Tuesday, April 29, 2008

Small business gears up for Christmas

Christmas decorations at Carr Mill Mall beckon customers to start their shopping early this holiday season. Photo by Kyle Curtis

With the Christmas season fast approaching, Carrboro residents face the sometimes difficult decision of where to shop. Carrboro small business owners have a much more daunting task at hand; convincing residents to spend their money on Main Street rather than at the mall or Wal-Mart.

This Christmas season will be the twenty-ninth for the Carr Mill Mall. Located in an old cotton mill in downtown Carrboro, Carr Mill doesn’t feel like a normal mall. The floors are still old wooden planks and the wide, arching windows bathe shoppers in comfortable sunlight during the afternoon shopping hours. Boutiques and specialty shops are the mainstays at Carr Mill, along with Elmo’s diner and the Townsend Bertram Outdoor Outfitters.

Everything is not all peaches and cream for small businesses these days in Carrboro, though. Small business owners have faced difficult times in recent years as they struggle to remain competitive with corporations. Typically, a corporation can supply a product at a lower cost to the consumer than a privately owned small business. Therefore, the privately owned business needs another angle to attract the consumer.

Bill Simmons owns Head over Heels, a hair salon at Carr Mill. He says that he is the only remaining owner still in business from when Carr Mill opened in 1977. Staying in business and remaining fiscally competitive is a real challenge for the small business.

The picture is not all bleak for these businesses, though. Jayne Coats at Shades of Blue characterized Carrboro as “an activist community dedicated to buying local products and keeping Carrboro dollars in Carrboro.”

Anna Pepper, owner of The Painted Bird, showed off some local artwork she is selling. Pepper said she tries to keep her customers happy by offering things that are distinct and have been largely produced by local artisans and craftsmen. The Painted Bird sells a variety of items, ranging from women’s clothing to artwork and novelty items.

Pepper and The Painted Bird moved to Carr Mill four years ago from University Square in Chapel Hill. She had been at University Square for 28 years, but grew dissatisfied with some of the changes that had taken place and decided to try her luck in Carrboro at Carr Mill. Pepper said she really likes the new location, especially the sunlight from the large windows.

Having been in business for such a long time, Pepper had some valuable insights into the world of the small business owner, as well as the customer. She identified three primary customer types. The first is the early shopper that really wants to shop around and make sure he or she is getting the right present. This type of shopper will often take notes on the merchandise and return later to make the purchase. The second type is the after mall-sale shopper. This shopper will arrive on the Saturday after Thanksgiving, burned out from the mall sales of the day before. Finally, the third shopper of the season will be the last minute shopper. This shopper will arrive in the last two weeks before Christmas. The last two weeks before Christmas are the busiest for Carr Mill, and the stores stay open until around 8 or 9 o’clock instead of the normal six.

Pepper is a little bit worried about how this season will go at The Painted Bird. She says that customer service is a big selling point for her store, and that she always tries to staff with “people that like people.” She said that there is a fine line between offering good customer service and getting a little pushy. Pepper says that if you go too far and oversell your product you can alienate the customer and they will leave and never come back, so you have to be careful.

Worrying Pepper in particular about this Christmas season is the high cost of gas. More on gas means less disposable income to spend on gifts, which could really hurt the small business this Christmas. Furthermore, Pepper expressed that online shopping is becoming more popular and was uncertain what role that would play in the future of her business.

Everyone knows what is available at the mall. This Christmas season, spend a little time shopping at a small business as well. You may find a great gift that you would otherwise never have found. You will definitely help strengthen the community by keeping Carrboro dollars in Carrboro. Even if it costs a couple extra bucks, it is worth it.

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Maternity Leave in small businesses

In April 2007, changes made in the Employment Rights Act 1996 start taking effect, which improve the entitlements for employees who become pregnant. I’ve been reading a bit about what these entitlements will become.

I started by reading up on what expectant mothers are entitled to…

Women who become pregnant can take up to 52 weeks maternity leave.

The first 26 weeks of maternity leave are called Ordinary Maternity Leave (OML). During OML, women still get all the same rights under their normal contract. For example, they still build up holiday, and are elegible for things like pay raises and pension contributions that they would normally be. After OML, they can come back to the same job.

The next 26 weeks of maternity leave are called Additional Maternity Leave (AML). During AML, women still get some of the same rights under their contract, but not all. For example, terms and benefits such as pay raises and holiday pay do not have to be continued during this. After AML, they should be offered their old job back, unless this is not reasonably practical.

Statutory Maternity Pay (SMP) defines how much women are entitled to earn while on maternity leave. For the first 6 weeks (of OML), SMP is 90% of average earnings. For the next 33 weeks, it is a flat rate of £108.85 per week.

It’s worth pointing out that I think maternity leave is a great idea. When my wife took a year off work after our daughter was born, this made a big difference for us, and we are very pleased that she was able to do it. I only had a month off for paternity leave, and wished it could have been longer.

