MEDweek 2010 Recap - The Good, The Bad and The Ugly

I think I will start with the grim reality (The bad) of minority owned business. From the official MBDA (minority business development agency) disparities in capital access report, "The probability of self-employment is substantially higher among the children of the self-employed". Studies generally find that and individual who had a self-employed parent is roughly 2 to 3 times as likely to be self-employed as someone who did not have a self-employed parent. In a study by Michael Hout and Harvey S. Rosen, they note a "triple disadvantage" faced by African-American men in terms of business ownership. They are less likely than white men to have a self-employed fathers, to become self-employed if their fathers were not self-employed, and to follow their father in self-employment. Across all ethnic groups business ownership is 10.1% but in the African American community business ownership is just 5.5%. Of course, we all know access to capital creates job and minorities are redlined in being denied access (which creates jobs) by the financial markets.

The MEDWeek conference showed initiatives (The good) the federal government,through the small business administration, has implemented to addressed these concerns. The SBA is guaranteeing loans up to 90% to mitigate the banks risks in making loans to small business. The SBA has also dropped or substantially reduced the loan application fee . The IRS has creating tax incentives (health care credits) to help employers create jobs and provide benefits which in turn allow employees to stay longer. The SBA has initiatives from the white house to to help small businesses. Quote from http://www.sba.gov/jobsandcapital/ "

Administration Announces New Small Business Commercial Real Estate and Working Capital Programs

President Obama announced on February 5, 2010 two new small business lending initiatives to help increase access to capital and create jobs. These temporary Small Business Administration initiatives include a refinancing program for small business owner-occupied commercial real estate and an expanded working capital loan program. At the same time, the president continued his call for a permanent increase of the maximum loan sizes for SBA’s 7(a), 504 and microloan programs and to extend the successful small business Recovery Act lending programs. These initiatives are part of the Administration's broader agenda to improve access to credit for small businesses, including a proposal to transfer, through legislation, $30 billion to a new Small Business Lending Fund that will support lending by community and smaller banks." Small businesses especially minorities are have the upper hand when it comes to importing/exporting goods and services. As we all know people do business with people of a similar ethnic group. The world is brown and 95% of all consumers are OUTSIDE of the United States.

The truth of the matter is that small business is stuck in a rut (The Ugly). Small businesses create 2 out of every 3 new jobs. But inadequate financing and red tape bureaucracy limit job creation. The cycle of business is too dependent on the financial markets. Businesses are required to make the product, pay the employees and wait and average of 60 -90 days from job completion to getting paid from the commercial or government job. To hire employees, businesses must have a solid plan, good credit in order to build a working capital account and float salaries. This is a post on the www.business.gov website that is specific to Philadelphia " I have learned about many business programs that designed to help women and minorities. I hate to say that all of them are dysfunctional. I have wasted my time trying to get any help from those programs.They all nothing but running around service, and they all limited to phone calls and bureaucracy. I suggest to have all these business programs under one umbrella. Through my experience, I learned that those business programs have negative impacts on those who are seeking to start their own business. These programs are: Mayor Action Business Team,Business Development Center,Philadelphia Commission Development Center, SCORE, Profile Re-Employment Program, Fox Business School, Temple University,Women Business, Minority Business.PANO, women WAY etc.. I have tried all of them,until I got exhausted and lost interest."

In this economy, we have to change the financial model of business. We are too dependent on the broken banking system. Commercial contracts need to work with their suppliers and pay deposits on the goods and services they buy. Businesses must give each other lines of credit and work in partnership to complete jobs. We have to shorten the time it takes to get paid from a completed job from 60-90 days to a number under 30 days in the commercial and government sector and the banking system must start providing lines of credit (AGAIN) for commercial accounts.

I was personally impressed that MED Week did not sugar coat these issues. This year they attempted to bring businesses together in the form on a B2B Expo. I found the Expo to be a great idea in theory but the businesses that were there said go to our website and sign up in our database as a diversity supplier. (WASTE OF TIME). Somehow the MBDA must act as an intermediary to build 3rd party creditability (edification). Though the company is IBM, there is still a biased person making a decision to work with that company. The supplier diversity reps did not have a white paper of the type of businesses they were looking for. The responses I heard was they were looking for businesses with capacity and a strong financial foundation (see the good and the ugly with the reason MBE firms do not have this) and that is where the vicious cycle begins. But I am optimistic that a change is coming. Why? Because we have NO choice. Now is a great time to start or be in business because your business in INNOVATION ( read - http://www.examiner.com/business-technology-in-philadelphia/innovation-as-the-new-economy-for-2010)! The president has even dedicated 3% of the US economy's GDP (gross domestic product) to fund research and development. The world is open to your new ideas and technology has dramatically lowered the overhead to get your business off the ground. Capacity (i.e scalability) is key and while the financial door is closed, capacity can be built through leveraging partnerships that provide resources with your business idea. In a very short time, we are now realizing that discrimination has SUNK ALL SHIPS and MBE firms and non-MBE firms must find a way to work together. What a great concept for business (and for schools, for education, for religion, for life)!

