlier this year to shrug off the tax increase. But in April, their income failed to grow, and they cut back on spending for the first time in nearly a year. A Social Security tax increase is costing a typical household that earns $50,000 about $1,000 this year. For a household with two high-earners, it’s costing up to $4,500.
Cuts in defense spending might have slowed factory output in some areas, according to a Fed report released this week. Factory activity shrank in May for the first time since November, and manufacturers barely added jobs, according to a survey by the Institute for Supply Management.
A separate ISM survey found that service companies grew at a faster pace last month but added few jobs. Service firms have been the main source of job growth in recent months.
Some positive signs of the economy’s resilience have emerged. Service companies reported an increase in new orders, the ISM found. That suggests that businesses could expand further in coming months.
And steady gains in home sales and construction are providing support for the economy even as manufacturing weakens.
The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate increased because more people began looking for work, a healthy sign. About three-quarters found jobs. The rest added to the ranks of the unemployed.
The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.
Investors reacted positively after the report was released at 8:30 a.m. Eastern time. Stock index futures rose.
“Today’s report has to be encouraging for growth in the second half of the year,” said Dan Greenhaus, an analyst at BTIG LLC.
Employers have added an average of 155,000 jobs the past three months. But last month’s gain of 175,000 almost exactly matched the average monthly increase of the past 12 months: 172,000.
The less-than-robust job growth might lead the Federal Reserve to maintain the pace of its monthly bond purchases. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The purchases have helped drive down interest rates and boost stock prices.
Stock markets have gyrated in the past two weeks on speculation that the Fed will start to taper its $85 billion-a-month bond-buying program — a step that could increase interest rates and cause stock prices to fall.
“I think the Fed will stay on hold,” said Nariman Behravesh, chief economist at IHS Global Insight. “They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.”
Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.
“Today’s report is perhaps the perfect number for nervous investors,” said James Marple, Senior Economist at TD Economics. “It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.”
Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.
Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.
But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.
The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.
Consumers appeared earlier this year to shrug off the tax increase. But in April, their income failed to grow, and they cut back on spending for the first time in nearly a year. A Social Security tax increase is costing a typical household that earns $50,000 about $1,000 this year. For a household with two high-earners, it’s costing up to $4,500.
Cuts in defense spending might have slowed factory output in some areas, according to a Fed report released this week. Factory activity shrank in May for the first time since November, and manufacturers barely added jobs, according to a survey by the Institute for Supply Management.
A separate ISM survey found that service companies grew at a faster pace last month but added few jobs. Service firms have been the main source of job growth in recent months.
Some positive signs of the economy’s resilience have emerged. Service companies reported an increase in new orders, the ISM found. That suggests that businesses could expand further in coming months.
And steady gains in home sales and construction are providing support for the economy even as manufacturing weakens.
Source: Associated Press 2013
Household Wealth Tops Pre-Recession Levels
A robust stock market and stronger housing indicators are helping more Americans regain the household wealth that they lost during the Great Recession.
Federal Reserve reports that the net worth of American households is now higher than before the recession that occurred about five and a half years ago, without adjusting for inflation. Household net worth climbed 4.5 percent in the first quarter of 2013, reaching $70.3 trillion, compared to $68.1 trillion in 2007.
For the first quarter of 2013, real estate holdings accounted for a $784 billion increase in household net worth, according to the Fed. Corporate shares and mutual funds accounted for a nearly $1.5 trillion gain in that time.
A recent poll conducted by the New York Times and CBS News shows that more Americans are feeling upbeat about the direction of the economy, saying the economy was “very” or “fairly good.” That's the highest share since the recession began in 2007. However, some indicators continue to lag.
“Even as consumer spending remains healthy and the housing market rebounds, the labor market has been much slower to recover and many Americans at middle and lower income levels remain worse off than before the downturn,” The New York Times reports. "The lackluster gains in jobs and income for most Americans stand in contrast to the rally on Wall Street and increase in home prices so far this year.”