That said… from an employer’s perspective, this was all sounding a bit expensive. If you lose a key employee for a whole year (and in a small business, this loss is often felt all the more keenly), this has a significant impact. A temporary replacement needs to be found, which means recruitment - never a lot of fun. And for 39 weeks, you’re paying two people to do the same job. For any small business, this is a worrying prospect. For a small charity, even more so. We started to do some back-of-the-envelope calculations wondering if SYA could afford this… it didn’t look great.

A little bit of Googling later and I’d uncovered information intended for employers, with some reassuring news. The DTI guidance (pdf) says that:

You should find out about claiming back the SMP you pay. You are entitled to claim back at least 92 percent. Small employers are able to claim back all the SMP plus some compensation.

How small is a “small employer”? I found the answer on the HMRC website:

companies with an annual liability for National Insurance contributions of £45,000 or less are entitled to claim back 100% of the SMP plus 4.5% additional as compensation for the NI contributions paid on the SMP

The problems of losing a key member of staff for a while and having to find an effective temporary replacement remain. But it looks like the system is geared up so that it shouldn’t cause small businesses a massive financial burden. I should’ve guessed, really.

Oh - and if you haven’t guessed where my sudden interest in maternity pay has come from? Here’s a clue - as a trustee of Solent Youth Action, I’m a director of a small company employing seven members of staff. All of them women.

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Create Personal Wealth Beyond Your Small Business, Part 1

You know the story: Small time entrepreneur starts a business in his garage and almost overnight takes the company public to dominate an industry. O.K. so this is the exception and not the rule. Most small business owners probably have different motivations for starting their businesses, but the majority will probably include building wealth as one of the reasons for doing so. However, most small business owners miss an amazing opportunity to use their businesses to grow their personal wealth outside of their normal business activities.

The owner of a small business is usually focused on the day to day activities of keeping his or her business running or growing: Sales, accounting, collections, inventory, etc. Some have aspirations of becoming wealthy, yet most settle into a daily routine that lacks the focus necessary to truly develop wealth.

However, even these average business owners can start on a path to true wealth building that still involves their businesses, but creates this wealth because of the business, not through doing business. In fact, the wealth creation can be put on autopilot and converts a normal business expense into a powerful leverage tool. This amazing opportunity is achieved through the purchase of one or more income producing properties utilizing advantageous financing available only to the small business owner.

The theory is simple: The purchased business property is used initially to house the business, but it should also offer the business owner the opportunity to earn third-party rental income. As part of an estate plan, the use of the business to acquire and build a portfolio of income producing properties is an overlooked, but effective means of creating significant retirement income that is hedged against inflation.

First, a business owner has to decide if it makes more sense to own rather than lease for business use. In a later section, I will cover the “Lease vs. Own” decision, but for now I will focus on the assumption that a business owner wants to follow a real estate acquisition program to supplement his personal wealth. Let me give you some background before going into the actual steps of the strategy.

There are three types of third party financing that can be used in the acquisition of real estate for small business use. They are: Small Business Administration (SBA) loan programs, conventional real estate financing, and conventional small business financing.

The SBA programs for businesses come in two versions: The 7a (http://www.sba.gov/services/financialassistance/sbaloantopics/7a/index.html) and the 504 (http://www.sba.gov/services/financialassistance/sbaloantopics/cdc504/index.html). If you require in-depth knowledge of each of the SBA’s offerings, then click the links above. In summary, here are the programs:


This is the SBA’s “flagship” loan and is used for almost any business purpose: Inventory, equipment, real estate, etc. It helps qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. It is also the agency’s most flexible business loan program, since financing under this program can be guaranteed for a variety of general business purposes.

Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions). Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets.

THE 504

The second option provided by the SBA is the “504” program. This program provides long-term, fixed-rate financing to small businesses to acquire real estate or machinery or equipment for expansion or modernization. A 504 project is a “two loan” program that includes a first lien provided from a private-sector lender and a second lien secured from a Certified Development Corporation (CDC). This second lien is funded by a 100 percent SBA-guaranteed debenture. These two loans usually combine to provide as much as 90% of the cost of the real estate purchased by a small business owner, the other 10 percent equity coming from the borrower. The program helps small businesses expand while preserving working capital.

For a recent press release from the SBA concerning the popularity and use of the two programs, go here:


In the next article, I will cover other financing alternatives for small business owners and then begin to develop the Wealth Building Proposition for Small Business Owners.

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: ‘ “The Investment Property Insider” is published by Craig S. Higdon, a veteran commercial mortgage broker. He publishes the weekly e-zine and blog, www.InvestmentPropertyInsider.com, for commercial real estate investors, developers, and industry professionals. Visit the blog and get this free report: “The 7 Biggest Loan Mistakes Real Estate Investors Make And How To Avoid Them.” ’

Craig S. Higdon, “The Investment Property Insider”

www.ExcelsionMortgage.com, www.InvestmentPropertyInsider.com

Craig Higdon has over 14 years experience in financing commercial loans, small business loans, construction loans, and land loans. He owns Excelsion Mortgage, a commercial mortgage brokerage offering real estate investors a wide range of resources to help them in their investment activities.

