Clark wants to reiterate his warning about the dangers of criminals targeting the accounts of small and medium-sized businesses.
These types of businesses aren't large enough to have an IT department, but their high level of cash flow makes them appealing to cyber-thieves -- many of them based in Eastern Europe.
Small businesses need to take special care because of how they're treated under the Uniform Commercial Code.
The UCC dictates that small businesses may be held partly or totally responsible if their lines of credit or accounts are compromised.
Isn't it odd that the very businesses that are the backbone of our economy are left unprotected?
The consumer champ has two key takeaways to help small business owners and entrepreneurs protect their accounts:
• Go to your bank and have them put a block on wire transfers from your business account(s). Citibank has already set up a procedure where its customers can block wires to foreign banks, according to Forbes. But Bank of America will not permit a business to block this. So you may want to consider moving your business accounts away from Bank of America.
• Have a dedicated computer that you use solely for the purpose of accessing your financial accounts. No surfing the web on your dedicated computer. No e-mailing. No visiting Facebook, MySpace or Twitter. This is the cheapest insurance Clark can suggest.
Forbes also has some additional recommendations to help avoid online scams that can lead to your account being compromised:
• Look for the logo of your bank being in odd place on the webpage. This is a tell-tale sign.
At 54, Clark has been through a lot of history. Growing up in the South, he has faint recollections of the struggles of the Civil Rights Era. He remembers the Cold War and later the Berlin Wall coming down.
And of course he's been through multiple recessions, including the current one. Now that we're in the Great Recession, people are having trouble seeing the future being as positive as the past. And with great drama, the press is writing articles proclaiming that America's day is setting.
Yet we Americans have an ingenuity that allows us to reinvent ourselves.
People only look at what we have lost, but not at what may be created in the future. Here's a simple example of what the consumer champ means: Apple profits for the most recent quarter jumped 47 percent on the strength of Mac and iPhone sales -- even at their premium prices.
Steve Jobs & Co. continually make products that are easy to use and have a lot of sizzle. And they did it with candlepower, using modern American ingenuity to make technology so approachable.
Therefore, t's important to understand that, yes, we have had mess-ups with crony capitalism and financial sector woes that led to widespread unemployment, but we're not done. We still have bright people and a marketplace that lets people succeed.
Apple is just one example of a company that came out of the doldrums. When Jobs came back, he helped Apple recreate excitement, innovation and uniqueness in the tech world.
So don't buy into the idea that we're done as a country.
What idea do you have to do something better, cheaper or in a more innovative way?
A "kitchen cabinet" is indispensable for anyone who owns their own business or wants to start one. This is an informal group of advisers who help guide you and develop new strategies to improve your business.
SCORE.org -- the Service Corps of Retired Executives -- has historically offered free advice to entrepreneurs thanks to the volunteer efforts of corporate America retirees.
The Wall Street Journal now reports a group called Athena International is helping women small business owners with free mentoring. This particular group operates in about 30 cities through local chambers of commerce.
Finally, small business development centers that are affiliated with universities in your community may also be of help.
There's so much emphasis on assisting the entrepreneur who is just starting out. But often you need the most help about 12-18 months into your business. That's most important time to draw on the experience of your informal kitchen cabinet.
It's been a really tough road for entrepreneurs and small businesses over the last year or two. The availability of money for operation dried up with lenders like Advanta and CIT shutting down or struggling to survive themselves.
If you're a larger company in need of funding, you can simply go out and issue corporate bonds. Problem solved. But what do you do if you're a smaller business?
There's a new federal initiative through the Small Business Administration that may ride to the rescue. The U.S. Senate Committee on Small Business & Entrepreneurship reports the following expansions are being considered:
• An increase in the maximum 7(a) loan to $5 million (up from a maximum of $2 million) • An increase in the maximum 504 loan to $5.5 million (up from a maximum of $1.5 million) • An increase in the maximum micro-loan to $50,000 (up from a maximum of $35,000)
Small business and entrepreneurs play a key role in creating economic growth. That's why this issue is so critically important.
Meanwhile, the public loves an underdog. A Vermont micro-brewer who marketed a beer called Vermonster received cease-and-desist letters from Monster Energy Drinks. After much public outcry, Monster backed down and allowed the micro-brewer to continue making and selling Vermonster. Score one for small business!
CLARKONOMICS: The brainiacs are saying the recession is over, citing a rise in corporate confidence and a spike in orders being placed. But it's not yet the real healing that individuals and families so desperately need on the job front.
For the foreseeable future, the job market will continue to be tough. That leaves many people in unexpected positions. Clark recently talked with a woman who was unemployed for some time. After a few minutes, it emerged that she had not applied for unemployment compensation because she was too proud.
Unemployment compensation should not be a dirty word in your vocabulary; insurers pay this insurance during good times so people can survive during lean times.
Three factors make this an extremely tough cycle. First, individuals went into the recession with big debt. Second, banks took on too much speculative debt and harmed our nation to its core. Third, the federal government has taken on massive borrowing as a result of the first two factors. Yet the government's artificial props for the economy will eventually have to be dealt with. We can't keep printing money!