Source: “Fed Reports American Households Have Regained Ground Lost in the Recession,” The New York Times (June 6, 2013)
Federal Reserve reports that the net worth of American households is now higher than before the recession that occurred about five and a half years ago, without adjusting for inflation. Household net worth climbed 4.5 percent in the first quarter of 2013, reaching $70.3 trillion, compared to $68.1 trillion in 2007.
For the first quarter of 2013, real estate holdings accounted for a $784 billion increase in household net worth, according to the Fed. Corporate shares and mutual funds accounted for a nearly $1.5 trillion gain in that time.
A recent poll conducted by the New York Times and CBS News shows that more Americans are feeling upbeat about the direction of the economy, saying the economy was “very” or “fairly good.” That's the highest share since the recession began in 2007. However, some indicators continue to lag.
“Even as consumer spending remains healthy and the housing market rebounds, the labor market has been much slower to recover and many Americans at middle and lower income levels remain worse off than before the downturn,” The New York Times reports. "The lackluster gains in jobs and income for most Americans stand in contrast to the rally on Wall Street and increase in home prices so far this year.”
Source: “Fed Reports American Households Have Regained Ground Lost in the Recession,” The New York Times (June 6, 2013)
How Small Businesses Can Avoid Loan Rejection
Thousands of stunned small business owners call Dun & Bradstreet Credibility Corp. each week after they’re turned down for a loan. Jeff Stibel, CEO of the business credit reporting company, has a message for them: Don’t blame the bank.
Instead, he says, find out how you contributed to that rejection and start working to improve your company’s credit rating so next time, the answer will be “yes.”
“There is so much you can do, and should do, before you need a loan,” he says.
Dun & Bradstreet Credibility compiles credit reports on small businesses, which banks can buy to help make their lending decisions. In a recent conversation with The Associated Press, Stibel talked about the continuing sluggishness in bank lending to small companies. Lending rose modestly in April, according to the Thomson Reuters/PayNet Small Business Lending Index, after falling the first three months of this year. Stibel agrees that banks can make it difficult for small businesses to get loans. But he argues that owners bear some responsibility when they’re rejected.
Many small business owners go about getting a loan all wrong, he says. They apply to banks that aren’t likely to approve them. When they apply, they haven’t made sure their companies’ finances and credit ratings are solid. And they haven’t taken the time to cultivate a relationship with a banker who will be sympathetic.
Stibel knows that business owners aren’t helping themselves because they call Dun & Bradstreet Credibility after banks reject loan applications and tell them to find out what’s in their business credit reports. The files are similar to the personal credit reports on consumers that are compiled by reporting agencies such as Experian and Equifax. They include information such as a company’s payment record, how much debt it’s carrying and the number of loans it has applied for.
“We talk to over 20,000 businesses a week and a huge percentage of them don’t even know they have a business credit file. They think that all they have is a personal credit file,” Stibel says.
Sometimes owners don’t see their business credit report until they’re sitting with a loan officer in a bank branch, Stibel says. For bankers, that’s a red flag.
“They’ll say to a business owner, ‘I’m trying to believe that I can trust you to pay your bills and that I can entrust money to you and you’ll be a good corporate steward and pay me back – but if you don’t know what your credit profile looks like, then how on earth can I lend you money?’” he says.
Owners can get copies of their files from reporting companies including Dun & Bradstreet Credibility, Experian and Equifax. They also should study their personal credit reports, which bankers consider when making loan decisions.
Another roadblock: Many businesses aren’t savvy about the application process, Stibel says. Owners think they can walk into a bank, fill out an application and presto, get a loan. These days, that’s a good way to get turned down.
“Before they think about any credit, they should do what they do before they start a business,” Stibel says. That includes writing a formal business plan that explains how you will spend the money you want to borrow.
The smartest owners “have banks asking, begging to work with them instead of hustling to try and find the right bank,” he says.
