Tuesday, October 13, 2009
Report: CIT Nears Bankruptcy, CEO to Resign
by CalculatedRisk on 10/13/2009 08:23:00 AM
From Reuters: CIT debt swap struggles, bankruptcy looms. Reuters is reporting that “sources familiar with the matter” say bondholders are showing little interest in the debt exchange offer and a bankruptcy is now more likely.
Also this morning CIT announced that CEO Jeffrey Peek is resigning effective Dec 31st.
The possible bankruptcy of CIT is a major concern because CIT provides financing for about one million small businesses. And small businesses are already having trouble obtaining credit.
From Peter Goodman in the NY Times: Credit Tightens for Small Businesses
Many small and midsize American businesses are still struggling to secure bank loans, impeding their expansion plans and constraining overall economic growth …
Most banks expect their lending standards to remain tighter than the levels of the last decade until at least the middle of 2010, according to a survey of senior loan officers conducted by the Federal Reserve Board. … Bankers worry about the extent of losses on credit card businesses …[and] are also reckoning with anticipated failures in commercial real estate. Until the scope of these losses is known, many lenders are inclined to hang on to their dollars rather than risk them on loans to businesses in a weak economy …
Also see: Small Business and Employment
A CIT bankruptcy will probably lead to even tighter credit for many small businesses exacerbating the current credit situation.
Categories: Business Start-ups
Over the last week I’ve done several posts on different surveys showing how small business owners view risk. A quick summary is most small business owners think working for someone else is more risky than owning a small business and they are very good at minimizing business risk.
Several people have asked me does this data mean that small business ownership is less risky than traditional employment? The quick answer is yes, but only if your small businesses is successful.
The reason is the referenced surveys onlysurveyed existing small business owners. This is almost always the case with small business surveys because most research is focused on what is going on at existing small businesses.
But if your goal is to find out how all small businesses owners think about risk, this approach is flawed. This is because former small business owners – the folks that went bankrupt, lost their companies or were removed from their jobs – are no longer small business owners so theyaren’t included in these surveys. Because business failures are excluded, the survey resultsare biased towards successful small businesses.
It’s possible (probably likely)that failed small business owners consider small business ownership riskier than those still in business.Andincluding them might change the survey results.
This is called survivor bias and it is a common research problem.
My favorite example of survivor bias is surveyingexisting customers to develop satisfaction ratings. I was once asked to figure out why a company was losing so many customers despite having stellar customer satisfaction ratings.
It turned out they didn’t include customers that left prior to the annual customer satisfaction survey. After all, they explained, they weren’t customers anymore.
Not surprisingly, when surveyed this group rated the company very low in several important areas. But because of stellar ratings fromthe shrinking number of customers that stayed with them, the company was unaware of these problems.
So if you are considering small business ownership, entrepreneurship or self-employment keep survivor bias in mind as you read surveys and talk to people. Also, make sure to talk to folks that have failed. They will give you important and likely different perspectives than people thathave succeeded.
Categories: Business Start-ups
Phase One – The Changing Face of Entrepreneurs (January 2007)
Focuses on the changing face of entrepreneurship, in which the most diverse pool of entrepreneurs will drive American small business. The report looks at who they are and the factors driving them—everything from job insecurity to early entrepreneurial education.
This first installment of the Intuit Small Business Forecast series examines three emerging trends that will impact small business formation and operations over the next decade.
Categories: Business Start-ups
Research & Ideas
Understanding VC Networks
| Published: |
December 4, 2006 |
| Author: |
Julia Hanna |
Most of us have experienced the power of networks. There’s the job found through a friend’s sister’s boyfriend, or the lifelong partner met through a neighbor’s cousin.
But how do networks play into business—particularly the relationship-rich industry of venture capital?
New this year to the HBS faculty, Toby Stuart studies networks and how they enable or impede certain organizational and entrepreneurial behaviors. In a working paper, “The Evolution of Venture Capital Investment Networks,” he and coauthor Olav Sorenson of University of Toronto’s Rotman School of Management examine the effects of geographic distance and a “hot” IPO market on the formation of networks in the venture capital industry.
Categories: Business Start-ups
Harvard Business School professor William A. Sahlman’s article on how to write a great business plan is a Harvard Business Review classic, and has just been reissued in book form. We asked Sahlman what he would change if he wrote the article, now a decade old, today. Key concepts include:
- A business plan can’t be a tightly crafted prediction of the future but rather a depiction of how events might unfold and a road map for change.
- The people making the forecasts are more important than the numbers themselves.
- What matters is having all the required ingredients (or a road map for getting them), not the exact form of communication.
- The best money comes from customers, not external investors.
Bill Sahlman: Writing a business plan is a seminal moment in the life of a new venture. Doing so entails committing to paper a vision of the factors that will affect the success or failure of the enterprise. People take the exercise very seriously and get emotionally invested in what they produce.
In that context, the article was written to give insights into how to think about the role of a business plan and its relation to new venture formation. I tried to explain that a business plan can’t be a tightly crafted prediction of the future but rather a depiction of how events might unfold and a road map for change. I emphasized the notion that successful entrepreneurs constantly seek the right mixture of people, opportunity, context, and deal. They anticipate what can go wrong, what can go right, and they try to balance risk and reward.