So know that it is legitimate for you to seek assistance in this economy. Here are two key takeaways:
• Do not allow pride or embarrassment to keep you from applying for unemployment compensation.
• Do not be afraid to rely on food stamps to put square meals on the table for your family.
Entrepreneurs are the happiest workers of all, according to a new Gallup survey from Well-BeingIndex.com.
The power of being your own boss, making your own decisions and choosing how much or how little you work is key. Entrepreneurs tend to be self-starters and they generally don't do well in a bureaucracy.
Interestingly, Clark and all three of his siblings are all entrepreneurs. Some have suggested it's because they don't like being told what to do! It's certainly true that you only have yourself to credit or blame when you call the shots at the head of a business.
Entrepreneurship is a very self-selecting process as well. Some people who get into it realize the work is just too much and promptly get out of it.
Clark was 25 when he opened his first travel agency. At that time, he worked all day everyday to the point that he would forget in the morning what time of year it was. Did he need a coat? Should he wear short sleeves?? He was that focused on his work that everything else just became a blur.
The consumer champ also used to wake up with anxiety-based insomnia for about four months when he first launched his business. After the fourth month, he made a profit and was able to get a good night of sleep! Entrepreneurship is not for everyone.
RIP-OFF ALERT: Entrepreneurs are being cautioned to avoid signing up for or using small business credit cards. These types of cards will lock you into extra liability in spite of the Credit Card Holder Bill of Rights that goes into effect February 2010.
The initial liability comes because the small business is the signatory and has responsibility in the event of default. Yet there's a second level of liability to the individual that's specific to small business cards. The lender can do what's called "piercing the corporate veil." In plain English, that means if your business can't pay the bill, the bank comes after you.
The Credit Card Holder Bill of Rights does not offer any protections on this specific issue for entrepreneurs and small business owners.
You can expect to see a flurry of offers trying to lock you into a small business card instead of a personal card over the next several months. But you want the personal card instead.
Remember, you should be using a personal card for business expenses and simply paying the bill from your business account.
The Wall Street Journal reports that Chase is launching no less than four new small business cards to ensnare entrepreneurs. They'll tell you that you're being offered these cards because of your personal success and business acumen. But don't be fooled. Accept the compliment and shred the offer.
The Tax Foundation has released its 2010 State Business Tax Climate Index, which tracks the best and worst places to do business in America every year.
Clark has long believed states that tax the most lose population as residents and businesses exit -- no matter if they have a sunny climate or other desirable geography.
The simple fact is that states have to learn to do less for their citizenry. It would be great if state government could do everything for everybody. But that's unrealistic. There is no free lunch. And this is not about government doing more by becoming more efficient, either. States will have to make hard choices about how to do less.
New Jersey, New York and California are win, place and show as the worst places for businesses. If you still think it's a weather issue, consider that New Hampshire has the seventh best taxation environment. And Vermont right next door? No. 41 and losing economic vitality all the time.
The best states to do business in include South Dakota, Wyoming and Alaska. Not exactly sunny climes.
Remember, the lowest tax states generally have the greatest economic growth. And states with the highest burden on citizens and businesses suffer the greatest economic declines.
Clark does have one bone to pick with Tax Foundation's research. They suggest that targeted tax credits to bribe businesses to locate in a particular place are a great idea. The consumer champ completely disagrees. Helping one business means taxing another more.
CLARKONOMICS: Unemployment benefits are likely to be extended by 13 weeks in the 27 states that have been hardest hit by joblessness.
These states include Alabama, Arizona, California, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Maine, Michigan, Mississippi, Missouri, Nevada, New Jersey, North Carolina, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Washington, Wisconsin and West Virginia.
Again, this has not been signed into law yet, but it is a bill that's destined to become law very soon.
We are in a cycle that likely won't see a decent recovery in the job market until 2011 or 2012. Clark says this reluctantly because, for the unemployed, taking 2010 off the table is dispiriting. The reality is that in 2010 we'll reach equilibrium between job losses and job gains. But we won't see a true recovery until a year or two out beyond that point.
Clark was recently in an airport when his cell phone was running low on power. He immediately looked for an outlet to charge up. But revenue is down for airport operators, so they covered up all the outlets to prevent people from running up the electric bill!
In many cases, people are buying one cup of coffee at coffee shops that offer free wifi and sitting there all day long. They're using the electric for their laptops and cell phones, tying up seats and basically using the space as a free office.
In a battle of wits with customers, businesses are now locking up their outlets and banning all-day sitters during peak hours.
The good news is this just a temporary phenomenon. Affordable mobile web surfing that can beat any coffee shop's free wifi is coming. Clear, Metro PCS and Cricket are among those offering laptop cards for hi-speed surfing at flat rates.
Meanwhile, Verizon is currently testing 60Mbps Long Term Evolution (LTE) cellular service that will allow you to surf at 4G speeds. The technology is expected to offer far more capacity than the kinds of laptop cards that tend to bill at $60/month with usage caps and possible massive overage charges.
In other news, there's new technology coming for laptops to light up the screen. The technology will use so little energy that it will be possible to go 12 hours between charges. The same OLED (organic light-emitting diode) screen technology is now already in use in some cell phones.
