Posted at 08:00 AM ET, 03/31/2009

Time To Go Fly A Kite

I went to the annual kite festival on the Smithsonian mall with my family over the weekend. We watched master kite flyers dip and soar their sleek, colorful contraptions into the cloudy sky. Although many festival-goers brought their own snazzy kites, we showed up empty-handed -- having stopped by the festival at the last minute after an early-morning, soggy tour of the cherry blossoms around the tidal basin.

My kids were apoplectic that they should be denied the right to launch something into the air so we stopped by the arts-and-crafts booths to see what we could invent. With help from a kite enthusiast, we managed to fold a piece of paper this way and that. With some paper streamers taped to it along with something resembling a pair of chopsticks for support, we got that simple kite flying. In fact, it soared high into the sky and far surpassed anything we thought possible.

It reminded me of many of the stories you've shared with me over the last two years. Plain and simple ideas that take flight with perseverance -- even in a crowded field.

I've been honored to share your stories and pass on your lessons learned. If you've read my blog for a while, you've probably caught on that I've always been something of a policy geek. I took full use of my vantage point in the nation's capital to bring you politics and policy issues pertinent to small firms and their community.

It's with great sadness that I report that today is the final post for washingtonpost.com's Small Business Blog.

if you're interested, I'd be happy to keep you apprised of what I do next. I'll let you know via my Web site, www.sharonmcloone.com, or you can always find me on LinkedIn. I've also started a new Twitter account: @smallbizwatch.

You'll still be able to find excellent reporting, resources and access to my archives at www.washingtonpost.com/smallbusiness.

Thanks for your readership and support.

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Posted at 10:45 AM ET, 03/27/2009

Web Media Startup Raises Small Business Spirits

Meet the new Sir-Mix-a-Lot.

He mixes sound and video, along with a good cocktail and sips it back in the form of a small business.

Colin Kimball, 31, is co-founder of the one-and-a-half employee Web-media company Small Screen Network and a good example of today's new media entrepreneur.


Cocktail lover and videographer Colin Kimball gets ready to shoot a Web show. (Courtesy of Kimball)

He went to film school in Seattle, worked on independent films and for major networks. He cut his teeth as a production assistant on the first season of television phenomenon American Idol.

Kimball, who has always had the entrepreneurial itch, started a company called Storypipe after graduating. It had a concept similar to Small Screen, but Kimball said it "imploded because five people -- really, really creative people -- were trying to run a business."

He then started Small Screen in September 2006 with the idea to make a television-style network on the Web. Kimball is a self-described "foodie" and decided to start with a Food Network-like show focusing on quality cocktails. He was inspired when he read an article in a Seattle newspaper about mixologist Robert Hess , author of The Essential Bartender's Guide. Kimball contacted him and brought him on to shoot a pilot episode. "I knew he was the guy for us when he gave me a lecture for 15 minutes just on gin," recalls Kimball.

Kimball said he wants his Small Screen Network "to become a major player in the entertainment industry via the Web, but right now [they're] focused on a cocktail/wine/beer vertical market."

"I'd love to get into other areas like tech, auto, sports or do a more food-based show with a local chef. This is very much the infant stage of what we'd like to ultimately do," he said.

But not even a bright idea and a strong work ethic will always bring in the revenue.

To remedy that, Kimball tapped Brian Dressler, a high school friend to put together a Web design. Dressler now at Small Screen part-time as a business partner and is an initial investor.

Dressler is "much more of a numbers and business-oriented guy," said Kimball, who works from Bainbridge Island -- just west of Seattle and call himself "crazy creative."

Today, the company is self-funded, profitable and makes money through sponsorships and advertising. A connoisseur's alcohol brand like Hendrick's Gin or Maker's Mark Whisky pays Small Screen a sponsorship or product placement fee. "We look for brands we like, and we know that our audience will like," said Kimball, who sees his audience as people who treat a cocktail as culinary pursuit and not a slapdash, slug-it-back kind of experience.

