Small Business Contracts…or are they Big Business Contracts?

The Small Business Administration has released their contracting data for fiscal year 2008, and the numbers show a shortfall in contracts awarded to small businesses to the tune of $6.5 BILLION. The government reports that while congress mandates that at least 23% of all contracts should go to small businesses, only 21.5% of them were awarded to qualified businesses. These are the best self reported numbers to come out of Washington in years, so they do represent some hope…except they’re probably not accurate.

We spoke with Chris Gunn of the American Small Business League on my small business radio show this afternoon. The ASBL did a study of the top 100 contracts awarded to small businesses in 2008, and found that 65% of them were actually given to large multi-national corporations. These contracts were given to companies such as Xerox, HP, AT&T, Boeing, and General Electric. Do any of those sound like small businesses? According to the ASBL, actual contracts awarded to small businesses is less than 10%, not 21.5%, representing a shortfall of over $100 Billion! You can see a raw copy of their study results here.

One way that we can help to combat this problem is to contact our congressional representatives and urge them to support the Fairness and Transparency in Contracting Act of 2009 (H.R. 2568). We’ll have another visit from the ASBL on the Small Business Hour next month, and will keep on top of this story to let you know the latest.

Rule 15 – Conserve, Preserve and Reserve

This week I’m giving you a sneak preview at the online exclusive bonus chapter to my book, The Rules of Attraction. To read the full chapter, head on over to www.markdeo.com/rulesofattraction

This rule is becoming more and more important to marketers today. It is the social responsibility rule. While the 70s and the 80s were the “me” decades, the new millennium is the “us” decade. More than ever we are feeling the pressure to tighten our belts and adopt a more conservative approach, build larger reserves for our families and preserve what we already have. The spend, spend, spend and boom/bust mentality is passing away in favor of a more “grounded” mindset. This extends itself to the marketing arena as well.

Conservation-based Marketing
Everywhere we look, we see the “green story” being touted. This doesn’t just apply to energy companies, manufacturers and Fortune 500 companies looking to join the “green” bandwagon. Organizations in every industry and field of endeavor are opting for adding this element to their communication strategies. According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. Thus, green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.

Preservation-based Initiatives
One way that we can leverage the current focus on the “green mentality” is to promote sustainability. It’s getting difficult to find an industry or profession that doesn’t have some type of sustainability initiatives. This can encompass alternative energy initiatives, ride sharing, new recycling alternatives, lower consumption levels and the like. I know a display manufacturer that completely retooled their manufacturing process to eliminate ALL harmful VOCs (volatile organic compounds) thereby reducing their consumption footprint by 70%. While this did require a significant upfront investment in new equipment, it has resulted in a 136% return on investment to date. Their return came in the form of lower material prices, energy rebates and a special low rate financing as a result of the reduced environmental impact.

There are many more ways that we can leverage this 15th Rule. In short let me say that the more we sincerely focus on preserving, conserving and reserving, the more powerful our marketing will be to those who are socially responsible. What can you do to use this rule in your business?

Attraction-based Marketing for Professionals

I coach and consult with many professionals that are doctors, dentists, lawyers, bankers and CPAs. Often times when professionals focus on sales or marketing, they can appear desperate. In a sense, “marketing their practice” can reduce their credibility rather than increase it. For this reason, using “attraction-based marketing” can be particularly effective.

There are a number of very credible ways in which professionals can create attraction. Over the next few weeks, I will be focusing on four PROVEN methods by which professionals can create positive client attraction. The first is:

Leveraging Knowledge through Exclusivity

Since professionals have a highly specialized vertical skill, they possess deep knowledge in a very specific area of expertise. If this knowledge is properly used in a carefully orchestrated campaign, it can produce fabulous results in attracting potential clients and referrers. Unfortunately, few professionals perform the planning necessary to properly educate and inspire their prospect base. It often comes off as “self promotion” which has the opposite of the intended impact. Instead, I recommend first crafting the educational message in a way that is interesting and relevant to the target audience. It should be, however, most critically in a way that demonstrates the “exclusivity” offered by the professional. That is, “what do you offer which no one else does?” How do you do it? Why is your exclusive method more valuable that the traditional approach?