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Trade policy blasted as anti-small business

LEAD convenor of the Fair Trade Alliance Wigberto Tañada deplored the state of agriculture, Philippine trade regime and Philippine business in general, calling it “haphazard, aimless, going into the altar of annihilation.”

Tañada who was not able to attend the two-day conference-workshop on “Transforming Philippine Agriculture through Balanced Rural Development Policies,” sent his speech instead and was read by Melisa Serrano of the University of the Philippines School of Labor and Industrial Relations.

As read by Serrano, Tañada berated the country’s global and liberal trade policy as ‘haphazard and aimless’ and proven to be anti-small business and ineffective.

“The opening of the economy (liberalized economy) did not automatically bring in more investments, create more jobs and modernize industry and agriculture through technology transfer,” Tañada said.

He added that the country plunged itself into global competition but did not thought of “strengthening first the capacities of our industry and agriculture and give them the proper enabling environment to grow competitively.”

Other than the country’s un-preparedness, Tañada cited the ‘prostituting’ of national integrity by citing the Philippines as a party to Japan-Philippine Economic Partnership Agreement (JPEPA) which allowed importation of second-hand vehicles, adding, “JPEPA will make our country a dumping site of their toxic wastes and allow Japanese factory ships to compete with our small fisherfolk.”

Tañada also cited the RP-China Deal which will compromise 1.3 million hectares of Filipino lands to the Chinese, of which he said could have transformed and modernize Filipino farmers by teaching them land productivity through capacity-building measures and strengthening of government support services.

He stressed, “This is a clear violation of the Philippine Constitution.”

Also, he further explained that with an ‘aimless’ trade policy, he used figures of the Federation of Philippine Industries which estimated P175 billion worth of smuggling volume owing to uncontrolled lowering of the country’s tariff system.

Tañada is not against the coming in of foreign investments, he stressed, however, that, “We want them to support our development needs or in a business partnership that is mutually beneficial. Further we want them to invest in sustainable ventures such factories and transferring modern technologies.”

He explained that small domestic investments must also be given equal footing in terms of fiscal incentives.

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Defining Your Internet Brand as a Small Business Owner

Branding is the the ability for a company to be associated with marketing images, such as logos, labels, taglines, key messages, etc.

Personal Branding, however, is the ability for a person and/or their careers, professions, etc. to be packaged into a “brand”. Successfully “branding” yourself personally or as a business entity allows one to become more noticed, attracted and hired; often referred to one’s Unique Selling Proposition (USP).

Internet branding, most often associated with “corporate Internet branding” is when a company takes their brand (logos, labels, tag-lines, images, key messages, etc.) and utilizes the Internet to deepen their customer relationships. By creating a real-time consumer/user-generated community, a company can interact directly with their customers. This helps establish a more personal experience for their customers thereby creating greater loyalty, respect and trust as a thought-leader in their specific industry. The more approachable and personable a company is by servicing your customer’s needs and desires, the higher a return on their marketing investment. Assuring the best online experience includes but is not limited to a company’s ability to have a website/blog that download quickly, the ability to offer excellent real-time customer service, having easy navigation (site map) and a clean design; while promoting your USP and offering protection of customer’s privacy.

Therefore, Internet Branding for a Small Business Owner is the ability to take one’s Personal Brand online and strategically create a user-generated community around you (the small business owner) and your company.

Key words = You (the small business owner) and Your company.

Having a Strong Personal/Small Business Owner Internet Brand translates to your ability to be recognized and noticed widely throughout the Internet. Therefore, Internet Branding includes but is not limited to your ability to capitalize on link-popularity, Google PageRank, having high search engine, alexa and/or technorati (blog) rankings, so your internet branding/marketing efforts attract your most ideal customer.

Internet Branding simply means any and all the internet marketing techniques you utilize to harness the power of your Personal Brand, while creating a following (readers, subscribers, customers) who are actively involved in the growth, development and success of you and your business.

Since many of the Internet branding techniques are easy to use, implement and are highly-economical, I feel small business owners are well-positioned to develop their Internet Brand comparable to any other company/corporation coming online for the very first time.

You are one single small business owner, and you have the ability to create an online user-friendly experience that your own customers may not even know they are contributing to your user-generated community because they are simply having fun and ease to communicate directly with you and your Internet brand.
For example, when a customer comments on your blog, their sole interest may be in sharing their own thoughts based on your well-informed and articulate article prompted them to start a dialogue with you. Meanwhile, their comments, recommendations, suggestions can be used for your market research and product development purposes.
Another example may be when one of your friends in any of the social bookmarking sites you are a member of, may simply “bookmark” your webpage/blogpost simply because she/her felt its worth sharing with other friends. By sharing your article/blogpost, they in turn are creating a “viral campaign” that brings traffic to you, your excellent article, and your business as a whole.

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