Persistence can be the key to success. It took about two years for Hendrick's to agree to sponsor Small Screen shows. Kimball, in addition to shooting, editing and encoding the video, calls up the big firms to try and drum up partnerships. He says the major brands have been "really receptive" to new and different ways of advertising, although they can take a while to reach a decision. "I try to read as much about marketing and advertising as I can and what I'm seeing is that people are cutting back on their marketing budget but still trying to find cost effective ways to get their brands out -- and one way is through online video, especially one with a niche audience that can be measured."

Kimball is also reaching out hi into other small businesses so they can piggyback off each other. For exmaple, he uses a technology offered by VideoClix, a small firm in Vancouver, British Columbia. He said the technology, which allows users to click on objects and learn more about them while viewing them in a video, has been key to enticing advertisers to get on board to Small Screen's programs.

"The development of the Internet as a free distribution portal.made it really easy for people like us to start a business," said Kimball, who noted that he's certainly not the only entrepreneur out there pursuing Web media empires. "We don't have to pay a huge fee to be a broadcast network or get on cable.All these technologies of Internet, video and low/cost production by working on my laptop makes it so we don't need thousands of dollars to get started. There's opportunity for people like us now."

He's entertaining the idea of getting some outside money to use for marketing or for additional talent to put before the camera and has big plans for growth, but for now "we're the anti YouTube - we want quality over quantity and we're happy where we are."

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Posted at 07:30 AM ET, 03/26/2009

Legislation Seeks to Revamp Manufacturing Program

The Senate Task Force on Manufacturing on Wednesday introduced legislation designed to aid a special, public-private network of centers that assist small and medium-sized manufacturers.

The Manufacturing Extension Partnership helps manufacturers expand operations, become more efficient, increase sales and create jobs. The centers currently must provide two-thirds of their funding after four years of operation by raising money from state governments, the private sector and colleges and universities.

The Commerce Department's National Institute of Standards and Technology oversees the program and provides one-third of its funding. This legislation would reduce the centers' cost share to 50 percent of funding for all years of operation.

The task force includes Sens. Herb Kohl (D-Wis.), Joe Lieberman (I-Conn.), Debbie Stabenow (D-Mich.) and Olympia Snowe (R-Maine), who is the top Republican on the Senate Small Business and Entrepreneurship Committee.

Snowe said the bill will give the centers "much-needed relief so that they may focus on providing counseling and training services to the small and medium manufacturers that are struggling to grow."

The White House in recent years had sought to eliminate the program through lack of funding in its budget proposal, but lawmakers shot that down and continued to fund it.

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Posted at 01:20 PM ET, 03/25/2009

Federal Contracting Program Continues to Suffer from Fraud, Abuse

A Small Business Administration program that provides federal contracting assistance to small firms located in economically disadvantaged areas continues to be rife with fraud and abuse.

A new report from the Government Accountability Office shows that the HUBZone program has problems spread throughout the nation, and not just in the Washington, D.C., area as outlined in a similar report released in July 2008.

After that 2008 report was issued, lawmakers asked the GAO to determine whether fraud existed in the program outside of the nation's capital and if the SBA had taken actions to stem the fraud.

For the study released today, the GAO identified 19 firms in Texas, Alabama, and California participating in the HUBZone program that do not meet program requirements. For example, an Alabama firm listed its principal office as "Suite 19," but GAO investigators found after visiting the site that the office was "Trailer 19" in a residential trailer park. The individual living in the trailer had no relationship to the HUBZone firm. In fiscal 2006 and 2007, federal agencies obligated nearly $30 million to these 19 firms for performance as the prime contractor on HUBZone contracts and a total of $187 million on all federal contracts.

The GAO said the SBA has initiated steps in strengthening its internal controls as a result of GAO's 2008 testimonies and report but "substantial work remains."