Small businesses that had been choking for funding since the collapse of lenders like Advanta and the near-collapse of CIT can breathe a sigh of relief.
The Treasury Department is supposedly days away from making $15 billion in funding available for small businesses. Clark has originally announced this money was on tap in winter shortly after President Obama took office, but it took this long behind the scenes to turn on the funding spigot.
$15 billion is a lot of money in total, but it's not much when you consider each and every entrepreneur that needs it. Still, it should help the flow of capital.
So if you found the teller window to borrow was closed through the Small Business Administration program in the past, it is now opening up again. Visit SBA.gov for more details on the program.
CLARKONOMICS: CIT Group -- another big lender to small business -- is in danger of going under.
The whole episode is reminiscent of what happened with Advanta, where that lender ran out of money and closed down lines of credit to 1 million customers at the end of May. People who were traveling on business suddenly couldn't use their credit cards to check into hotels or rent a car.
What happened with Advanta and what may happen with CIT both highlight the danger of small businesses relying on a single source of capital.
If you're a business with an open line of credit at a bank, here's Clark recommendation: Draw down that money now before it gets cut off. Be sure to deposit the money at a different bank or credit union.
Why a different bank or credit union? In most loan agreements, there's a clause that allows the bank to claw back the money owed on a loan when it is suddenly called due. So if the money is sitting on deposit at the issuing bank, they'll just help themselves to your account to get it.
As a business, you need to have multiple lines of credit. But Clark knows that's easier said than done in today's climate. If your lines of credit being shut off would put you out of business, then you have some homework to do to line up alternate sources of funding.
Do you need to buy an individual health insurance policy because of a layoff, or because you're self-employed or work as an independent contractor? Clark knows it can be a daunting experience.
So often, the consumer champ gets calls from people who tell him what they paid for a policy and then ask him if it's a good price. There is no one answer. It depends on what's covered under the plan, the amount of the deductible and the limits therein.
We don't have what economists would call a "transparent market place." That means it's very difficult to shop apples-to-apples across the market.
The consumer champ has long advocated that coverage be standardized. In Clark's ideal world, there would be just 12 health plans offered to everyone: 3 HMOs, 3 PPOs, 3 HSAs and 3 of the traditional 80/20 splits. Every insurer would have to sell identical plans. That way you could switch to another insurer's HMO plan No. 2, for example, if your insurer's HMO plan No. 2 is too costly.
But until the day when that becomes a reality, here are 2 websites that can walk you through the process of buying an individual policy:
RIP-OFF ALERT: Small business owners with unprotected computer networks are at risk of having their bank accounts drained by hackers.
Cyber-thieves are increasingly bypassing both individuals and large corporations in favor of small business targets. They know that most individuals have limited assets, while most corporations have robust computer security in place.
The Internet Crime Complaint Center reports that these types of hacking crimes are up 33% in a year.
The Houston Chronicle reports that one small business owner was able to thwart an in-progress online theft of $1.2 million. The criminals had launched a fully coordinated attack to get the money by sending 39 wires in less than an hour.
The small businessman was able to have many of the wires canceled because he acted quickly and got in touch with his bank. Yet he's still responsible for $150,000 in losses, even though he caught the theft immediately!
Had he been any slower to respond, he could have been insolvent and ruined financially.
Wiring money has become a foolproof conduit for crooks to make off with funds. And it's through no fault of Western Union or any other money-wiring service; they're just the mediums of transmission.
This particular business owner in The Houston Chronicle story has since wised up. He's put a standing order with his bank that wires cannot be sent electronically without the express approval of a designated employee at his company. And he's also put in a security system on his computers.
Remember, small business needs to take special care because of the Uniform Commercial Code. Under the UCC, small business may be held partly or totally responsible if their lines of credit or accounts are compromised.
Sometimes it seems as if nobody cares about small business people and entrepreneurs. Here's yet another example.
Under the new credit card law, small business owners are left completely exposed to all the old policies that individuals are now being protected from.
Small business owners using business credit cards will still be subject to sudden interest rate hikes, retroactive rate increases, shorter billing cycles and more.
And remember, when you apply for a business credit card, you sign for personal liability. That means you're still personally responsible for charges even if your business fails.
So Clark has a very simple workaround for you: Just use a personal credit card for your business expenses. As a business owner using a personal card, you still come under the protection of the new credit card rules.
Need another reason to switch from a business card to a personal credit card? If you lose a personal card, your maximum liability is capped at $50. But with a business card, your liability could potentially be unlimited under the Uniform Commercial Code!
You'd still be subjected to sudden interest rate hikes, retroactive rate increases, shorter billing cycles and more on your business card -- all the things that normal consumers may soon not have to deal with any longer.
In addition, when you apply for a business credit card, you sign for personal liability. That means you're still personally responsible for charges even if your business fails.
However, there's a very simple workaround you should know about. Just use a personal credit card for your business expenses. As a business owner using a personal card, you would still come under the protection of the potential law.
One further caveat and another reason to switch to a personal credit card: If you lose a personal card, your maximum liability is capped at $50. But with a business card, your liability could potentially be unlimited under the Uniform Commercial Code!
Basically, you're carrying dynamite in your wallet or purse if you carry business credit cards.