Financial Plan for your business

One of my biggest mistakes was creating a business with a financial plan that consisted of using my own money as working capital. 90% of all businesses fail because of issues with cash flow (not enough revenue coming in or too many expenses). My goal in creating the business was to love my work and be able to do it for the rest of my life. This year I will learn from my mistake by implementing something different! The greatest advantage of being a business owner is the ability to save money utilizing the tax code for business. This country was built and designed for business and the current tax code heavily favors business ownership which used to have a high cost of entry (rent, staff, overhead expenses). Now because of the network marketing industry, anyone and everyone can have access to the tax advantages of business ownership.

Lately, I have been consulting with clients who are expecting a refund from their 2009 tax return. The best advice from Christopher Chaplin, a fellow ULEC Financial Consultant and Michael Bing, Director of The Enterprise Center Capital Corporation is to save the refund (in the form of a savings account or money market account) to use as collateral for the SBA guaranteed Micro loan Program . The loan program has a maximum loan size of 35,000 which President Obama has proposed to increase the limit to 50,000. A lot of business owners do not apply for the program because of the reporting requirements. As you may already know, I am a multi-tasker (mom of three , business owner, network marketer, mentor, mentee) and I view this is an opportunity to complete the W/MBE certification requirements at the same time. Since most of the paperwork for the loan and certification is the same, we can create a financial goody bag!

The financial goody bag should have an executive summary of your business, a company profile (with testimonials and past clients), 3 years of tax returns (call 1-800-TAX-FORM to get past reported information from the IRS), a business privilege license, a certificate of organization from the state, a signature card from the business bank account and the articles of incorporation. Once this information is in the bag (pun intended!) your business is set to complete both the loan application and the state certification for Minority or Women Owned Business. My intention for the micro loan program is to create a working capital account for my business. Expenses that are incurred (like rent, salaries, cell phone, electric, etc) without regard to actually selling a product will be paid from this account. Then the revenue generated from the sales of goods and services will be used to service the debt and create a buffer fund for research and collateral for the next loan. This will remove my company from the feast or famine trap of small business to create the financial stability needed for long term success!

Happy Financial Planning!

Nicole's Commentary 2 January 2009

As I reflect on this year, I realized that college prepared me to be an employee. The last 2 and ½ years books from Barnes and Noble, Borders and Amazon.com prepared me to be an entrepreneur. I know there is a million dollar business somewhere in my soul and the knowledge that I feed my mind (like the food that I feed my body) is the key to bringing it out. This is how I plan on educating the next generation of entrepreneurs and growing my business.

Our children will go to college and study in the Business School for People who Like Helping People (Robert Kiyosaki). At college, they will learn how to become Campus CEO's (Dr. Randall Pinkett). To become campus CEOs, they must Think and Grow Rich (Napoleon Hill) and get straight A's in Relationships 101 (John C. Maxwell). They also need to learn How To Win Friends and Influence People (Dale Carnegie) so they can reverse The E-Myth Revisited trend that 50% of all businesses fail within the first 5 years. The Secret (Rhonda Bryne) is out - wealth is attracted, and I have been blessed to understand the The Slight Edge (Jeff Olson) principles of changing my philosophy into self-disciplines that create habits. These habits I used to attain an MBA, build my health and to build Newman Networks.

Philadelphia in 2009 is on the verge of The Tipping Point (Malcolm Galdwell) to connect the city of neighborhoods into a united community. At the same time, Newman Networks has completed the first half (employee and self-employed) of The Cash Flow Quadrant (Robert Kiyosaki). Through network marketing, I am learning how to become a leader with the 21 Irrefutable Laws of Leadership (John C. Maxwell). Now it is time to move to the business owner quadrant and use The Blue Ocean Strategy (W. Chan Kim) of cohesiveness and business coalitions to embark on my true calling which was found in A Purpose Driven Life (Rick Warren). This will allow me to live as a Go Giver (John David Mann & Bob Burg) and then DiversePhilly will be seen as a network of Endless Referrals (Bob Burg). I have The Audacity of Hope (Barack Obama) that I can help my mentor and friend, Sulaiman Rahman, realize his vision of making Philadelphia a better place to live, work and play.