Additionally, it found that the SBA was not able to effectively assess that it didn't have the resources to effectively carry out its review of applications in a timely manner. As a result, according to today's study, the agency had a backlog of about 800 HUBZone applications as of January 2009. At that time, SBA's interim application process was taking about 6 months, which far exceeds the one-month goal as specified by SBA regulations.

The GAO said the SBA has taken some enforcement steps on the 10 firms previously identified by GAO that knowingly did not meet HUBZone program requirements. However, SBA's "failure to promptly remove firms from the HUBZone program and examine some of the most egregious cases" from GAO's July 2008 testimony resulted in an additional $7.2 million in HUBZone obligations and about $25 million in HUBZone contracts to these firms.

The GAO report is expected to be discussed at a House Small Business Committee hearing this afternoon. SBA Acting Administrator Darryl Hairston is scheduled to testify.

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Posted at 10:01 AM ET, 03/25/2009

Tools, Tips and Studies: Health Care Heats Up, Snail Mail Slows Down

The small business community continues its push on health care reform. The National Small Business Association has launched Health Reform Today along with new data on the small business community and its difficult relationship with affording decent health insurance. Group President Todd McCracken said the number of small business owners who are able to provide health insurance to employees dropped from 67 percent in 1995 to 38 percent in 2008. In other health news, the House Small Business Committee held a hearing last week on health care issues. Chairwoman Nydia Velazquez (D-N.Y.) said: "The needs of small firms and small medical practices are different from those of big companies, and it is critical that we not push forward with one-size-fits-all reform."

Other lawmakers last week introduced a bill (H.R. 1470) that would eliminate language in the tax code requiring millions of self-employed individuals to pay additional taxes on the cost of their health insurance. Corporations currently can deduct the cost of health insurance premiums as a business expense. The self-employed cannot, resulting in an additional 15.3 percent tax on their health insurance premiums. During a conference call promoting the legislation, one expert said that 60 percent of the uninsured in the United States come from families in which the head of household is either a sole proprietor or runs a small business.

The National Federation of Independent Business recently released research testing various legislation approaches for healthcare reform and measured how each approach would affect different constituencies. Researchers Stephen Rassenti and Carl Johnston built an insurance market in a laboratory and measured the outcomes on small businesses, large businesses and employees. The findings suggested that there is no panacea for health reform and that a "one-size-fits-all" solution will not work for both small and large businesses. Examples the group tested include mandating employers to provide coverage or mandating individuals to purchase coverage. The study is available from NFIB .

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Sen. Olympia Snowe of Maine, the ranking Republican on the Senate Small Business and Entrepreneurship, sent a letter to Postmaster General John Potter urging him to consider the impact on small businesses of his proposal to reduce the postal service's delivery week from six days to five. "America's small businesses depend on reliable and consistent service from the USPS, and they could suffer significant setbacks by a shortened mail delivery week, such as lost sales, order backlogs, and job cuts," said Snowe.

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The Small Business Administration's Business Gateway Program has launched a new online community specifically geared to small businesses. It's an extension of Business.gov, aiming to provide small business owners, bloggers and the government with a forum to discuss and share information about starting and operating a successful small firm.

A new report from the National Women's Business Council outlines current policy priorities of women business owners. "Current Priorities and Challenges of Women Business Owners" features policy recommendations of women business owners who participated in the council's six town hall meetings in 2007 and 2008. The report highlights the importance of government-funded resources and technical assistance programs for small and women-owned businesses as more Americans turn to entrepreneurship and business ownership in a difficult job market.

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Intuit recently reissued a survey it first conducted in August 2008 and found that small business concerns have changed. The company queried 250 accountants and 250 small firms based in the United States about challenges they face in growing their businesses. This time around, the number one thing that keeps business owners up at night is paying their bills. Previously they were most concerned about "finding time to develop and run a business."

Separately, Intuit also announced that it has extended its Small Business United grant competition until Apr. 24. The company is offering $30,000 in business grants.