Meanwhile, here's the second part of Clark's double warning: BusinessWeek reports that a number of small businesses were bankrupted recently because their merchant processors for credit card transactions kept "hold back" money up to 100%.
"Hold back" money is money the processors keep based on their guesstimate of how likely you are to have charge-backs. Holding back 100% would mean an instant stop of cash flow.
So how can business owners protect themselves from this danger? You should always be under contract with more than one processor. If one tries to stick it to you, you can go with the other one to run your transactions.
And as always, with banks shutting down their lines of credit to small business, Clark wants to repeat another of his recent alerts: If your business relies on a line of credit to survive, draw it down now before the bank cuts it off. Then be sure to deposit it elsewhere at another institution so the original bank can't automatically seize the funds.
Politicians don't understand economics. It's a rare bird in Washington who actually does. That's why D.C. has a new plan for taxation that would stick it to people who run their own businesses.
Under the new tax regime, there would be no increase in taxes for big businesses or for individuals. But small business would pay dearly.
The Washington Post is not exactly known as a bastion of conservative reporting, but even their own analysis shows that a 19% increase would be typical for most successful small businesses.
It's important to note that we're not talking about all small businesses here. These new taxes would only affect those businesses that are successful enough to have a number of employees and keep retained earnings.
Retained earnings are the rainy day monies that get put aside to deal with future losses. Under the new regime, there would be much higher taxes on that kind of money.
This all raises the question of what constitutes a "successful" small business? You could be just barely cash flow positive to the tune of 6 figures and you may still be taxed heavily. Why? Your business and personal earnings will be treated as one in the same -- unlike the treatment that big business gets.
Clark is particularly bugged by the disparity in treatment that's afforded to small business and big business in this respect.
Small businesses are the lifeblood of the country and a real engine for job growth. Big business, meanwhile, only gets dumber as it get larger -- much like a dinosaur.
We've got to create an environment in this country where it's favorable for small business to take the kind of risks that will ultimately create job growth. And the new tax plan doesn't cut it!
Almost 30 million Americans are entrepreneurs or small business owners. That's one of the secret ingredients of our long-term financial power as a nation.
Most small businesses live by credit lines that are usually available from the largest banks and often tied into credit cards. Right now, however, the odds of tapping into the power of plastic are much tougher because of turmoil in the banking business.
You've heard the calls from individuals in this respect. But think about what it means to a business that is depending on this line of credit as a lifeline.
Clark despises debt for lifestyle, but he doesn't mind entrepreneurs taking on debt as an investment in a business venture. Small business long ago switched from trying to obtain lines of credit at a bank to getting what they need on a credit card.
No surprise there; credit was so widely available that entrepreneurs decided to go the path of least resistance.
So here's a special message if you are a business owner and there's money that you need for cash flow. Clark wants you take a cash advance from your available lines today. That ensures you get the money before the bank has a chance to cut the line.
Do a cash flow analysis on your business and make sure you have the funds you need to continue operation!
RIP-OFF ALERT: SmartMoney magazine has compiled a list of 5 hot work-at-home scams of the moment. Some will be familiar to you as "golden oldies" on the show, while others are more recent.
Assembly and craft work This is perhaps the oldest on the list, as it dates back to the 1980s. Don't fall for the pitch that you'll be able to do assembly work in the comfort of your own home.
Medical back office billing This one first popped up in the mid-1990s. The gist of it involves buying a software package that allows you to process medical paperwork from home. There's a small kernel of truth here -- some longtime employees of doctor's offices do this kind of work from home -- but the way it's being sold is a big falsehood.
Mystery shopping Here's another relative oldie. There are some legitimate mystery shopping sites such as Volition.com. But most others are a false lead -- especially if they ask for money upfront.
Rebate processing Here's a more recent rip-off. Rebate processing is a high volume, low margin business that's done at big processing centers and usually handled internally. This kind of work is generally not farmed out. The only exception may be a handful of hires that live within close proximity to a processing center.
eBay power sellers This is a brand new scam that promises you instant credibility on eBay and the opportunity to make a fortune selling online. But eBay transactions are way down and the company is going through a midlife financial crisis. One big problem is the credibility factor of sellers and buyers alike. There's no insta-biz solution when it comes to eBay. As a seller, you only sustain yourself over time by specializing in a niche market.
Clark has long said that the best time to start a business is during a recession. Space, equipment and staff all come cheap during down times. In just one example, aspiring restaurateurs are finding they can rent a space with kitchen equipment that's been abandoned by previous tenants.
The consumer champ typically recommends that budding entrepreneurs consult with the Service Corp of Retired Executives for guidance when launching a business.
However, if you're looking for some more unconventional guidance, here's a thought. BlobLive.com sponsors open-mic nights at bars and other venues in major metro areas where anyone can get up and pitch a startup idea.
You'll get instant audience feedback, but you've got to be willing to get your feelings hurt. The service is free the first time and $10 after that if you want to pitch more than one idea.
Many people who are unemployed are spending their time in isolation hunkered down behind a computer while searching for job postings and sending out resumes.
Wrong move, says Clark.
The consumer champ has a strong bias for the old-fashioned way of job hunting where people meet in support groups to encourage each other.