The next step is to create a series of messages that clearly articulates the significance of the exclusivity in a way that does NOT promote the professionals services. Shameless self-promotion by professionals is the “kiss of death!” This can accomplished through e-blasts, seminars, webinars, teleconferences and most importantly in a casual way through personal conversations and networking. Finally, the all-important follow-up step. Without consistent, valuable follow-up we are unable to maintain the top-of-the-mind awareness so that when a client need arises, we are the first call they make. More critically, our series of carefully orchestrated messages succeeds in motivating someone to take action based on a latent need. This is the most influential from of selling for professionals.

For more examples of how professionals can use “attraction-based marketing” to build their practice, particularly during economic downturns go to www.markdeo.com and check out my new book, The Rules of Attraction.

How Professionals Can Leverage Exclusivity

Since professionals have a highly specialized vertical skill, they possess deep knowledge in a very specific area of expertise. If this knowledge is properly used in a carefully orchestrated campaign it can produce fabulous results in attracting potential clients and referrers. Unfortunately few professionals perform the planning necessary to properly educate and inspire their prospect base. It often comes off as “self promotion” which has the opposite of the intended impact. Instead, I recommend first crafting the educational message in a way that is interesting and relevant to the target audience. But most critically in a way that demonstrates the “exclusivity” offered by the professional. That is, “what do you offer which no one else does?” How do you do it? Why is your exclusive method more valuable than the traditional approach?

The next step is to create a series of messages which clearly articulate the significance of the exclusivity in a way that does NOT promote the professionals services. This can accomplished through “customercentric” e-blast announcements, seminars, webinars, teleconferences and most importantly in a casual, informative way through personal conversations and networking. Shameless self promotion by professionals is the “kiss of death!”

Finally the all important follow-up step. Without consistent, valuable follow-up we are unable to maintain the top-of-the-mind awareness so that when a client need arises, we are the first call they make. More critically our series of carefully orchestrated messages succeeds in motivating someone to take action based on a latent need. This is the most influential form of selling for professionals.

Minimum Wage Update

The minimum wage saw another increase July 24th, 2009. Even if you don’t have employees being paid at this rate, this affects your business.

Taken from the US Department of Labor Website:

The Fair Labor Standards Act (FLSA)
The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. The FLSA requires employers to pay covered nonexempt employees a minimum wage of not less than $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.

Poster Requirements
Every employer of employees subject to the FLSA’s minimum wage provisions must post, and keep posted, a notice explaining the Act in a conspicuous place in all of their establishments. Although there is no size requirement for the poster, employees must be able to readily read it. There is no requirement to post the poster in languages other than English.

What does this mean for employers?
If you have a poster with an outdated minimum wage posting notice, you need to update this section of your poster or hang a new poster to avoid potential civil penalties.

What do I need to post?
With the myriad of state and federal regulations with which you must comply, it can be difficult to know what you need to post for your business. We recommend consulting an expert in the compliance business that can help you discover what you need.

Do I need to get these posters from the government?
While in many cases you can download or order posters directly from government agencies, in most states you will wind up having to deal with a multitude of agencies at the federal and state level. In California, you could end up with a dozen or more separate sheets of paper hanging on the wall! Obviously this can be difficult to manage and keep up with any updates, and as such we recommend using a combined labor law and minimum wage poster that has all of your required federal and state postings.

What happens when things change and I have a combined poster?
If you deal with a reputable poster provider, you will be contacted and notified that a change has occurred. In many states these changes happen infrequently (every few years), but in California, New York, Texas, and other large states these changes can happen as often as every 6 months. Some poster providers will require you to purchase an entirely new poster, so we recommend dealing with a poster company that has the option of stickers that you can place on your existing poster for smaller changes.

One company that we recommend dealing with for your labor law and minimum wage posters is Compliance Poster Company, a small business based in Monrovia, CA. They have a full time dedicated research staff to make sure that when changes happen, their clients are notified right away. You can also easily call them and talk to a knowledgeable representative on the phone. They offer free compliance audits for any business- just answer a few questions for their representatives and they can tell you what the law requires you to post, and what you need to communicate but not necessarily post. For the most recent minimum wage change, they offer a Peel-n-post sticker option so their clients don’t need to replace their entire posters. You can even talk to the president of the company, Patty Blum. Just call 800-817-7678 and ask for her, and you know you’re dealing with one of the most knowledgeable persons in the country when it comes to posting requirements.

As my friends at CPC like to say, “Don’t get caught with your posters down!” With this new minimum wage change, make sure that you get the most recent posting from a labor law and minimum wage poster provider such as CPC, or directly from the Department of Labor. It’s a very small investment to make to ensure that you aren’t fined.