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Posted at 07:00 AM ET, 03/19/2009

Poll: Government Could Do More to Spur Entrepreneurship

The government should be doing more to encourage individuals to start businesses, according to a new poll (pdf) released by the Ewing Marion Kauffman Foundation.

Pollster Douglas Schoen conducted the survey, asking a random sample of 2,000 Americans whether they prefer the government giving individuals the incentives they need to start their own businesses or if the government should create new jobs directly or through big corporations. Sixty-three percent said help out the individuals, while 22 percent favor the government creating new jobs in the public and private sector.

Three hundred of the respondents identified themselves as entrepreneurs and 200 said they were aspiring entrepreneurs.

The Kauffman Foundation said the study pointed to a "key and unrecognized reason as to why the public has not been satisfied with the overall stimulus package."

"These two statistics -- which produced similar results -- underscore the public's deep and abiding belief that the government should facilitate entrepreneurial activity by creating the conditions and policies that make it easier for individuals to take a risk, as opposed to the government itself creating jobs," said foundation President and CEO Carl Schramm. "Monday's announcement to loosen credit for entrepreneurs and small business owners is a step in the right direction, but more can be done to encourage current and future job creators."

Seventy-nine percent of the respondents said entrepreneurs are "critically important" to job creation, ranking higher than big business, scientists and government. Additionally, only 33 percent of entrepreneurs support the recent economic stimulus package, according to the poll.

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Posted at 01:40 PM ET, 03/18/2009

Lawmakers Extend Tech R&D Program

Congress last night extended the life of a popular small business program that was set to expire at the end of this week.

The Senate passed a bill that gives a new lease on life to the Small Business Innovation Research program, which is administered by the Small Business Administration to ensure that small, high-tech firms receive federal government research and development dollars.

Eleven federal agencies participate in the SBIR program, which has generated more than 84,000 patents and millions of jobs, by allocating 2.5 percent of their extramural research and development budgets to it. The National Science Foundation administers the SBIR.gov Web site.

Several lawmakers have been pushing for the program to receive a long-term reauthorization. Sen. Olympia Snowe (R-Maine), the top Republican on the Senate Small Business and Entrepreneurship Committee, said: "It is disappointing that last Congress we were unable to pass a long-term reauthorization bill for vital SBA programs...I look forward to working with [committee] Chair [Mary] Landrieu to fashion bipartisan legislation to make this goal a reality this Congress."

In other Capitol Hill news, the SBA's Office of Advocacy sent a letter of support to Reps. John McHugh (R-N.Y.) and Kurt Schrader (D-Ore.) for a bill they introduced (H.R. 1509) that would create a standardized home-office tax deduction.

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Posted at 11:25 AM ET, 03/18/2009

How Do I... Make It to a Sesquicentennial?

With most small businesses closing shop within five years, how do some make it to 150?

The Potter Violin Company officially started in 1996 when Dalton Potter, the senior repair technician at the Violin House of Weaver, took over the retail and service operations that Herman Weaver founded in 1898 and was maintained by four generations of Weavers.

When Herman's grandson Bill was running the shop, he recognized that the student violin market was key to the professional market, according to Potter. "Professional violin shops used to be hoity-toity places, and you just didn't think about bringing kids there," he said. "But Bill took a different approach -- he recognized that violinists of the future will start out as kids today."

That insight dovetailed with the blossoming in the United States of the Suzuki musical education program designed for children. The program spurred a demand for high-quality student-size instruments rather than the big clunkers that initially were offered to young students. Bill Weaver began importing partly-finished German factory instruments and finishing them himself so that they sounded like totally handmade instruments.

Potter recalls that Weaver turned to him and said, "I'll make 'em and you sell 'em."

Today, Potter Violin employees 18 full-time staff and three part-timers with two locations 50 feet apart in downtown Bethesda, Md. It offers violins, violas, cellos and basses. About 60 percent of its business is for fractional-size instruments for students who are younger than 10. It also rents about 3,000 instruments across the country every year and sells a couple thousand at retail annually.