Many owners also don’t realize that not all banks are alike. Banks have different philosophies and strategies about lending. For example, some make more loans secured by assets like real estate, while others lean toward companies with good cash flow.
“How do you know that Joe’s Pizza should be getting a loan from Bank of America, but Jim the chiropractor should be getting one from Wells and Jane’s Dry Cleaner should be getting one from a community bank?” The answer is for business owners to do their homework, and research lenders ahead of time. They should have informational meetings at several banks, and read up about the banks on the Internet.
“Not knowing what their criteria is before you walk in the door is a recipe for disaster,” Stibel says.
That disaster goes beyond a rejection. Many owners who shop for one loan after another don’t realize that every inquiry and rejection goes into their business and personal credit reports.
Credit reports can also be an issue when a company doesn’t need a loan. Some big retailers want to see credit reports for the manufacturers whose products they buy. They believe a company with a good credit rating is more likely to be well run and not cut corners on the goods they sell, Stibel says.
He recalls hearing from a small consumer products manufacturer that had a deal with a big national retail chain. That is, it had the deal until the retailer took a look at the company’s credit report and decided that there wasn’t enough information in it. The retailer didn’t feel secure enough about doing business with the company. The owner immediately called Stibel.
“The first word out of his mouth wasn’t ‘hello,’ it was ‘help!’ Stibel says. “They told him, ‘we don’t care if your product is good or not, we won’t put it in our store.”
Even as the economy has continued its slow recovery, lending to small businesses remains weak. Many companies say they don’t want or need loans because they’re not sure whether their revenue will be strong or weak, and they don’t want to take on more debt after having paid their loan balances down following the recession.
Stibel says the stagnant lending is also due to the fact that banks and small businesses are at cross purposes. The banks say they’re working on making more loans. Bank of America has hired 1,000 bankers to serve small businesses. Wells Fargo is increasing its marketing and outreach to women small business owners to help increase how much it is lending to them. Citi said in March that it had surpassed its 2012 small business-lending goal by $1.6 billion. But banks are also concerned about the risks involved in lending to small businesses, so they add requirements to loans. The companies want loans with as few requirements as possible, Stibel says.
“We’re seeing this disconnect between everyone’s incentives, motivations and interactions, and that’s where I think the real bottleneck is. It’s not for want or lack of effort,” Stibel says.
Banks are more likely to lend to a business owner that they know and can trust rather than a total stranger, he says. That’s the reason why Bank of America has placed more small business bankers around the country, so it can get to know small business customers better.
But a business owner has to work on the relationship too. Stibel’s advice: “You should have, if not quarterly meetings with your lending officer, at least two times a year, even if it’s nothing more than going out to lunch and saying how great your business is. You don’t want to have your first meeting when something’s wrong.”
Instead, he says, find out how you contributed to that rejection and start working to improve your company’s credit rating so next time, the answer will be “yes.”
“There is so much you can do, and should do, before you need a loan,” he says.
Dun & Bradstreet Credibility compiles credit reports on small businesses, which banks can buy to help make their lending decisions. In a recent conversation with The Associated Press, Stibel talked about the continuing sluggishness in bank lending to small companies. Lending rose modestly in April, according to the Thomson Reuters/PayNet Small Business Lending Index, after falling the first three months of this year. Stibel agrees that banks can make it difficult for small businesses to get loans. But he argues that owners bear some responsibility when they’re rejected.
Many small business owners go about getting a loan all wrong, he says. They apply to banks that aren’t likely to approve them. When they apply, they haven’t made sure their companies’ finances and credit ratings are solid. And they haven’t taken the time to cultivate a relationship with a banker who will be sympathetic.
Stibel knows that business owners aren’t helping themselves because they call Dun & Bradstreet Credibility after banks reject loan applications and tell them to find out what’s in their business credit reports. The files are similar to the personal credit reports on consumers that are compiled by reporting agencies such as Experian and Equifax. They include information such as a company’s payment record, how much debt it’s carrying and the number of loans it has applied for.
