A recent report from the Federal Reserve Bank of Richmond reveals that the number of community banks dropped by a whopping 41 percent between 2007 and 2013. That’s bad news for small business owners, who rely heavily on financing from small, local banks.
Even more troubling is the potential culprit. Analysis by the Fed suggests that the Dodd-Frank Act is at least partially responsible.
A Harvard University study shows that the rate of decline in the community bank share of commercial banking assets has doubled since the passage of the law in 2010. Moreover, almost all of the decline in the number of community banks in recent years has resulted from a cessation in bank formation during the current economic recovery, the Richmond Fed reports.
(Bloomberg) — Sterling Risk Advisors, an Atlanta-based property and casualty insurance broker with 86 employees, has added 13 workers since June and will probably hire 10 to 15 more this year.
“We are committed to growing,” said Doug Rieder, 50, president and co-founder. “We feel a lot better about business. We are pretty bullish right now.”
Small business, responsible for most American job creation, is finally gaining momentum, giving an expansion approaching its sixth anniversary some legs and leading an acceleration in job creation. Confidence is near a post-2007 peak for small companies, construction is recovering and credit conditions are easing.
Small, local businesses lack access to capital. Banks will place restrictions before giving loans, like asking for collateral, wanting to see years of revenues, or asking for personal covenants. And then venture and angel investors aren’t interested in the low-rate returns hairdressers, restaurants and furniture-makers can offer; they want “high growth.”
That is why small, local businesses generally stay as small, local businesses. But what if small businesses could reach over the top of those market failures to the general public and investors who are willing to suffer the relatively low returns on offer? That might open up options.
Obtaining funds to start a new business or to expand an existing one can be a challenging and exciting experience. Before lenders and investors can commit to funding, they will want to know there is a high chance that your business will be successful.
Certain areas need to be addressed and prepared such as a coherent and comprehensive business plan that includes marketing strategies, financials, product or service offerings, competitor analysis, and short- and long-term growth strategies.
“My business is in trouble with debt spiraling out of control and I simply don’t have enough cash to make payments on time. I’ve read that most small business startups have problems similar to mine, but why?”
This concern is common amongst the directors, managers, and owners of small business startups in the UK, and for good reason – about 2/3 of startups fail within their first 3 years of operation. Usually the failure is brought about by a number of factors that work together synergistically to make business progression difficult. Here are the 4 most common reasons why small business startups don’t do well:
1. Inadequate PreparationStarting a successful startup is all about planning – analysing your market conditions and competition. Some of the things you’ll need to know and have planned for:
- Who is going to buy your product/service
- How many companies are providing similar offerings
- Why your company’s offerings will be more appealing
- How much your competition is charging
- What it will cost to get the business of the ground and start an advertising campaign
- How much the business will need to spend to operate on an ongoing basis
The economic recovery may be continuing, but small business owners aren’t ready to put the rose-colored glasses back on.
According to an exclusive CNNMoney-Manta survey released Tuesday, 28% of small business owners said the economy is the “biggest challenge” they’re currently facing, topping issues like sales, regulations and financing.
The survey polled over 1,500 small business owners across the country. Even those experiencing revenue growth are hesitant to test their luck. “We’ve done well as a small business, [and] banks are willing to lend us money,” said Victoria Aguilar, the founder of a small law and consulting firm. “But is it safe to bring on another employee?”
As I left our home and drove around the mountain, fog enveloped me quickly. Unexpectedly.
There was no sign of fog when I pulled out of our garage.
The business environment changes that quickly, also, particularly with what influences our customers’ and clients’ lives.
For example, the shooting down of the Malaysia airliner over the Ukraine suddenly dominates our conversations, news media, buying habits, and prayers. It fogs our perception.
So how do you do business when tragedy fogs over your business? Here are 3 Strategies to Work Positive in a Tragedy.