The company also has embraced technology -- using a Facebook page and Skype to connect with customers and show them products when they can't visit the store.

And while the company will customize an instrument for you -- such as a purple violin with a dog's head carved in it -- most people identify with and want a traditional-looking violin, said Potter.

"We pretty much do things the same way they did 300 years ago," he said. "When it comes to a violin shop the best way to stay current is to stay with the old way of doing things."

What it all comes down to, according to Potter, "is being honest with yourself about what you're good at, what you have that has the potential to become profitable."

But entrepreneurship means learning on the job: "I stubbed my toes and got bloody noses on more than one occasion and made decisions that I had to recover from, but the biggest failure is someone who's never failed," he said.

For example, Potter learned that making the guy who is a good instrument maker -- but not very social -- to run the counter doesn't work. "Trying to fit people into the wrong niche just because that's what you need right then usually isn't a very good idea."

He's also found that a small firm must recognize its real customer base. "If you're a shoe store, auto dealership or somebody that sells pottery -- know your clientele. Make sure you're making decisions about inventory and that you're helping the people you need to help," said Potter, who noted that a big part of his business are private studio teachers who teach lessons from home.

He also realizes that he's not the only violin shop out there. "Really focus in on what it is that you're doing that makes you different than other people," he said. "There are a lot of people who sell violins, or sell them online or there are big warehouse companies that shovel stuff out the door like sneakers in a box -- what is it that makes you different?"

For Potter, "it's recognizing we sell a feeling, an emotional experience that comes from the parent and student who have gotten what they need at a fair price and are well enough informed that they have confidence in their decision... What we're servicing is the aspirations of the student, the dreams of these adolescent kids to achieve their goals... The violins are essentially just a vehicle to achieve that goal."

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Posted at 12:05 PM ET, 03/16/2009

White House Offers Details of Plan to Foster Small Business Growth

Treasury Secretary Tim Geithner today announced details to some of the promises made in the government's Financial Stability Plan outlined last month, including ways to spur banks to lend, eliminating loan fees and creating new bank-lending reporting requirements.

The Obama administration believes that the nation's "economic recovery will be driven in large part by America's small businesses" and notes that small firms have generated about 70 percent of net new jobs annually over the past decade, according to a statement from the White House. However, entrepreneurial growth has been stunted as credit has dried up; the Small Business Administration typically guarantees about $20 billion in loans annually but new lending is leaning toward less than $10 billion this year.

Treasury announced today that it has appointed an investment manager who will be able to purchase securities backed by portions of SBA's popular 7(a) loan program. This action, as explained by the department, will help unclog the backlog of securities that has piled up since the beginning of the credit crisis last year by providing banks with a source of liquidity so that they are inspired to lend again.

Also, beginning today, the government has eliminated borrower and lender fees for two popular loan programs, the 504 and the 7(a). These fees -- which go up to 3.75 percent for larger loans -- increase the cost of borrowing for small businesses and make it more difficult for them to access the credit they need to expand or make new investments. The SBA also will offer a refund for borrowers or lenders charged with any of these fees beginning Feb. 17.

Treasury also will require for the first time that the 21 largest banks receiving Financial Stability Plan assistance to report their small business lending monthly. The department is also calling for every bank nationwide to report their total lending to small firms in their quarterly reports rather than just once a year. Geithner also called on all banks to make the effort to extend small business loans to creditworthy borrowers.

Small Business Committee Chairwoman Nydia Velazquez (D-N.Y.) cheered the move, saying: "Taken together, these small business lending provisions will unlock $21 billion in new lending for small firms, creating or saving 600,000 jobs."

