Small Business Boomers

A couple of recent stories about taxes on U.S. businesses have me shaking my head.
On the one hand, the U.S. has the second highest corporate tax rate in the world (at 39.3 %, average of federal and state), with only Japan being higher.  And some states, including Iowa, California, Pennsylvania, and New Jersey, pay higher taxes than Japanese businesses.  A Wall Street Journal story detailing these figures includes statements about how damaging these tax rates are to U.S. businesses.  At the least, these high taxes are dis-incentivizing.  Why bother?
On the other hand, many U.S. businesses pay no tax at all.  …read more

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I found a good article that follows up on my recent post about using an IRA to fund your business startup.
This article points out what you’ll lose if you cash out before 59 1/2. It also is another dramatic example of the power of compound interest. I teach this subject to Millenials and they are always surprised at the calculations. Once, one young man asked me if I made up the numbers! (Another example of compound interest, showing that there is no substitute for starting NOW to save.)

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I have seen this over and over as I help young professionals buy practices:  The owner of the practice (often a baby boomer) invariably overvalues the practice.
Here is the scenario:  You have worked hard to build up your business over 20- to 30-years, in order to leave it to your children (who it turns out don’t want it) or to sell it to finance your retirement.  So you value it at what you think it’s worth, including all of your “sweat equity” (I hate that term).
The value for your business is this:  A willing buyer and a willing seller, who …read more

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Like all business owners, baby boomers are dealing with the current financial mess in different ways.  Here are some suggestions for you, depending on your degree of optimism and your risk tolerance:
1.  Restrict your cash flow and focus on essentials.  Decide what is essential for your business and what is nice to have but not essential.  For example, this is not the time to remodel the reception area.  As they say, “stick to your knitting.”
2.  Find small savings.  Those little things can add up.  For example, do you really need those fancier new pens or will an older one do?
3.  Cut employees.  …read more

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CNBC recently released a ranking of U.S. states as to their competitiveness and top states in which to do business.  CNBC used ten weighted categories and combined rankings for all categories to get an overall ranking.
The categories were (in order of most to least weight): cost of doing business (taxes), work force, economy (“solid” – whatever that means – and diversity of industries), education, quality of life, technology and innovation, transportation, cost of living, business friendliness (regulations), and access to capital.
I commented in my About.com blog that I disagreed with the weighting.   Access to capital is a heck of …read more

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In my last post today, I talked about a new course from the SBA describing the types of loans they have available.  Here is the second new course from the SBA.
The second one, How to Package a Loan Request,  discusses the requirements for putting together a loan.
It also includes a list of “realities” about small business loans that is worth noting:
Reality 1:  There is no such thing as 100% financing.  You will be required to put something into the business, sometimes “sweat equity,” but usually cash.
Reality 2: Your credit history is important.  If you have a great credit history- 650 …read more

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Over the next few days, I’ll be providing information on getting a loan for your small business – you know, the one you want to start after you “retire.”
First,  the Small Business Administration has two new online courses (really just PowerPoints) that provide information about the types of loans available and how to package a loan.
The Guide to the SBA Small Business Loan Programs gives you information on the types of loans available from the SBA, including their basic 7(a) loan, specialized loans (for women, minorities, veterans, etc.), and Micro-loans (small loans under $35,000).
Next, how to package a loan request….

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For a year or so, I used an online data storage system. I uploaded copies of all my writing (books, articles, blog posts) and all my financial data faithfully. But in the back of my mind, I always wondered if that was a good idea or a bad one.
The advantage is your ability to retrieve data online in the event of a hard drive crash or other computer malfunction.
The disadvantage is your inability to retrieve data online in the event of a hard drive crash or other computer malfunction. The other disadvantage is the possibility that other …read more

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In my attempt to help you find that great second (or third) career,  I’m continuing to look at businesses that baby boomers can start. Today it’s businesses in the beer-wine-alcohol industry, specifically microbreweries.
By the way, American Craft Beer Week was just a couple of weeks ago.  Craft Brewers are “small, independent” breweries. A micro-brewer produces less than 15,000 barrels a year.   The New Brewer, a publication of the Association of Brewers, says that over 2 billion (not a misprint!) pints of craft beer were enjoyed last year.  That’s a lot of beer!
Another reason to start a beer-making business: …read more

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I’m still not sure we’re really in a recession. “Experts” have been talking about a recession since January. I figure by the time they decide we are in a recession, it will be over. But we do know that the only certainty is uncertainty. And business people don’t like uncertainty. So, what kind of business should you get into or invest in, and how do you run your business in uncertain times? Over the next few posts, I’ll give you some ideas and I’d like some of yours. For example:
1. …read more

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