Fortunately, the two approaches are no longer mutually exclusive. The San Francisco Chronicle recently reported on a new website called LaidOffCamp that presents a free opportunity for people to get together and network across the country.
This is essentially day camp for those who have been laid off and want to know how to get moving. It's described as "an ad-hoc gathering of unemployed and nontraditionally employed people (including freelancers, entrepreneurs and startups) who want to share ideas and learn from each other…Attendees will discuss topics in sessions that may include: living on an extreme budget, building your personal brand, how to be a freelance consultant and more."
LaidOffCamp is traveling around the country with meetings coming together in New York, San Diego, Detroit, Los Angeles, Chicago, Seattle, Dallas, Washington D.C. and elsewhere. You can even host a camp gathering in your town!
Unemployment support groups are an old concept, but people are not using them this time around because they think the Internet replaces everything else. It doesn't. The Internet is only a tool for communication and research. The most important thing at a time like this is using the Internet as a way to reach out to others a la things like LaidOffCamp.
In general, it's Clark's belief that stimulus packages just create temporary false booster shots that artificially pump up the economy. Once the money is all spent, it's as if there was no boost at all.
However, the Obama plan has some benefits for small businesses that could stoke our nation's economic fires. Small business accounts for much of the economic growth in our country, and the stimulus package will give additional funding to the Small Business Administration (SBA) for loan guarantees, microloans, bridge loans and more. See a breakdown of the funding courtesy of The Los Angeles Times.
Of course, small business faces a very challenging climate right now with lines of credit and credit card limits alike both being lowered. What's an entrepreneur to do? Well, barter is back in a big way for the first time since the early 1990s.
In its simplest form, barter involves trading your services or goods for another's services or goods. There is no exchange of cash. Clark wants you to know that through bartering, you create reportable income. So be aware of the implications of potential income tax evasion here if you don't report it.
The most popular form of barter is going through an Internet-based barter exchange. The barter exchange simply administers the transactions (for a small fee) and keeps a record of them for members. So in essence, you as a small business trade your services for credit that you can then use to "buy" services from other businesses.
One caveat: Clark's recommendation is that you should never put more at risk than you can afford to have wiped out if the barter exchange goes insolvent.
Clark is making it part of his new mission to be a resource for the unemployed and the underemployed during this tough economic cycle.
The conventional wisdom about education and employment -- as your level of education rises, the less likely you are to be impacted by lay-offs -- has been completely flipped on its head this time around. This recession knows no boundaries in terms of education, skill level, training or years on the job.
If you have skills of a certain nature, try picking up some consulting work (aka freelancing) on a per-job basis. The Internet offers a variety of sites that hook freelancers up with employers. The San Francisco Chronicle's Tom Abate has compiled a list of such websites, including the following ones:
These sites are being called "virtual hiring halls" because they're a modern adaptation of the union hall idea where workers would go to await job orders.
Clark has a longtime bias in favor of entrepreneurs, calling them the "secret weapon of our prosperity" in America. The consumer champ also has a belief that the best time to launch a new business is when the economy is in the toilet. Everything you need -- space, equipment, employees, etc. -- all come cheaper at a time like this.
It's not uncommon for people to start their own business while they're still working somewhere else. Of course, that means that you're working your tail off both day and night. But it also lowers the risk should your new business venture fail.
Money magazine has new stats about the percent of people who are employed full-time while starting a new business. It turns out that it's 70% among men and 50% among women.
For example, Kim -- one of our producers -- works full-time on the show and also has a side business.
Interestingly, she violated one of Clark's cardinal rules for entrepreneurs -- "know the business." In her case, she took a chance getting into the field of photo booth rentals without any prior experience working with the equipment. Thankfully, it has paid off for her.
But in general, Clark recommends first working for someone in the industry you're considering to learn the ropes. Just don't tell them you'll be an eventual competitor!
CLARKONOMICS: If you're a business owner, you know that passing price increases to customers is difficult during touch economic times. Savvy shoppers may notice that Frito-Lay is reducing ounces and upping the price. Perhaps they're secretly trying to give you a hint about that diet you've been putting off?! Just kidding.
Gas stations are also squeezing costs in their own way. Some locations are offering cash discounts at the pump, which saves them the expense of processing credit card numbers. They can then pass a piece of those savings along to you. It costs a gas station about 10 or 12 cents per gallon to run your card. So it's really a win/win situation.
The spiraling rate of inflation has led to economic dislocation. The government is reporting the inflation rate at around 4%, but Barron's says it's actually over 10%. There's political benefit in lying about the rate of inflation, and it also cheats Social Security recipients out of the proper inflation adjustment. But we see the inflation everyday when we go out.
Businesses are in real bind because they have rising costs at time when there's less demand. Just look at the airlines and their huge fuel bills. Southwest is the only one that made a meager profit. Continental is not merging with United because the latter loses $6-$7 million a day!
Yet the average person pays fares that are up only 3% over a year ago. Why? Demand is too soft for the airlines to charge any more. When push comes to shove, airlines may be willing to park planes in the desert. This will reduce the number of available seats and allow them to charge more money for fewer seats. Every business faces this kind of choice in a recession.