Small Businesses Forgotten in Stimulus Distribution

This article was co-written with Lloyd Chapman, President of the American Small Business League. Lloyd will be on my weekly radio show this Monday at 4 PM. Please visit smallbusinesshour.com to listen.It is time for America's small businesses to unite and take ACTION!In a recent national address, President Barack Obama boldly proclaimed that his Administration's economic stimulus package was working. Meanwhile, small businesses in middle class America struggle to simply keep their doors open. Despite thousands of business closures during the last several months, the mainstream media has spent little time discussing the importance of small businesses to America's economic vitality. Our nation's political leaders routinely recognize small business as the backbone of our nation's economy, but to date small businesses have largely been left out of efforts to stimulate America's economy.

America's 27 million small businesses generate more than $6 trillion in annual revenue and collectively account for more than half of our nation's Gross Domestic Product. U.S. Census Bureau data indicates that companies with less than 20 employees account for 90 percent of all U.S. firms and are responsible for more than 97 percent of net new jobs.

When small businesses thrive, our economy grows. Yet today, millions of these businesses are being threatened by the very plan that was supposedly intended to help them. The president's stimulus package, rather than providing aid to small businesses is diverting resources to save mismanaged corporate giants.

Congress earmarked a mere 1.9 percent of the initial $789 billion stimulus package to assist small businesses. Worse yet, to date, less than one half of one percent has been distributed to small businesses. The irony of this is that in the long run small businesses will bear the burden of paying nearly the entire tab for this extravagant spending package and receive almost NOTHING in return.

The new administration is taking capital and revenue from the mouths of America's small business owners and feeding it to the big national banks, greedy Fortune 500 CEOs and Wall Street executives. This theory enraptures Wall Street, yet alienates Main Street. Even the Small Business Administration (SBA) is led by venture capital vipers who are licking their chops at a chance to infiltrate and dominate federal programs designed for small businesses.

The SBA was planning to guarantee $20 billion in loans during fiscal year (FY) 2009, yet it is currently on-track to reach half of that mark. Loan programs like the ARC [America's Recovery Capital] have been purposely structured so that few small businesses can qualify and banks literally have little motivation to lend. Even more disconcerting, every year, billions of dollars in federal contracts intended for small businesses are diverted to Fortune 500 corporations and other clearly large firms. Since 2003, more than 15 federal investigations found fraud, abuse, loopholes and a lack of oversight have led to widespread abuses in federal small business programs. The American Small Business League (ASBL) has estimated that every year up to $100 billion in federal small business contracts are diverted to corporate giants.

On top of this, small businesses are facing a hike in taxes for those earning more than $250,000, limits on itemized deductions, higher dividend taxes and shouldering more responsibility for worker health care.

While the Fortune 500 corporations have an army of lobbyists in Washington, small businesses are on their own. For this reason, it is more important than ever that small businesses unite. Regardless of political affiliation or industry association something needs to be done to stop this insane, wasteful spending spree. The ASBL and the Small Business Hour Radio Show are urging small business owners to make their voice heard. They collectively will be working together to shine a brighter light on issues facing America's 27 million small businesses, and to help the small business community organize a more powerful unified voice. To participate in this united movement towards change, please listen to the Small Business Hour with Mark Deo at smallbusinesshour.com and become a supporter of the ASBL by visiting http://www.asbl.com/joinasbl.html.by Lloyd Chapman and Mark Deo

Lloyd Chapman, President of the American Small Business League
A vocal crusader for the rights of small business, Mr. Chapman is a familiar figure at the Small Business Administration and in the United States Congress, where he has continued to work tirelessly during the last two presidential administrations to prevent federal small business contracts from being diverted to large corporations. He is regularly quoted by the media on small business contracting issues. He can be contacted at www.asbl.com

Mark Deo, Host of the Small Business Hour
Mark Deo is a small business advocate, author, journalist and business owner. For 12 years he has been the host of CBS radio's, "The Small Business Hour." He has been voted "Journalist of the Year" by the Small Business Administration; his weekly radio show can be heard at www.smallbusinesshour.com.
Thank you for your feedback, and have a great week!-Mark Deo

No interest, no payment for one year, $35,000 loans available from the SBA

loan_approved

The Small Business Administration released "lender guidelines" yesterday for the America’s Recovery Capital (ARC) Loan Program. While the program was announced back in May, details on the $35,000 interest-free, deferred-payment loans are only now available.