However, at least one small business group was displeased. Lobbying group the Small Business and Entrepreneurship Council said the plan "does not fully help what is hurting small businesses." The council's chief economist, Raymond Keating, said: "Rather than fiddling with various government programs, the Obama administration would accomplish much more in terms of boosting confidence and getting the economy moving by, at the very least, moving away from imposing higher personal income, capital gains, dividend and estate taxes on investors and business owners, not to mention increased energy costs through a cap-and-trade regulatory scheme."

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Posted at 11:00 AM ET, 03/13/2009

Spending Bill Halts Women's Contracting Plan

The spending bill signed into law this week by President Obama stops a controversial regulation that critics said would have limited opportunities for women to compete in the federal marketplace.

"President Obama has made clear that women's opportunities to compete for their fair share of federal contracts will be a priority from now on," said Rep. Nydia Velázquez, chairwoman of the House Small Business Committee and a Democrat from New York.

Law mandates that government agencies must award at least 5 percent of federal contracts to women-owned businesses, however that goal has never been met. The proposed rule -- which was reversed this week -- said women were under represented in contracting agreements in just four out of 140 recognized industries. That proposal was met with staunch criticism because it meant that only women-owned businesses in those four arenas would be eligible for contracting assistance.

Lobbying group Women Impacting Public Policy, which had strongly opposed the proposed rule, applauded the decision.

"From the beginning WIPP members have worked tirelessly to stop this ill-conceived rule and advocated for its withdrawn," said group President Barbara Kasoff. "We look forward to working with the new SBA leadership and Congress on a meaningful women's procurement program which reflects Congress' original intent."

Velazquez and the leaders of the Senate Small Business and Entrepreneurship Committee had publicly voiced their disapproval of the proposed rule.

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Posted at 02:45 PM ET, 03/11/2009

Big Spending Bill Includes Small Business

The big spending bill headed to President Obama's desk for final approval has several measures in it aiming to aid the small business community.

The measure overall would provide fiscal 2009 funding for nine federal departments, covering all government activities other than defense and homeland security-related agencies, whose funding was approved last fall. Many agencies would see big increases, in some cases 10 percent or more above fiscal 2008 levels.

According to the Senate Small Business and Entrepreneurship Committee, the bill bumps up funding for the Small Business Administration to $547 million -- that's $63 million more than President Bush's original request for the agency and $47 million more from the amount appropriated last year.

The appropriations measure also gives:

* The SBA the authority to back $17.5 billion for its most widely-used 7(a) program and $7.5 billion for the 504 program, which aids in long-term financing for fixed assets like land and buildings. The SBA doesn't give out money itself, but works with bank partners to offer loans. The measure also authorizes the SBA to back $3 billion for the Small Business Investment Company Program.

* $2.5 million to leverage the microloan program that gives very small loans to startups and the technical assistance for the microloan initiative, and $2 million to leverage $1 billion in surety bonds to aid small contractors.

* $1.2 million for veterans' programs, including funding to add three veterans' business outreach centers .

* $110 million for Small Business Development Centers, which tags $1 million of that money for veterans' assistance programs and $1 million for energy efficiency programs.

* $13.75 million for Women Business Centers and $775,000 for the National Women's Business Council.

* $5 million for the Program for the Investment in Microentrepreneurs (PRIME), which provides training and business assistance to low-income entrepreneurs with very small businesses.

* $2.38 million for the 7(j) technical assistance program, which provides small disadvantaged businesses with training in financing, business development, management, accounting and marketing.

* $5 million for the SCORE Program, which provides one-on-one counseling to small business owners through the use of experienced volunteers.

* $1.03 million for Native American Outreach.

* $2.5 million for the controversial Historically Underutilized Business Zones program (HUBZones), which creates incentives for contracting with small firms to create jobs in underserved communities.

Meanwhile, while fiscal 2009 funding is getting wrapped up, the House Small Business Committee today submitted its recommendations for the SBA's fiscal 2010 budget. The panel wishes to double previous budgets by proposing $1.43 billion in funding for agency programs. The committee said its suggestions would restore SBA funding levels similar to those under the last year of the Clinton administration.

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