“We talk to over 20,000 businesses a week and a huge percentage of them don’t even know they have a business credit file. They think that all they have is a personal credit file,” Stibel says.
Sometimes owners don’t see their business credit report until they’re sitting with a loan officer in a bank branch, Stibel says. For bankers, that’s a red flag.
“They’ll say to a business owner, ‘I’m trying to believe that I can trust you to pay your bills and that I can entrust money to you and you’ll be a good corporate steward and pay me back – but if you don’t know what your credit profile looks like, then how on earth can I lend you money?’” he says.
Owners can get copies of their files from reporting companies including Dun & Bradstreet Credibility, Experian and Equifax. They also should study their personal credit reports, which bankers consider when making loan decisions.
Another roadblock: Many businesses aren’t savvy about the application process, Stibel says. Owners think they can walk into a bank, fill out an application and presto, get a loan. These days, that’s a good way to get turned down.
“Before they think about any credit, they should do what they do before they start a business,” Stibel says. That includes writing a formal business plan that explains how you will spend the money you want to borrow.
The smartest owners “have banks asking, begging to work with them instead of hustling to try and find the right bank,” he says.
Many owners also don’t realize that not all banks are alike. Banks have different philosophies and strategies about lending. For example, some make more loans secured by assets like real estate, while others lean toward companies with good cash flow.
“How do you know that Joe’s Pizza should be getting a loan from Bank of America, but Jim the chiropractor should be getting one from Wells and Jane’s Dry Cleaner should be getting one from a community bank?” The answer is for business owners to do their homework, and research lenders ahead of time. They should have informational meetings at several banks, and read up about the banks on the Internet.
“Not knowing what their criteria is before you walk in the door is a recipe for disaster,” Stibel says.
That disaster goes beyond a rejection. Many owners who shop for one loan after another don’t realize that every inquiry and rejection goes into their business and personal credit reports.
Credit reports can also be an issue when a company doesn’t need a loan. Some big retailers want to see credit reports for the manufacturers whose products they buy. They believe a company with a good credit rating is more likely to be well run and not cut corners on the goods they sell, Stibel says.
He recalls hearing from a small consumer products manufacturer that had a deal with a big national retail chain. That is, it had the deal until the retailer took a look at the company’s credit report and decided that there wasn’t enough information in it. The retailer didn’t feel secure enough about doing business with the company. The owner immediately called Stibel.
“The first word out of his mouth wasn’t ‘hello,’ it was ‘help!’ Stibel says. “They told him, ‘we don’t care if your product is good or not, we won’t put it in our store.”
Even as the economy has continued its slow recovery, lending to small businesses remains weak. Many companies say they don’t want or need loans because they’re not sure whether their revenue will be strong or weak, and they don’t want to take on more debt after having paid their loan balances down following the recession.
Stibel says the stagnant lending is also due to the fact that banks and small businesses are at cross purposes. The banks say they’re working on making more loans. Bank of America has hired 1,000 bankers to serve small businesses. Wells Fargo is increasing its marketing and outreach to women small business owners to help increase how much it is lending to them. Citi said in March that it had surpassed its 2012 small business-lending goal by $1.6 billion. But banks are also concerned about the risks involved in lending to small businesses, so they add requirements to loans. The companies want loans with as few requirements as possible, Stibel says.
“We’re seeing this disconnect between everyone’s incentives, motivations and interactions, and that’s where I think the real bottleneck is. It’s not for want or lack of effort,” Stibel says.
Banks are more likely to lend to a business owner that they know and can trust rather than a total stranger, he says. That’s the reason why Bank of America has placed more small business bankers around the country, so it can get to know small business customers better.
But a business owner has to work on the relationship too. Stibel’s advice: “You should have, if not quarterly meetings with your lending officer, at least two times a year, even if it’s nothing more than going out to lunch and saying how great your business is. You don’t want to have your first meeting when something’s wrong.”
Source: Associated Press 2013
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