So you must be an educated consumer and cherry-pick the deals. Patient leisure travelers can do this when it comes to flying. Shoppers can do this by avoiding overpriced groceries until they go on sale. It's like a chess game and you've got to out-think the business owner who is trying to sell to you.
Targeted TV ads have traditionally been too expensive for small business owners to buy. But a new website called SaysMe.tv is leveling the playing field. It allows you to target specific parts of a town and get ad quotes on a variety of channels.
For example, SaysMe.tv lists an ad on MTV in the Raleigh, N.C. market at 4 p.m. as costing $130. If you wait until midnight, the price drops to $44.
This service was developed with small business owners in mind, but it has really been embraced by people who are passionate about the '08 election. They're buying ad time and populating it with their own content. So you've got a slew of homemade ads airing that are either for or against McCain or Obama!
One final word on advertising: Repetition counts. If you are a small business owner, don't think that buying a single ad will net you results. You need a strategic plan to buy a number of spots on the right channel at the right time.
Not all states are created equal when it comes to employment. While Michigan, Ohio and Indiana are seeing jobs leave, other states can't find enough workers. Wyoming and Texas are both examples of the latter situation.
Americans have always been a migratory people in search of better opportunities elsewhere. Now the newest wrinkle is that many entrepreneurs are going mobile by coming to customers -- instead of waiting for customers to come to them. For example, mobile dentists in RVs are going to patients or specific businesses. Dog-grooming services and legit massage therapists are also doing the same thing.
While it may cost entrepreneurs more in fuel to go to customers, they also enjoy lower overhead if they don't have a storefront. The Boston Globe reports one mobile spa company has 700 technicians in 50 states and revenue is up 300%.
So if you're an entrepreneur, what creative thing can you do to generate more customer traffic? Is there a cost-effective way for you to go to the customer?
On the other hand, if you're a worker and you find that opportunity is lacking where you are, you may have to go mobile too!
Clark has news about a new hip trend in frozen treats that has entrepreneurs going crazy.
Years ago, frozen yogurt was the hottest thing. More recently, it's been Cold Stone Creamery as a franchise opportunity. But Cold Stone has proven to be a big debacle.
The latest "in" thing is tart frozen yogurt. This craze started on the West Coast and is now sweeping the East Coast. The Washington Post reports that people camp out the night before a new tart frozen yogurt store opens up. However, Christa sampled some and didn't enjoy it.
So here's a special warning to entrepreneurs about jumping into the latest "can't lose" opportunity. While early adoptees may profit, the second and third waves of people who get on board often wind up losing money. Just because it's hot, that doesn't mean it's an automatic money maker. It might just burn a hole in your pocket.
In the midst of all the doom and gloom about employment forecasts, Clark recently told you about certain opportunities in the job market. But there's an underground opportunity just around the corner that could go mainstream in the next few years. You've heard of white collar and blue collar jobs, right? Well, how about green collar?!
There could be potentially millions of jobs coming in the environmental sector. Clark thinks back to the UC Davis professor he had on the air who worked for 20 years to develop plug-in hybrids. These kinds of cars start out electric and then switch to gas when they run out of juice. After years of pooh-poohing plug-ins, GM is now advertising a plug-in called the Volt coming in 2010. Likewise, Toyota spent years being hostile to the idea of modifying the Prius to be a plug-in hybrid. Now they're going to launch that version in 2010 for fleet sales before entering the general market with it.
Here's another example of a green business: Our old electronic waste is often shipped to Third World countries where kids disassemble computer monitors and get exposed to dangerous chemicals. Clark recently read a Forbes story about an independently wealthy man who thought there had to be a better way. So he launched a business called ERI (Electronic Recyclers International) in Fresno, CA. ERI employs ex-convicts who follow safety standards in taking equipment apart and recycling it. It's been a real money-making venture. And it also benefits ex-cons by providing employment and opportunity for those who haven't had much in their lives.
Look around each corner and you'll see green opportunities going forward. Clark thinks retro-fitting houses to make them energy efficient will employ those laid off in construction. Bringing home green by working green will soon be more of a reality.
This is an extraordinary time for entrepreneurs. There's no better time to start a business than during a recession. Think about it: There's a surplus of vacant office, retail and commercial space that can be had for below-market value. Ditto for high-quality labor.
Clark started his business in the midst of the 1980s recession. The reality is that you always lose money with a startup. But if your overhead is lower to begin with, then as the economy recovers you're poised for faster growth than you might have been otherwise.
The New York Times recently ran a story about people who wind up going the entrepreneur route after they've retired. Economists call this the "micro-businesses" trend. These are people who may have had a beloved hobby, but they never really got to pursue it during their working life.
It might also be a good time to try out a micro-business if you've lost your job. However, what was fun as a hobby does not always prove fun as a job. But Clark's longstanding belief is do what you love first -- and then figure out how to monetize it later.
Clark encountered political turmoil with some listeners recently when he praised one presidential candidate's health insurance plan. People see Clark as a beacon of non-political discourse in the talk radio world, so what was he thinking wading into the fray?!
Well, Clark believes that it's reasonable to step in from time to time, especially if a politician has an idea that he thinks has merit. It's not as if he's endorsing a candidate.
