One of my targeted real estate brands is Homes Near Campus. As such I have been following the real estate market since 2003 near Biola University. Recently when reviewing the data I noticed a positive bounce in prices and a drop in inventory. Plus the days on market has stabilized. If this continues then my investors who own properties within one mile of the campus will be happy.

I recently ordered some new business cards from OvernightPrints.com and was happy with the quality and price. A designer friend of mine recommended that I use them but only if I went with a matte finish and preset the Pantone/PMS colors in Illustrator (instead of expecting what was on the screen to match the printing). These were good tips and I was satisfied with the results.

One thing that he didn’t mention was to look for a coupon code before placing the order. I saved 20% off their already good prices by first going to RetailMeNot.com.

If you can’t afford high-end printing this is a good option to maintain quality and seriously save on the budget. Obvioulsy it helps if you have a good layout so spend the extra cash on hiring a designer and save on the printing.

Advanta has announced that they will be no longer offering small business credit cards. With only 3 days of warning they have indicated via e-mail and on their website they are no longer able to fund activity due to their own financing problems.

Small Business owners have appreciated the focus that Advanta has given them. Unfortenatly, this is going to make it more difficult to obtian working capital. For many small business owners Advanta was some of the first credit they they obtianed to operate their businesses.

Problems with  the credit card companies is going to have a “trickle-down” effect and harm small business and the overall economy. Good bye Advanta. It was nice to know you.

Small business has been told they’re going to be financing a portion of the most recent stimulus package. Any business that offers health care and is subject to federal COBRA or simular requirments under state law is required to pay 65 percent of the premium on behalf of the COBRA participants. To recover the subsidy employers have to wait until they file Employer’s Quarterly Federal Tax Return (i.e. Form 941). This means that the float has to be financed by small business working capital which is already streached thin. Additionally, the additional administrative expense in complying with this program is lost productivity when we can’t afford it. While it generally doesn’t apply to businesses smaller than 20 employees this is going to impact a large number of companies. I don’t have a problem with the assistance provided to these unemployeed workers but the way that it is being implemented puts the burden on the employeer. It’s just another example of how governement shifts the burden over to business.

American Express has taken a step backwards in it’s small business focus.

In recent years, American Express OPEN has significantly expanded the range of card products that [they] provide to small business owners, and those products are at the core of how [they] meet the purchasing needs of [their] customers. As a result of our increasing focus on this core set of products, American Express OPEN has decided to discontinue the Business Line of Credit and Business Capital Line program[s], effective January 15, 2009
Source: AMEX

This is bad news for small business owners in an already difficult time. It could be the death blow for some small businesses who’s only working capital left was the AMEX LOC. It’s a shame that AMEX needs to focus on revenue models (i.e. transaction fees charged to merchants at the point-of-purchase) that are best for them and not what’s best for the small business owners.

Do you know how much actual income is derived from your business? In real estate many investors have never sat down to see how much their property actually makes for them. To see how strong the business is you should first ignore financing, income taxes, and depreciation and find out the net operating income after you subtract revenue from required expenses.

I sat down with an investor who owns a property in Portland, OR. A rough calculation of his cap rate identified that it was only 1.74%. This one bedroom condo was limited in the rents it could obtain, had high HOA costs, property taxes tied to current value, average management fees, and a vacancy rate of 8%.

The only reason that this landlord wasn’t writing checks all the time to subsidize the property was because he has approximately 75% equity. This creates a situation where it took an outside point of view to show that it is an under performing asset.

When was the last time that you sat down to see what your operating income after accounting for the input costs? Unless there is another reason to keep that product or service maybe it should be removed from your portfolio.

Doesn’t this so eloquently capture how we are all feeling about the current state of the financial markets? It would be even better if the Economist actually had published this cover. With these types of spoofs floating around the internet it’s clear that the market(s) have changed!! You’ll most likely have to make changes to the way you run your small business. But the good thing about change is that it provides opportunities. Focus on the opportunities. Focus on your strengthens. Keep it all in perspective… The bigger the change the bigger the opportunities. This may actually be a great thing for you long-term!

Some say that greed caused the markets to over price assets. Greed causes you to take on too much risk and ignore rational strategy and conservative business models.

Fear is actually stronger than both rational thought and greed. Fear leads to undervaluation and emotional transactions.

How will the current market madness imapact your business? Who knows? The only thing that you can do is take a realistic assessment of your strengths, weaknesses, opportunities, and threats.

If you have extra time because sales have dropped off then take this as an opportunity to work ON your business! Remember that successful businesses can start and/or grow during periods of economic downturn. You just need to focus on the needs of your customers and solving their problems.

We’re in an amazing time right now. Some have said that this is once in a lifetime economic event. It’s scary when Fortune 500 companies and governments (like the State of CA) are struggling to get financing and having major consequences as a result. What does that mean for small business owners who even in good times are ignored?

I recommend that you do diligent vetting of your bank(s) to make sure they won’t default on their promises to you. With my companies I directed a mini run on the bank (not for deposits) but for access to the lines of credit. I was talking to a VP at WaMu and she agreed that this was a good idea. Lately some banks have been required by the FDIC to take actions to limit access to the unused limits on small business credit lines.

