President Obama meeting with National Economic Council Director Gene Sperling, Jason Miller, Special Assistant to the President for Manufacturing Policy, and Senior Policy Advisor Jacob Leibenluft, in the Oval Office

President Obama hosted a forum on “Insourcing American Jobs” at the White House yesterday. According to the press release circulated, “The forum will focus on the increasing trend of insourcing – where companies are bringing jobs back to the United States and making additional investments here in America.”

Ain’t that swell?

The point of this exercise isn’t only to encourage companies to create jobs here in this country but also to make stuff here and export it there instead of making stuff there and selling it there, too. In other words, it’s about jobs but it’s also about imports and exports.

To make his point, President Obama invited a number of very large company representatives (Ford, DuPont, Siemens, Intel, Otis Elevator) that are still making stuff here as well as a few foreign giants (ThyssenKnapp, Rolls Royce) and a handful of small businesses. And there are policy goodies for the Administration to announce.

Specifically for small businesses, there is the SBA’s International Trade Loan program, which the President is directing to educate small businesses about their potential eligibility to participate in the program. What program? you may ask. This is (yet another) SBA loan program, for small businesses trying to access foreign markets or that are adversely impacted by imports.

Evidently, there aren’t many small businesses using this program. President Obama and SBA Administrator Karen Mills think that’s because not enough of us know about it. So now, the SBA is going to make a point of telling us about it and helping us with the loan applications.

Because everybody knows that’s just what we’re all sitting around here waiting to do: take out loans.

There will be further policy goodies proposed by the President. Specifically, he wants to create tax credits for companies that bring jobs home and otherwise invest in the U.S. and he wants to eliminate any tax goodies that go to companies outsourcing jobs. Assuming, for the moment, that he is able to get Congress to go along with this idea, this will be something else we can always count on.

Tax incentives and loans. Oh my!

Once again, we’re looking at policy goodies nominally aimed at small businesses that miss the mark with most of them. Microbusiness owners might be able to take advantage of the tax rewards for hiring in the U.S. (assuming Congress doesn’t do this through corporate taxes instead of a more general business tax provision) but most won’t apply for the loans because most (a) won’t know about them and (b) would assume they wouldn’t qualify, if they did know about them.

And, of course, the SBA isn’t going to be able to educate as many small business owners as they hope (I suspect) because I don’t see anything they’re doing that indicates they’re any better than all the SBAs before them that tried to reach out to us and failed.

I don’t begrudge these policy goodies to the small firms for which they will work. I’m just tired of hearing politicians talk about pro-small business economic policy that doesn’t help 95% of small businesses.

That and I wish politicians would put themselves to the trouble of trying to find out what small businesses really need before they start trying to craft policy. How would they do that?

Well, it’s like Elmo always says: the best way to find something out is to ask questions.

That and to be very careful about who you are asking. There’s a whole alphabet soup of so-called small business lobbying organizations in Washington and most of them have no clue about most small businesses (which is to say, microbusiness).

So, while President Obama is trying to get the corporate giants to create American jobs and the foreign corporate giants to invest in America and the rest of us to create jobs in America, he probably hasn’t thought about the fact that the majority of small business owners do create jobs in America — when they create jobs at all.

In fact, here is something I’ve been told by more than one small business owner: “Well, I’ve been told by others in the industry that I’d make more money if I had my [bluggedyblus] made in China but I’d rather keep those jobs in America.”

You think small business owners get credit for that? If they do, I haven’t heard about it.

With the upcoming Presidential campaign, it’ll be interesting to see whether President Obama tries to woo small businesses. I haven’t seen much for him to work with from this White House but I’m willing to keep an open mind.

How’s that for mixing my metaphors?

Of course, you know that I sometimes write for Small Business Trends when I’m not busy being brilliant here. And one of my regulars is the annual microbusiness trends for the new year article.

This year is no different.

Yes, I have dusted off my crystal ball to give you want I consider to be the best opportunities for microbusiness prosperity in the coming year. Of course, these aren’t the only kinds of businesses that’ll make you money in 2012. As it happens, it is looking like the economy is looking up: the NFIB’s Index of Small Business Optimism is up again for the third month in a row and has recovered enough to be back up to 93.8 points. But I do think that my short list of possibles has a lot to recommend it for short term gain.