But in the interest of bipartisanship, Clark today spoke about another health proposal from…wait for it…2 Democrats and 2 Republicans!
Their joint proposal, the Small Business Health Options Program (SHOP), would make it possible for small business employees and entrepreneurs to receive a tax credit for buying health coverage. SHOP would also allow multi-person risk pools that would lower premiums.
Entrepreneurs have long suffered without readily available healthcare. If they do have coverage, they're often individually rated. So while an illness may initially be covered, they'll face exorbitant future premiums designed to drive them out of the insurer's pool.
The tax credit idea would extend the help that large corporations get to the world of small business. They'll have money coming back from the government to buy private healthcare.
Meanwhile, the issue of redlining is a hot one in the insurance realm. Clark wants transparency in health coverage and thinks it could be achieved if there were only 8 plans offered to small businesses: 2 HMOs, 2 PPOs, 2 HSAs and 2 of the traditional 80/20 splits.
Every insurer would have to sell identical plans, and they could charge what they wanted for them. That way you could switch to another insurer's HMO plan No. 2 if your insurer's HMO plan No. 2 is too costly. As always, Clark says the real risk to insurers if they don't shape up will come from the threat of socialized medicine.
If you have a small business, you know that software can be expensive. Surprisingly, only 6% of people have ever used software alternatives to Microsoft Office. But our Free and Cheap List has no-cost options like OpenOffice.org, which is now offering the newest version of its office suite-style software for free. Clark's not an anti-Microsoft person, but he'd rather you save the dough. OpenOffice is inter-operable with Microsoft Word if it's used correctly. What if you're a small business owner burdened by the hassle of making appointments? You might want to check out GenBook.com for free online appointment scheduling software. That way you can focus on making money, instead of playing phone and e-mail tag with clients.
It's no secret that people are feeling squeezed and living on fumes during these slow economic times. This has been an ever-present issue among the presidential hopefuls. Meanwhile, President Bush is set to propose an economic stimulus package and the Democrats will do the same. But is this all too little, too late? After all, we may already be in a recession right now; for one thing, unemployment is up from 4.7 to 5 percent. Stop for a moment and think back to our last recession in spring 2001. Economists didn't recognize or confirm it as such until a year later! Of course, you know from your own life if things slow down -- you'll see less hours at work, slow business if you're an entrepreneur, etc.
We're definitely seeing the early warning signs of recession, so this is the time to get your act together. A slow economy actually yields opportunity. It's always best to start a business at this point of the cycle because space and labor come cheap. Entrepreneurs who can keep costs under control will survive. Technology can help in this respect by allowing you to work at home or remotely. At-home businesses are ideal, but beware of zoning laws if you're in the retail or restaurant fields. Meanwhile, what should you do if you face a layoff and feel the entrepreneurial spirit? Don't throw the baby out with the bath water. You've probably spent years developing knowledge, a skill set and contacts in your field. Stick to what you know -- you'll find your greatest opportunity there.
We're in a cyclical time of increased entrepreneurship right now. This usually happens whenever the economy slows down and people get laid off. That's when mid-career corporate employees decide this is the last chance to go into business for themselves. They get swept away by presentations at hotel ballrooms touting the hottest business ideas and franchises. The funny thing is that the best time to open a new business is when you're in a down economy. That's when space and employees all come cheap. But beware that you must do your homework before buying a franchise. Very often corporate types who are used to bureaucracy have difficulty being the sole decision makers in their newfound businesses. So Clark's advice is to get your hands dirty first. Go and work in the field of the franchise you want to open. Don't tell the employer you're doing research, just get in there and empty out the garbage or sweep the floors! Make your mistakes on somebody else's dime and decide if you want to be in the business. Remember to keep your costs low and your risks lower.
Many people want to do part-time work at home, especially when they have a newborn. But a lot of work-at-home offers are scams. One stat has it that for every legitimate offer you may see, you're going to come across 42 scams. So Clark wants you to be careful if you're looking to work at home. Be sure to avoid the ads in the back of women's magazines about envelope stuffing, doing medical office paperwork and the like. There is, however, one area that's proven legitimate over time: becoming a call center worker from your home. Employers like this option because they don't have to rent office space for you, so it costs them less than setting up a call center. Typical costs for a call-center employee could be $31, while it only costs a company $21 to set you up to do the same work at home. Bear in mind that these figures are not what you'll be earning; they represent what the company pays out of pocket to set you up as an independent contractor. Fortune magazine reports that there are now about 100,000 people involved in such work-at-home businesses. That number is expected to triple in the next 30 months. Be sure to check out Clark's list of legitimate vendors in this field. Not many people know it, but JetBlue was one of the pioneers in the home-based call center industry. Now companies like 1-800-Flowers and J. Crew are also getting in on the action.