I was on the phone with Eric Zarnikow, Associate Administrator for Capital Access, the SBA department overseeing the ARC loan program, and he told me that, "Borrowers can begin applying for these loans beginning June 15, per the Administrator's May 18 comments. We estimate that the SBA, through our lenders, will be able to provide about 10,000 ARC loans to small businesses across the country."

You can read my article with more details on these loans on Entrepeneur.com.
What are ARC Loans?
ARC loans will be made for up to $35,000 and available to established, viable, for-profit small businesses suffering "immediate financial hardship" in order to provide some temporary financial relief so they can keep their doors open and put their cash flow back on track. It is intended for businesses that need short-term help to make their principal and interest payments on existing qualifying debt (including conventional loans, credit card obligations, notes owed to suppliers and utilities).

So what exactly is a "Viable business?"
Zarnikow says the SBA defines this as "a for-profit business with evidence of profitability or positive cash flow in at least one of the past two years."

How does the SBA define "immediate financial hardship"

The SBA is requiring businesses to show evidence of a "change in the financial condition" such as declining sales, frozen credit lines, difficulty meeting payroll, paying rent or difficulty making loan payments. The lender must analyze and confirm that a hardship exists.

How do ARC loans work?
The loans are 100 percent guaranteed by the SBA and made by existing SBA 7(a) lenders. They have no SBA or lender fees associated with them (unless the lender must secure collateral as part of the loan). The disbursement period (up to six months) is followed by a 12- month deferral period with no repayment of principal. After the deferral period, the borrower pays back only the ARC Loan principal over a five year period. ARC loans are available through SBA-approved lenders as long as funding is available or through September 30, 2010.

Mark Deo will help to guide you through the loan process
I have spent a great deal of time discussing these programs with officials at the SBA, as well as proving insight to some of the most influential business publications in America, including Entrepreneur Magazine. As a reader of my business update, I am more than happy to share this information with you- all I ask is that you purchase a copy of my new book, The Rules of Attraction. If you have a copy of my book, and you want to get my insight on how your business may be able to obtain an ARC loan, please send an e-mail to mark@markdeo.com and include your name and phone number. I will personally call you to help you assess your prospects of obtaining one of these loans.

Click here to purchase my book from Amazon.com. Remember that 100% of the profits from my book go to the charity Habitat for Humanity.

Thank you, and have a great week!

–Mark Deo

Building Loyalty by Thinking Small

Those of us that have lived in a small town know that loyalty is very
natural. People know each other and treat one another as neighbors. Companies
need to think small if they want to build greater loyalty. This works both
externally when trying to attract the right kind of customers as well as
internally when attempting to create greater teamwork and collaboration.
To apply this to improved marketing, I advise that business leaders isolate
several highly targeted audiences that all rally around the same type of
specific requirements. Then focus the ENTIRE message on their needs. This is one
way to become more important to fewer people. This can also be applied to
management by building a structure where people can work well in small teams.
When a small team accepts ownership of a daunting challenge for change, a
wonderful dynamic emerges. Everyone stops worrying about who will get credit or
the political factors. They step up and collectively perform.

Whether you are trying to create attraction externally in the marketplace or
internally in your organization I want to encourage people to get my new book
which is available at Amazon.com now.

You can get it here.
Remember that 100% of the proceeds go to the charity Habitat for Humanity.

Thoughts on the Stimulus Package

I am being asked to comment in a number of media outlets about the impact of
the President’s stimulus program on small businesses. Today I did an interview
for MSN Business. Later this week I will be talking to La Opinion. Here are some
of the typical questions I have been receiving and the answers I am giving. I
have done this in outline form so that you can read this very quickly. I’d love
to get some feedback from our readers.

How important is small business to the U.S. economy?

Small businesses drive this economy

Employ about half of the nation’s 144 million private sector workers

Account for 60 to 80 percent of new private sector jobs

Generate more than $6 trillion in annual revenue

Account for more than half of the country’s GDP

What do small businesses possess that larger enterprises lack?

Personal passion: Personally invested rather than Wall Street dollars.

Customer-centric: Deep understanding of customer needs and opportunities.

Agility: Adapt quickly to changing market conditions and new business practices.

Experimentation: NOT afraid to improvise and accept failure as a path to success.

Limited resources: Adept at accomplishing more with less with little waste.

Collaboration: Rely on social networks, affiliates, alliances and information sharing.

What are the economic challenges for small businesses today?