You’ll see why when you read the article, because I explain it all over there.

Another prognosticatin’ article you might find interesting — at least, I did — comes to us from our friends over at Small Business Labs: they posted their annual trends article and it’s well worth a read.

I found the first two identified trends to be particularly interesting and insightful.

Have you come across any microbusinesses-in-2012 articles that I’ve missed? Don’t be stingy; share them in the comments!

One of the things I couldn’t tell you about when it happened has to do with my friend, Dr. Winslow Sargeant (who is not Kellen Winslow and has never played for the San Diego Chargers), Chief Counsel of the SBA Office of Advocacy.

The sad saga of Dr. Sargeant’s nomination to the Chief Counsel spot and the small minded Senate politics with which that nomination was greeted, the resulting standoff and delay, and President Obama’s final decision to resort to a recess appointment in order to get him installed have been pretty thoroughly hashed out in previous posts here at The Journal Blog and at the Microbusiness News Briefs.

I thought the story was over … until I received a certain press communication from the SBA in November.

The release essentially said that the Senate had finally confirmed Dr. Sargeant’s nomination to Chief Counsel of the SBA Office of Advocacy. After sitting in the Chief Counsel chair for sixteen months, doing the job and doing it well, the Senate finally decided to make it official.

Better late than never, I suppose.

From a practical point of view, none of this matters, of course. The nation’s small and microbusinesses have been benefiting from Dr. Sargeant’s championship for all this time anyway, such that we all managed to successfully forget that he hadn’t been confirmed by the Senate yet. I don’t know that this official blessing of what he’s been doing all along will make all that much of a difference on a day-to-day basis.

We won’t tell those Senators about that, though. It might make the cry.

It is my earnest hope to be able to persuade Dr. Sargeant to join me for a Microbusiness Conversation sometime this month. We probably won’t talk much about the Senate (I don’t want to get him in trouble), but we probably will be talking about what he’s been doing all this time without Senate approval. I hope you’ll be able to listen in.

Meanwhile, if there is anything to be learned from this entire tale, is is this: if you’re going to pay attention to what goes on in Washington, first develop a sense of humor.

Otherwise, you’ll end up with an ulcer.

Happy New Year! Remember me? Were you beginning to think you were never going to hear from me again? So was I.

No doubt you remember back in June 2006 I got flooded out of my house/office and was out of touch for a little while. I managed to battle my way back from that, beating the odds.

According to Labor Department estimates, 40% of businesses never reopen after a disaster and, of those that do manage to get their businesses going again, 25% close within two years.

Well, thanks to the double-whammy of Tropical Storms Irene and Lee, the upper Susquehanna River escaped its banks once again and took up temporary residence in the back yard. My family and I got to spend another four enchanting days and nights living on cots in the Middle School gym. And it has taken me a lot longer to get back to doing business this time.

I wonder what the Labor Department would estimate for businesses that get hit with two disasters within a five-year period?

Once again, I am determined to beat the odds — although I’m pretty sure it’ll be a lot harder to do this time. I’m going to start with getting back to blogging here and I hope to start publishing The MicroEnterprise Journal again very soon. I’ve still got some business infrastructure stuff to put to rights, too.

I’ll keep you posted. Assuming I manage to pull this off, it’ll make for an interesting story one of these days when I can look back on it all and smile nostalgically.

And, by the way, if you don’t have some kind of disaster plan in place, you might want to think about my story and take appropriate steps.

Wish me luck.

It’s gotten to be that time of year again.

Yesterday, the U.S. Census Bureau released new nonemployer numbers and we’re seeing a continuation of a trend that started last year: for the past two years now, the number of nonemployers has been declining.

That’s a big deal, at least in part because that had never happened before last year.

Overall, the number of nonemployer firms fell by a little less than a quarter of a million firms, down from 21.3 million to 21.1 million establishments. That’s a 1% decline in population.