On his recent book tour Clark met a gentleman who was about to become a refugee from corporate America due to company downsizing. He decided that buying a franchise was the right way to go from here. Clark asked him what he knew about the industry, and he said "nothing." He said the franchise company promised incredible profits, but you can't always trust their word. Clark asked what his previous field was...he answered computers. Clark asked him why he wanted to go into a field that had nothing to do with his business experience...was he burned out? He said no, he just thought he could make a lot of money with this franchise. But Clark wants you to think long and hard before you do buy one, especially if you're a corporate refugee. Clark's advice: work in the industry first and see if you really like it. Learn it from the inside out, even if it means emptying trash cans at first. Franchises are much harder to sell than buy, so you want to be 100% sure you want to stick with it. Corporate refugees, you have to be especially careful, since what you used to do was very specific, typically. You'll have to be a multi-disciplinary person--a utility player-- if you're going to go from an office into running your own business. If you're not, you're probably not the kind of person who should own a franchise. So what do you do if you have experience but can't find a regular job?. Try consulting. Use the knowledge you gained in the corporate world and put that to use helping others who can benefit from your advice and experience. If you've gained the currency of knowledge, education and training and just kick it to the curb, you'll be throwing the baby out with the bath water!
Clark is a big fan of small businesses and loves to hear stories from entrepreneurs who are jazzed about branching out on their own. The successful entrepreneurs find a niche in the market – usually a service that hasn’t been met - and they offer it to consumers. One recent story Clark saw featured a woman who started a mobile haircut business. Her employees drive around in Winnebagos and do on-the-spot haircuts at businesses and corporations. Revenue in one year increased 800 percent and she keeps buying new RVs to meet the demand. Check it out at onsitehaircuts.com for more. Another story focuses on a man who drew what he thought was “the perfect pen” while in middle school. As an adult, he took the idea to engineers and had the pen created. Now, they are flying off the shelf. It’s an ergonomic pen that eliminates hand cramps and calluses. Find out more at penagain.com. If you can come up with an idea that serves a need in the marketplace, you could be a millionaire.
Through the years, Clark has had lots of calls from people wanting to publish a book. Most of these people didn’t know where to turn. They’d either been turned down by huge publishing houses or contacted by fake publishing houses that wanted to take their money. It’s taken a while, but there are some new companies making a buzz in the self-publishing industry. The first is lulu.com, which has been around for a bit. The second is blurb.com, which his fairly new. With these services, you can do any number of arrangements. At lulu, binding your first book is $4.50, plus 2 cents a page, for example. Blurb has several more features and the costs are a bit higher. But these are legitimate alternatives to the gigantic publishing houses, which charge quite a bit per book. Or, if you’d like to publish something small, such as a family history, these are great.
Clark is a huge fan of small business owners and entrepreneurs who are willing to take a risk and put something new on the market. Typically, as companies get larger, the ability to respond to customer needs gets tougher and corporate brains seem to shrink. It paves the way for smaller companies to come in and compete for part of the market. One of those companies is Tom’s Toothpaste, which you might have seen in health food stores. A couple from Maine started this company with $5,000 and had no idea what would happen. The toothpaste was all natural, unlike most others on the market, and people took a huge liking to it. Well, Tom and Kate recently sold the company for $1million to one of the monster toothpaste companies out there – Colgate. Tom’s was killing Colgate on the shelves, so Colgate bought them up. Clark says good for them. He hopes more people catch the entrepreneurial bug.
Yahoo recently conducted a survey showing that three-quarters of Americans have the entrepreneurial bug. Many people want to have their own businesses, and half of the people surveyed want to start their own business in the next five years. No. 1 on a list of reasons why was that people wanted to do something they loved. Second on the list was that people wanted to be their own boss. Much lower on the list was making money. Clark thinks this is great. The American City Business Journal reported people who start their own business end up loving it and are very financially stable.
Clark has been on the air since the 80s, and for years he had to warn hopeful authors about all of the self-publishing scams out there. Up until 1998, one in particular, known as the “Vanity Press” industry, would charge people outrageous sums to publish a book for them. It wasn’t unusual for someone to pay $8,000 to $12,000 to these phony publishing houses. Luckily, about five years ago, legitimate organizations, including some bookstore chains, got involved in the self-publishing business. Now, it’s possible to hire a publisher for $500 and have your book published. Occasionally, these self-published authors end up with a huge hit. It’s very hard for someone who hasn’t been published before to get published by a traditional publishing house. So, these houses are real alternatives, and the prices are reasonable. Two of the main ones are xlibris.com and iuniverse.com. But be realistic. Publishing a book yourself probably won’t make you millions.
Clark has been very fired up about the renewed entrepreneurial spirit spreading across the country. In the past couple of years, a large number of Americans have decided to go out on their own. In fact, so many people are branching out on their own that the Small Business Association has run out of money to lend people. Last fall, it was clear that people were forming businesses at a rapid rate, and the demands on the SBA were off the charts. And Congress never got around to approving more money for the SBA. So, Clark hopes that Congress realizes what’s going on and steps in with some more funding. If you are in corporate America and you would like to get out and go into business for yourself, you may want to consider working part time for someone in that business first. You should try it out for about six months before you go into this business. You want to know if you’ll excel at being the one who calls the shots, or if you’re better off in a corporate setting that is a little more structured. Having your own business is not for everyone. Also, you should consider some real estate factors when making the decision to start your own business. If you can work out of your home, you can lower the cost of doing business by quite a bit. And, if you’re looking to rent office space, you can get a much better deal these days. You can negotiate and you don't need a lot of space, so don't let the agent talk you into buying too much space.