Crushing debt due to asset devaluation

Lost 4 million jobs in the last year and more than half are small business jobs

A significant drop in sales and productivity in every industry except Washington

Lack of access to capital or affordable funding

TARP participating banks will likely not participate limiting the ability to fund loans

Wickedly fierce competition and price erosion

How might small business’s benefit from the President’s stimulus plan?

Obama earmarked $15 billion of the $789 billion stimulus package for small business

$730 mil to reduce small business lending fees

Increase SBA loans to 90%

Attempting to open-up secondary market credit

What are some of the problems with the plan?

Incorporates a HIKE in taxes for all households and businesses earning more than $250,000

Higher dividend taxes

Limits on itemized deductions

Small businesses will likely have to shoulder a more responsibility for worker health care.

SBA was planning to guarantee $20 billion in loans yet currently on-track for less than $10 billion!

The US government is not in-touch with the needs of small businesses – they are spending billions to save 250,000 auto-maker jobs while already 4 million small business jobs have been lost!

Summary

While I cannot place the complete blame for this conundrum at the feet of this
new administration I believe the outgrowth of this stimulus plan is like taking
capital and revenue from the mouth of America’s small business owners and
feeding it to the big National Banks, Wall Street financers and government
bureaucrats. This theory enraptures Wall Street and alienates Main Street. Don’t
expect help from the government. Small business leaders are on-their-own. That’s
good for those willing to roll-up their sleeves. This is how our country became
great – on that backs of small business leaders!
We all have to answer the question: Do we have a fighting chance or just a
chance to fight? I believe the former.
Recommendations for small businesses:

Business attraction is more critical than ever:

Become a bigger fish in a smaller pond by shrinking your audience.

Create standards and systems to leverage efficiency and accommodate growth.

Be willing to destroy and rebuild your business or re-invent yourself especially NOW!

Innovate or die! It’s time to launch your most creative products, services and marketing.

Take advantage of all the great talent on the street.

This is the time to enter into collaborative alliances, affiliate relationships and joint ventures to consolidate costs and spread risk.

Localize or globalize! There is no center ground today.

Invest wisely. This is the time to buy – learn how to identify devalued assets.

Sources:

U.S. Department of Commerce, Small Business Administration, Intuit Future of
Small Business Report, Institute for the Future, Huffington Post, MarkDeo.com
–Mark Deo

Take Your Foot Off the Brake!

Have you ever driven your car on an icy road?
What happens when you jam-on the brakes?
That’s right, you slide off the road and maybe end-up in a ditch or worse.

That is exactly what is happening to many people today. They are spending entirely too much time watching, reading, listening and talking about how BAD things are in this economy. They are focusing on blaming Bush or Obama or the Fortune 100 CEOS or whoever. As a result, they can’t help but react with fear by jamming-on the brakes.

My winters in Chicago taught me that when I was driving on icy roads and I would hit the brake it would not “prevent” an accident but rather “cause” one to occur. When we blithely slash expenses, lay-off our best and often highest paid people, discontinue investment in technology, marketing, training or improvement programs we are actually RE-ENFORCING our worse fears and jamming on the brakes. I can assure you that this will cause us to end-up in the ditch. Getting out of the ditch will not be easy and in many cases will end-up costing us more than we save.

Instead, I want to encourage entrepreneurs to certainly drive carefully and more diligently. To continue the analogy, we may need to slip into low gear but maintain that steady forward motion. This challenging economic environment is presenting new opportunities (devalued technologies and businesses), the opening of new markets (Green and sustainable areas) and allowing us to access resources which have not been as readily available when times were good (there’s more great talent on the street). This is a fabulous time for small businesses to grow and prosper. My most successful clients are now investing more into growth and expansion opportunities than ever before! We are taking our own advice and investing in the release of my new book, The Rules of Attraction, the release of our new Small Business Radio weekly show and in hiring several new consultants!

Just like navigating a treacherous stretch of icy road, it requires careful planning, quick reaction time, precise execution and a healthy risk tolerance. I plan on safely arriving at my destination on time and ensuring our clients do as well. Our positive mindset, practical skills, and sharp wits will permit us to do so. Won’t you join me?

Your action plan for this week:
Turn-off the news!
Cancel the daily paper!
Stop talking about how bad things are!
Don’t buy-in to the FEAR mentality!

I predict just 18 months from today, you will look back and be happy that you did.
Have a great week!
–Mark Deo