Now, here’s the part I say every year: just to remind you, nonemployer firms are those with no paid employees outside the business owner(s). Firms with taxable receipts of at least $1,000 are included but the upper cap is a bit more complex than it used to be:

“For corporations and partnerships this cutoff is $1 million, except for service-type industries, where the cutoff is $2 million. For sole proprietorships, the cutoffs vary widely depending upon industrial classification. For some nonemployer sole proprietorships, such as those engaged in investment and entertainment, it may be possible to have well over $1million in receipts. However, it is unlikely that a sole proprietorship restaurant, for example, would have over $1 million in receipts and have no paid employees.”

In addition (if I might take a trip into data geek-ity), Census has made some changes in its methodology here. That meant that it would have been inaccurate to have made any direct comparisons between last year’s data and this year’s data. To address this problem (and to illustrate what the changed methodology might have done to previous data), Census released the 2008 numbers calculated according to the new methodology. I am using those new numbers here, rather than those I used for last year’s update.

One other note: as a general matter, while some firms are owned by more than one person and some persons own more than one firm, it all averages out so that the number of nonemployer firms is a pretty good proxy for the number of nonemployer firm owners in the country.

Okay, now that we’ve got all that technical stuff out of the way …

“Nonemployer firms generate a small percentage of total U.S. business receipts, but they constitute the majority of U.S. businesses,” said William G. Bostic Jr., associate director for economic programs at the U.S. Census Bureau. “The decline we have seen since 2008 reflects the change in economic conditions during that time.”

You can say that again.

And, in fact, the money tells a much more dire tale than the population numbers. Aggregated receipts for all nonemployer firms fell from $930 billion to $837 billion, a fairly steep $92 billion drop (down 10%). Average, per-business receipts for nonemployer firms declined from $43,645.86 to $39,723.29 — imagine taking a 9% pay cut ($3,922.56).

When you look at the number of firms according to NAICS codes, what you see makes sense in the aftermath of the collapse of the financial markets in September 2008.

Not all industry sectors lost large numbers but those that did are either capital intensive industries like manufacturing and retail, or they rely heavily on financing of transactions like real estate and finance/insurance. Utilities (down 9.75%), mining (down 8.77%) and real estate (down 7.22%) were the top three losers there.

On the other hand, nonemployers in the services sector continued to add firms in 2009 — but not in large enough numbers to make up for the carnage in the goods producing and financial sectors. “Other services” grew by 3.6%, heath care ans social assistance increased in number by 3%, and Administrative, et al., was a somewhat distant third, increasing in population by 1.76%.

Once again, though, the real pain was in the pocketbook. There was not a single industry sector that experienced any positive growth in receipts. The question there, instead, was who was hurting the most and who seemed to be weathering the storm while taking the least damage.

The mining sector took some big hits during the year. Aggregate receipts were down by more than 25%, while individual average receipts declined by 18%. That translates into a decline from $68,122 to $55,754 or a pay cut of roughly $12,755.

Ouch.

Nonemployers in transportation/warehousing (14%), accommodation/food services (16%), construction (12%), and manufacturing (10%) had the dubious distinction of rounding out the top five in pay cuts for the year.

Something new for this data release is that Census included income ranges for nonemployers. So, for example, we now know that one in four nonemployers earned less than $5,000 in taxable receipts in 2009.

The vast majority of nonemployers (82% of them, in fact) have annual receipts of less than $50,000. The remaining 18% earn more than $50,000, with 0.8% of them making $500,000 or more.

There are any number of ways to look at that and certainly there is no shortage of people who would be willing to label these tiny firms as having such low revenues as to be without value to the overall economy. On the other hand, given that 56% of nonemployers’ earnings fall between $5,000 and $50,000, it seems that there are quite a few of these people who are making a living.

For the owner/operators of nonemployer businesses, that is the point.

Interesting blog post by my old friend B.L. Ochman earlier this week. She talks about how often companies have the wrong attitude about customer service.

The wrongness of the attitude has to do with the company idea of where their money comes from. For example, one of the things I’ve often heard about the corporate glass ceiling is that women too often do not find themselves in “line” jobs — that is, they can be the V.P. of Human Resources but, as far as the company is concerned, that is not a job that leads to CEO because it’s not a job that makes money for the company.

In light of that, you’d think that the guy or gal in charge of customer services ought to have a straight-line shot at the top spot, right? B.L. writes:

Instead of having the most highly paid executives dealing with customers – the company’s most precious commodity – they have poorly paid or minimum wage employees handling customer service in stores, online and on the phone.