Over the years, I have received many e-mails from folks trying to craft a business plan. They want feedback. Actually, they really want me to say that they are on the right track. I explain that I would need to get to know them and their opportunity much better than what is possible in an e-mail and that the written document is not as important as the people writing it. It’s not science—it’s art and craft.
Click here for the entire interview.
Categories: Business Start-ups
‘Fundamentals for Founders’: What Every Startup Should Know from Knowledge at Warton
“Everyone has a plan — until they get punched in the face.” These words of wisdom from boxer Mike Tyson begin a new book titled, Fundamentals for Founders: The Practical Guide to Kick-Starting Your Business. As co-authors Peter Burchhardt and Dan Hou note, starting a business from scratch is an adventure led by passion, inspiration and innovation. However, like any adventure, startups hold plenty of surprises, and not necessarily all good ones.
It doesn’t have to be that way. In Fundamentals for Founders, Burchhardt and Hou, who have founded a number of businesses in the U.S. and China over the past decade, walk budding entrepreneurs through what they see as the building blocks for a successful startup. Those include lessons on how to conduct market and competitor research, design user-friendly products, use marketing techniques like online advertising and search-engine optimization, as well as craft a financial model to show how much cash the startup needs along the way and which parts of the business will drive profitability. …
Categories: Business Start-ups
http://asbdc.ualr.edu/consulting/feasibility.pdf
Arkansas Small Business Development Centers – A partnership program with the U. S. Small Business Administration and the University of Arkansas at Little Rock
This workbook is not a guide to writing a business plan. That is an extensive process that varies from business to business. Before you proceed to do a business plan, you should have already completed the basic business feasibility analysis.
TABLE OF CONTENTS
INTRODUCTION 1
IDENTIFY PERSONAL OBJECTIVES, SKILLS, AND RESOURCES
Step 1. Identify Your Personal Objectives 5
Step 2. Identify Your Personal Skills and Experience 7
Step 3. Identify Your Personal Financial Resources 9
DESCRIBE BUSINESS IDEA AND REQUIREMENTS
Step 4. Describe Your Product or Service 14
Step 5. Describe Your Customer 16
Step 6. Describe Your Competition 18
Step 7. Describe Your Sales and Distribution Process 20
Step 8. Describe Your Management Requirements 26
Step 9. Develop Your Sales Forecast 28
Step 10. Identify Your Start-up Expenses 30
Step 11. Estimate Your 12-Month Operating Budget 32
STEP 12. EVALUATE BUSINESS FEASIBILITY
Market Scoresheet 45
Management Scoresheet 46
Money Scoresheet 47
CONCLUSION 49
Categories: Business Start-ups
August 22, 2009 By Anita Campbell
Small Business Operator is a book about operating a small business that has stood the test of time. It is in its 32nd printing.
The book is written by Bernard B. Kamoroff, a certified public accountant (CPA).
It’s the kind of book you will want to put on your bookshelf near your desk to refer back to often. And if you are serious about growing your business you WILL refer back. It will help you get better at:
(1) understanding your numbers, and how to use them to run your business better;
(2) taking all the tax deductions to which you are entitled;
(3) complying with tax requirements, including how to keep better records to avoid being audited, or successfully surviving an audit.
It is not a step-by-step guide about what to put on line 54 of your tax return. But it answers many questions about taxes encountered as you operate your business. It will help you make smarter decisions BEFORE tax time comes.
Get Small Business Operator
Small Business Operator is a helpful reference guide. It is well worth the $18.95 price tag (currently discounted to $12.89 on Amazon – a no-brainer at that price). If you find yourself with unanswered questions about how to get more profitable, manage your books, and save on taxes, you will want this book.
From Small Business Trends
Small Business Operator – A Manual for Tax Deductions and Bookkeeping
Categories: Business Start-ups
WorkingPoint is online business management software for small businesses. It is an ambitious and comprehensive offering that includes bookkeeping, invoicing, contact management, inventory management, a public marketing profile, and more.
As a web-based software solution, you don’t load any software on your machine; it is all on the Internet.
The main advantage of many of today’s software-as-a-service applications is they’re ready to use right now. Most of them require very little customization and often have templates specific for your business. In fact, even the registration form is simpler and faster to complete than standard software.
WorkingPoint is no exception: They only require a company name, username, password, and your email to get started. Oh, they also ask, “how did you hear about us?”
Dashboard
Once you register, you are instantly taken to a dashboard, a control panel of everything you can do in this invoicing and online bookkeeping solution. The dashboard elegantly packs in a lot of information. Rather than try to cram more in, it provides an intuitive text link, such as: See All Invoices in the Who’s Overdue box. What I really like about the dashboard is it has a customizable interface. I can drag and drop any of the items into another area as it suits me.
Learn more about WorkingPoint.
Categories: Business Start-ups
From the Toilet Paper Entrepreneur.
Click the following link to be reminded of the first rule of entrepreneurship.
LIFE IS GOOD!
Categories: Business Start-ups
