SMB News Round Up: Failed Emergency Small Business Boost and How to Avoid a Tax Time “Train Wreck”

Every so often, I like to compile some of the latest news headlines in the small business sector. As always, there is no shortage of news to cover – since the SMB sector is the backbone of our economic recovery. This news round up post includes a number of stories regarding the America’s Recovery Act (ARC), as well as tips of how to avoid any tax time “train wrecks.”

An Emergency Small Business Boost That Fizzled
A stimulus measure crafted to get emergency funding to Main Street businesses has turned out to be such a flop that even its Congressional advocate wants the program killed. But for the 5,000 business owners who have jumped through all the hoops to land loans, even a flawed lifeline is better than none at all. The "America's Recovery Capital" (ARC) loan program was created as part of February's $787 billion Recovery Act. From the very beginning, the program struggled. Congress ordered the Small Business Administration to release guidelines for the loans within 15 days. Instead, it took four months. Read the full CNN Money article here.

Unsecured Small Business Loans—Will They Help Businesses And Unemployment?
Small businesses obviously need capital to run and maintain a certain standard of operation, and in the past unsecured small business loans have been a source of that capital. Also, small businesses are needed to combat unemployment and make more jobs available for those who are seeking work. The problem seems to be that if a small business is doing well, even in the face of a tough economy, just getting by or making a decent profit isn’t going to be enough for them to grow and expand their workforce. Bringing in enough money to pay expenses, employees, and maybe put a little away isn’t going to go to far in helping a small business create more jobs. That is where unsecured small business loans come into play. Read the full Red, White and Blue Press blog post here.

Small Firms Should 'Increase Their Website Presence’
As someone who has been advising small businesses for more than 25 years, there has never been a better, yet more challenging, time to start or run a small firm. The contradiction in that statement is deliberate. Better, because never has the playing field been so level - and challenging, because of the current economic malaise. Running a small business requires a skill set of extraordinary proportions, and it really is a miracle that so many survive, yet alone prosper. Read the full BBC article here.

Small Businesses Can Avoid a Tax Time Train Wreck
For some small-business owners, income tax filing season feels like a slow-motion train wreck. These are often owners who tend to be disorganized and unable to keep good records. Instead of keeping their companies' books with a small-business accounting program, they use a stack of overstuffed file folders or worse, boxes and shopping bags. They often end up spending hundreds of extra dollars paying their accountants to sort through the whole mess -- provided the accountants will even agree to deal with it. Read the full Salt Lake City Tribune article here.

Small U.S. Business Owners End 2009 Downbeat? Things Seem Better to Me

The National Federation of Independent Business recently issued its small business optimism index, which fell for the second straight month, dropping 0.3 point to 88.0 in December. According to the report, the reason for the dip is that small businesses were hurt by weak sales and worries about government policies.

According to a statement from the federation’s chief economist, William Dunkelberg, "Continued weak sales and threatening domestic policies from Washington have left small business owners with little to be optimistic about in the coming year.”

What is interesting about this news it runs counter to what I am seeing in the marketplace: SMB owners are starting to feel optimistic. 2009 was, without a doubt a tough year for the entire U.S. business sector, but things are looking up.

This week, the Federal Reserve Board issued a report saying that economic activity has been picking up in recent months in New England. The report also stated that things were getting better in Texas. And, retailers reported that holiday sales were up from last year.

These are all signs that things are getting better. My gut is telling me that that National Federation of Independent Business report results were influenced by a general fear that many SMB owners had in Q4 2009. Don’t worry the fear will subside and better times are ahead (saying this cautiously, of course!).

2010: A New Decade and New Threats for Small Businesses

Although 2010 is poised to be a turnaround year for small businesses, and things may start to seem a bit rosier, business owners must anticipate emerging threats and always be on guard. The tides can turn at any moment. A new competitive force could emerge and knock you on your feet. New legislation and tax codes could prove harmful. Or, as is the fate with many small businesses, Google could decide to take over your industry sector – then you are in real trouble.

Below are the emerging threats as I see them for small businesses in 2010 and beyond.

The Uncertainty of the Tax Code – Nobody really knows what will happen with taxes in 2010 and beyond. With our biggest deficit ever and anticipated additional spending over the next few years, it is almost certain taxes will increase. In fact, the major provisions of the Bush tax cuts are scheduled to “sunset” as of the end of this year. As a result, this will give less incentive for an entrepreneur to grow a business, and give private equity less incentive to invest in speculative but higher rates of return.

Competition from the individual 1099 contractors -- Although 1099 contractors are somewhat entrepreneurial in nature, professional services firm will face major competition from individual contractors (in the US and overseas) in addition to other competing firms. Tom Freedman’s book “The World is Flat”, explains this challenge and the challenge is a threat now more than ever -- with so many out of work professionals.

Access to Capital -- Although the Obama stimulus has earmarked hundreds of millions of dollars for SBA loans, companies still are finding access to this money harder than expected. In addition, the Venture Capital funds and tolerance for risk simply does not exist going into 2010. Entrepreneurial companies must become profitable from the start and not count on debt or equity for help.

Surely this is just the tip of the iceberg in terms of threats. As always, I welcome all comments, feedback and insights.