Customer service is something that every microbusiness ought to excel at because so much about customer service just plays to the structure of a microbusiness.

Watch.

B.L.’s top 8 ways to stop pissing off your customers goes like this:

1. “Make executives – not minimum wage employees – handle customer service.” Fairly often in a microbusiness, the person who answers the phone is the business owner.
2. “Make it easy to get a human being on the phone.” In a microbusiness, the only time a machine usually answers a phone is when there is literally nobody available to take the call — as in, nobody is in the office. Getting to talk to a human is the rule rather than the exception.
3. “Empower the people who answer the phone to make decisions and actually help customers.” This one depends to a large extent on the business owner and how much of a control monger he or she is. But, from a structural point of view, if you run a microbusiness and your (very slender) staff is on the same page with you — and you really need that kind of buy-in when your outfit is this small — it should not be a problem to empower said staff to “actually help” people who call you looking for solutions to a problem.
4. “Don’t piss people off.” Okay, it’s true that the customer isn’t always right and (let’s face it) some people are just jerks. But most of the time, customers with problems turn into angry former customers when they call you for help and you say you can’t help them. This might just be my bias but, in my experience, the smaller the business, the less likely I am to encounter that enfuriating it’s-not-my-job attitude.
5. “Have enough well-trained salespeople in stores to help customers quickly and well.” Of course, when you run a microbusiness, the one thing you don’t have much of is staff. On the other hand, when you run a microbusiness, it can be fairly easy to ensure that every single employee you have is an expert on your product and your firm and the intersection of the two. And that is just exactly the kind of expertise your employees need to solve customer problems — when you are too busy to take that call yourself, that is.
6. “Accept that customers usually have a point.” Generally speaking, the people who call you with a problem really do have a problem. But, then, you knew that.
7. “Listen to customers!” Customer issues and problems might seem to you like extra work in your already business day but customer issues and problems are also a form of feedback that can be incredibly valuable. I once knew an online microbusiness retailer who would adjust his web site and shopping cart every time he got a complaint from a customer who’d had any sort of problem browsing or purchasing from his site. It seemed crazy but, eventually, he had a site and checkout process that was about as close to glitch-free as any I’ve seen — and no more complaints about it from customers.
8. “Give customers the benefit of the doubt.” Don’t assume that anybody exists to feed your persecution complex. There’s no reason for that. Fortunately, it is pretty typical for microbusiness owners to be closer to their individual customers than Steve Jobs or Jeff Bezos could ever hope to be. Of course, Steve and Jeff have different priorities and that’s the whole point.

And that is the point. Microbusiness owners should focus on their strengths and one of those strengths is — or ought to be — customer service.

Serve your customers. That’s who pays the bills.

Happy Monday, fellow travelers.

One of the more interesting things that happens when the House and Senate are divided along partisan lines — you know, where one party holds the House and the other holds the Senate — is the way that you can have hearings on exactly the same topic in the two chambers that sound so very different.

It only stands to reason. After all, one of the reasons why Democrats are not Republicans, and vice versa, is that they care about different stuff.

That can make it seem like you really are a traveler — a space traveler — when you get to listen to what happens when such a pair of hearings takes place.

Unfortunately, it’s tough to get a full sense of that from news briefs. If you have about five hours to spare and you find political theater entertaining, I recommend that you go to the Committees’ respective web sites to listen in on the relevant hearings.

Who knows, you might find it eye-opening.

Listen to the Microbusiness News Briefs Podcast: Download audio file (06202011.mp3)

(Click here to subscribe to the podcast.)

For more information:

• House Committee on Small Business
• Senate Committee on Small Business and Entrepreneurship
• Small Business Contracting: Action Needed By Those Agencies Whose Advocates Do Not Report To Agency Heads As Required (PDF)

The National Federation of Independent Businesses (NFIB) released its June 2010 Small Business Economic Trends report for May of this year, indicating that small business optimism has declined for a third month in a row.

The problem is weak sales — at least on the surface. The NFIB uses this recession-level reading (the small business optimism index sat at 90.9 as of this report) to inveigh against a variety of the current administration’s policies, particularly the not-quite-implemented health care reform law.

