$5 Billion More in Loans to Small Businesses
One stimulus program designed to get loans flowing again to the nation’s small businesses worked very well, as in $5 billion well.
Lending to small businesses via two popular U.S. Small Business Administration programs rose nearly 30% in fiscal 2010, to $22 billion. The $5 billion increase translated to almost 7,000 government-backed small business loans.
The stimulus program’s “loan sweeteners” increase the guarantee on the SBA’s flagship 7(a) loans to 90% from 75%. That makes banks feel more secure about making these loans: They know that if a borrower defaults, the government will reimburse them up to 90% of the amount of the loan. The SBA doesn’t lend directly to small businesses; it backs loans made by banks.
Another related article by the Wall Street Journal.
A recent Gallup poll found an interesting change in the confidence of small business owner’s ability to retire.
Nearly 8 in 10 small-business owners prior to the recession in 2007 thought they would have enough money to live comfortably when they retire. By 2010, fewer than two in three felt that way.
When asked to rate each of a list of 11 different sources of retirement income, small-business owners are most likely to say: a 401(k) or similar account, the value of their business, the equity in their home, and individual stock and stock mutual funds, followed by Social Security.
From: Investors Go On Offense
The exclusive National Real Estate Investor/Marcus & Millichap Investor Sentiment Index shows that investor confidence has taken a major step forward in the past year. After bottoming out in 2009 with an index rating of 91, investor sentiment rose to 113 in the first quarter and 119 in the third quarter of this year. Although the index shows that sentiment is still well off the high of 148 that occurred in 2005, the positive trend over the past year is an encouraging sign that investor confidence is returning.
Read more here http://nreionline.com/M_M2010Q4.pdf
If you have been trying to time the expansion of your new business, now may be the time. The economy seems to be slowly improving yet there are still great lease deals available in the market. Landlords still carry a large amount of un-leased space and some are offering tremendous rates and other concessions. Now may be the time to lock in a great deal before the market turns around.
Lawrence Yun, NAR chief economist, said fallout from the recession continues to impact commercial real estate.
Vacancy rates are beginning to level off in some sectors, but rent discounts and moderate levels of landlord concessions are widespread. This is very much a tenant’s market, which is quite favorable for businesses that are considering expansion. It’s also encouraging that there is a modest improvement in the sentiment of commercial real estate practitioners.
Here is an interesting article about “pop-up” stores taking advantage of super cheap rates. “Pop-up” stores fill commercial real estate vacuum
After “Yes”, which is better, a “Maybe” or a “No”? From my experience, a “Maybe” is usually nothing more than a delayed “No”. Had you gotten the “No” immediately, you could have revised your proposal or used the time for other endeavors. Therefore, getting a definitive answer is critical to maximizing the use of your time. Here are a few tips to minimizing the time wasting “Maybe”.
- Establish a deadline. Always let the decision maker know the time in which a decision is needed. It is very easy to delay making a decision due to the many other distractions. Without knowing the importance of a timely decision, you may not get your “No” soon enough to move on.
- Provide all necessary information. “Maybe” often means that the decision maker does not have enough information. Explore all aspects of how a “Yes” will impact him or her and be prepared to talk to each issue.
- Realize that silence often means “No”. When the decision maker is being silent it often means he or she is trying to find a gentle way to say “No”. When you sense this, attempt to draw out his or her thoughts so you can either overcome the objection or learn the fatal flaw of your proposition. Sometimes you must provide an “out” to make the “No” easy.
What is TOC?
Theory of Constraints (TOC) is an overall management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help organizations continually achieve their goal. The title comes from the contention that any manageable system is limited in achieving more of its goal by a very small number of constraints, and that there is always at least one constraint. The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps. Read More.
The Theory of Constraints states that constraints determine the performance of a system. A constraint is anything that prevents a system from achieving a higher performance relative to its goal. A system is any collection of interconnected parts sharing a common goal. The Theory of Constraints was first applied to business systems. Dr. Goldratt defines the goal of a for-profit business as to make more money now and in the future. This definition is in keeping with the traditional definition of the goal of a business which is to maximize the owners’ or stockholders’ wealth. Constraints may be resource constraints such as a person or department that cannot keep up with market demand. If this department could produce more, more would be sold and the firm would make more money. If all departments can keep up with market demand then a market constraint exists. If more could be sold, the capacity exists to produce it and the firm would make more money. There are also policy constraints and dummy constraints. A policy constraint is a management decision or business culture that limits the system. For example, in the landmark book, The Goal, the plant highlighted in Goldratt’s novel had a resource constraint. At first, this resource was shut down during lunch breaks and shift changes, losing four to five hours per day across three shifts. This policy was a constraint. By working the resource truly all the time the Throughput of the plant was increased. A dummy constraint is a resource constraint that is easily broken. For example, in The Goal, the constraint resource was down occasionally awaiting the setup crew, making the setup crew a constraint. This is a dummy constraint because the cost of a setup crew is very small compared to the thousands of dollars per hour lost when the constraint was idle. A dedicated setup crew was applied to the resource constraint, breaking this dummy constraint. Read More.
Below are the 2 best explanations of Six Sigma that I have read.
From Wikipedia:
Six Sigma is a business management strategy originally developed by Motorola, USA in 1981. As of 2010, it enjoys widespread application in many sectors of industry, although its application is not without controversy.
Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Black Belts”, “Green Belts”, etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).
The term six sigma originated from terminology associated with manufacturing, specifically terms associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield, or the percentage of defect-free products it creates. A six-sigma process is one in which 99.997% of the products manufactured are statistically expected to be free of defects (3.4 defects per 1 million). Motorola set a goal of “six sigmas” for all of its manufacturing operations, and this goal became a byword for the management and engineering practices used to achieve it. Read More.
From iSixSigma.com:
Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process — from manufacturing to transactional and from product to service. Read More.
In a recent McKinsey Quarterly survey of 2,207 executives, only 28% said that the quality of strategic decisions in their companies was generally good, 60% thought that bad decisions were about as frequent as good ones, and the remaining 12% thought good decisions were altogether infrequent.
In the March 2010 McKinsey Quarterly, in an article titled “The Case for Behavioral Strategy“, the author explores the value in taking biases into account when setting strategy. Through their research, it was found that process has a larger effect on the decision than does analysis, by a factor of 6!
From: The Case for Behavioral Strategy, McKinsey Quarterly, March 2010
Improving strategic decision making therefore requires not only trying to limit our own (and others’) biases but also orchestrating a decision-making process that will confront different biases and limit their impact.
The article offers a four step process to adopting behavioral strategy:
- Decide Which Decisions Warrant the Effort
- Identify the Biases Most Likely to Affect Critical Decisions
- Select Practices and Tools to Counter the Most Relevant Biases
- Embed Practices in Formal Processes