But wait …

This morning, I received a note from somebody without a partisan axe to grind (unlike the NFIB) suggesting that their survey findings, which are pretty much the opposite, are available to offer a bit of balanced coverage.

The American Express Small Business Monitor for Spring 2011 found that small businesses are “shifting their focus from surviving to capitalizing on growth opportunities and they’re expecting to hire and make necessary capital investments in their firms, signaling to signs of an economic recovery.”

Fancy that!

Not for nothing but the NFIB surveys their members and their members are (as I have pointed out on more than one occasion) significantly and measurably different from statistically typical small business owners.

Then again, bear in mind that the NFIB conducts its survey on a month-by-month basis, while the AmEx survey is semi-annual. By rights, we really should compare apples with apples and oranges with oranges.

I’m just sayin’. (Pause for musical interlude) Download audio file (BlindedMeWithScience.mp3)

I’ll give you another example. Hearings on waste, fraud, abuse and duplication in small business programs at the SBA look very different in the Republican-controlled House than they do in the Democrat-controlled Senate.

Why? Because the House focuses on Obama Administration policies with which the GOP disagrees and its ideological differences with the way things are. Such a hearing, for example, has an additional focus on whether and how private sector entrepreneurial development programs get the job done without spending taxpayer dollars on small business service providers.

On the other hand, the Senate hearing spends a lot more time on the anti-fraud efforts underway at the SBA and whether those measures are getting the job done. In other words, “We’re Democrats andwe believe in government services but that means we have an obligation to make sure that our agencies get it right.”

(Both of these hearings are covered in more detail in Monday’s MicroEnterprise Journal and Microbusiness News Briefs.)

Naturally, your responses to these various assertions and perspectives depends on your own point of view and partisan inclinations. That’s not really the point.

If you’re looking for the facts, if you want to know what the story is, you probably are not going to find out if you listen to people with axes to grind — from either side of the issue (whatever the issue may be).

In fact, fairly often, organizations that take sides will only tell you enough information to get you to agree with them — always assuming that they don’t outright lie.

(In justice to them, the NFIB has research methodology standards that are reasonably rigorous enough to make their data acceptable, even among those of us who question their survey sampling. In other words, they don’t outright lie.)

This isn’t to say that you shouldn’t believe anything that anybody says to you.

I advise a certain amount of healthy skepticism.

Some people say that cynics are horrible people. On the other hand, you don’t really want to be the sucker that was born in your minute, do you?

(Photo by Daniel Leininger, via Flickr.)

It looks like the impossible has happened.

Budget negotiators in Washington are actually getting serious about cutting farm subsidies.

The lawmakers from the big farm states that get back so much more in farm subsidies from the federal kitty than they put into the federal kitty in taxes seem pretty much resigned to watching that kitty dry up. And they understand that if, philosophically, they are opposed to government handouts, that means their own handouts go on the chopping block, too.

It’s rather refreshing, really.

Of course, that hasn’t stopped the Ag lobby from making nuisances of themselves — but that was only to be expected.

You wouldn’t think I’d be in favor of ending farm subsidies, seeing as how I’m very much pro small farmers, would you?

But, you see, I don’t like farm subsidies because I don’t like the way they distort the food market in this country.

Direct payment farm subsidies for commodity crops make it really cheap for big agribusiness corporations to pay dirt cheap prices to farmers for those commodity crops.

That, in its turn means that the farmers make just barely enough money to keep farming. But, in order to keep the subsidies coming, they have to continue to grow those crops and they have to grow them in volume to make any money at all.

The agribusiness corporations take those dirt cheap commodity crops and take them away to process them into things like Twinkies and frozen dinners and canned and boxed stuff that masquerades as food. It’s not really food, of course. It’s mostly corn, teased in a lab somewhere to resemble something else, combined with dozens of unpronounceable chemicals.

(I know it’s not food because, when I bake a cake, it’s only got eight ingredients, and all those ingredients are real food: flour, milk, sugar, butter, salt, baking powder, eggs, and vanilla extract. Note the lack of unpronounceable chemicals.)

The end result is that the crap on the shelves packaged in cans and boxes, paid for in part by government subsidies, is cheaper than the real food in the produce section. The people with the least education and the least financial resources are eating the worst diets because that is what they can afford.

Those same people also have the most precarious access to health care and the crap they eat results in heart disease, stroke, liver problems, kidney problems, obesity and diabetes — all of which is costing us all a bucket of money.

My hope is that, if the farm subsidies go away, the real food in the produce section will be in a position to compete with the faux food from the processing plants.

My hope is that, without subsidies, some farmers will decide that it pays better to sell different crops (more variety of crops, better for the soil) directly to schools, hospitals, restaurants and grocery stories.

They’ll make more money that way, which will be good for them and the farm towns around them. People will, one hopes, start eating better, which will be good for them and good for the overall economy.

Of course, it probably won’t go that smoothly because it would be very unlike our nation’s leaders to fail to protect those corporations from the unpleasant repercussions of real and actual competition.

But I care more about those small farmers and about our nation’s health. So this is one form of austerity that I can get behind.

It’s been awhile since I blogged Krugman.

If you read Paul Krugman regularly, you have to ask yourself why policy makers don’t listen to him more often (if ever) because he’s usually right.

But, then, I guess that’s only to be expected from a Nobel laureate in economics. I’m impressed by that sort of thing, even if Washington isn’t.

But I digress.

So, one of the things that Krugman predicted was that the fiscal stimulus enacted back in 2009 was too small and would run out of steam before the economy had fully recovered.

That’s happening right now.

So, now, Krugman is talking about how it is unfortunate that policy makers have changed the entire conversation on the economy. Now, everybody is talking about deficit/debt reduction, as if that was going to fix the economy.

The only problem with that, as most microbusiness owners know, is that lessening government spending is not going fix the economy. In fact, it’ll probably make things worse because (a) if the government is shrinking, that means people are getting laid off and (b) if the government is shrinking, that means it’s not buying things.

And both those effects will only exacerbate the real problem: unemployment.

Unemployment is the problem because unemployed people don’t have much in the way of disposable income. They’re not buying things. Since they’re not spending, businesses don’t have customers and demand isn’t there to justify … job creation.

Can you say “vicious cycle”?

Parenthetically, those noisy House Republicans aren’t really all that interested in reducing the national debt. If they were, then they wouldn’t refuse to put tax expenditures on the table.

You could do a lot about the government’s precarious fiscal situation simply by letting the Bush tax cuts expire. If you’re not willing to do that, then don’t talk to me about fiscal responsibility.

What they’re really after is ideological. They want to force a reduction in the size of government because that is what conservatives are always after. That’s what they believe in. Since they haven’t been able to do it openly — not even when their boy was in the White House — they’re trying the stealth version.

We’ll see how that works out for them.

Meanwhile, none of this is why I’m bringing any of this up.

You see, whatever the politicians ought to be doing, we can all see that what they are not doing is stimulating businesses to create jobs. Then again, it’s going to be hard for them to do that if they’re broke. Besides (because Krugman points out that there are some things that can be done), right now, it looks like the political will is lacking.

So, besides voting the bums out (and President Obama should be concerned about his job security along about now), what can Americans, abandoned by both the left and the right, do to hold it together?

They can start nonemployer businesses.

The new nonemployer numbers, the ones for 2009, are due out next month. But the ones I’m really waiting for are the 2010 and 2011 numbers, expected to be released in 2012 and 2013, respectively.

I don’t think there’s going to be a lot of job creation because I think there will be too many people just managing to hold it together and too many households paying down debt to dash out and spend a bucket of money. So recovery is going to be slow and painful.

But people can only go so long without a way to support their family. There’s only so long that we can afford to keep paying out unemployment benefits but the bills don’t go away when we stop. Once again (yeah, I’ve said this before), if nobody is going to create a job for them, they’ll have to do it themselves.

The really interesting part is what’s going to happen when job creation picks up but a sizable portion of those newly self-employed decide they like it and want to stay where they are.

The really interesting part is what’s going to happen when the policy makers and the mainstream economists wake up one day and notice (finally!) that the economy has changed. Fundamentally. Structurally.

At that point, you and I will have a decision to make.

Do we snicker? Do we smirk? Do we smile a serene, Mona Lisa smile? And does that smile come before or after we’ve said, ‘I told you so’?