Does this mean that you should change your bank? Maybe not. The addition of 150% more FDIC insurance will help reduce risk. However, if you have a healthy payroll it wouldn’t be a bad idea to “spread it around”.

In the immediate future it’s going to be the small business owners who are hurt the most. Since we’re the ones who create the most jobs it could cause a protracted downturn.

Now that access to cheap capital may be over (at least temporarily) I predict that you’ll see more conservative management practices and an additional willingness to obtain equity investments in the business. After all, you’re business might just be the safest business in town. it’s a known risk that can be controlled instead of unknown risks popping up and causing havoc 24/7.

Hopefully we can all survive and be stronger at the end of this major event!

The Fed failed to take action and liquidity concerns appear to have pushed up the mortgage rates today. Rates increased about 1/8% this afternoon after the announcement compared to what was available this morning. They’re trying to balance the need to stimulate the economy with the side-effects of higher inflation. With all the problems in housing and finance we need a Fed that actually does something instead of sitting on the sidelines. Yes, they did add about $70 billion to the banking sector but apparently that wasn’t enough!

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Source: Federal Reserve

The Federal Reserve decided today to lower rates 0.25%.

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Fed expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity.

Source: Federal Reserve

We’ll it’s official, we were not in a recession in the first quarter of 2008! GDP numbers released today show growth of 0.6%. That’s better than expected macro economic data. But what does it mean for you and you’re small business. First of all, microeconomics (i.e. your business) is much different than macroeconomics. I know businesses that are experiencing  growth in excess of 10% per year. Obviously if the larger economy is having a slowdown it could have some impact on your business. But it is more likely that if you’re business is having problems its because of the fundamentals.  A bad balance sheet, poor branding and marketing strategy, non-existent systems, etc.  If things are slower for you then that gives you additional time to focus on the fundamentals of your business. If you don’t then maybe you should focus on an exit strategy. Just don’t blame it on the “economy”. Good businesses are not killed by cycles.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Fed expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. They plan to continue careful monitoring of inflation developments.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain.

Source: The Federal Reserve

The Fed made an unexpected move over the weekend by lowering rates 25 basis points. There is still a possibility that rates will drop lower after their meeting this week.

[UPDATE 03/17: The rate that the Fed changed over the weekend does not impact the prime rate (currently 6%). However, this change and the failure of Bear Sterns does increase the possibility of a rate cut between 50 and 100 basis points. My bet is now that we'll see a 75 point drop and the prime rate at 5.25%]

My bet is that the Fed drops rates by another 50 basis points this week. Which is great when you need to borrow for working capital needs … Bad if you’re looking for interest income.

On Jim Cramer’s Mad Money there is a regular segment called “Am I Diversified?”. As a small business owner often the answer is a very clear NO! Most owners have a majority of their wealth invested in their business. While this strategy might be effective in the beginning of your career … it is important to set a little bit aside every month. Invest in companies in a different industry or sector from the way you make a living. Here are five tips for becoming more diversified:

1. Find investments that are counter to the trends that you experience in your business. (chose investments that will be more likely to offset downturns in your sector)
2. Spend some time to become knowledgeable about the companies in which you invest. (listen to the conference calls and watch the stocks, you’ll learn things to help your investments and maybe even your company)
3. Minimize your downside risk by choosing stocks that pay solid dividends. (every month or quarter that you receive cash payment you’re taking money off the table and reducing your risk)
4. Make your investments in non-retirement accounts (if you ever need the funds for your business you don’t want to have to pay additional taxes or fees to tap those assets)
5. Start small and grow over time (your business is important but if you pull a little bit out at a time you’ll learn a great habit and you’ll never miss it)

I know your business is important, but don’t forget to spread out your assets (even just a little bit). Not only will it help maximize your wealth but it will help you sleep better at night since you know that everything isn’t dependent on your business.

With the corporate filing deadline a few days away and personal taxes due in a little more than a month … you can’t deny that tax time is here. Bootstrapping teaches owners to try and keep expenses low. This is generally a good thing unless you’re planning on preparing your own taxes. As a small business or startup you really should have the input of a CPA. Even if you’re revenues are small it’s important to have someone who stays on top of the changes in the tax laws and knows the best way to structure transactions in ways that maximize your upside and minimize the downside. One area that many small business owners get into trouble is in the over use of draws in a S-Corp. If not done correctly you could expose yourself to personal tax liability unnecessarily. Instead of spending $80 on software that will help you do the math…it’s better, in my opinion, to spend $600 and get professional advise. Your tax situation is unique and the cookie cutter approach is a recipe for disaster. Don’t under estimate value of professional advise. It often pays for itself very quickly.

There has been a lot of talk lately about the housing and credit. Most people know that their properties would appraise for less now than a year ago. But did you know that the softening market by itself changes the requirements for new loans? Wells Fargo is one of many lenders that has imposed a 5% reduction from maximum financing on ALL transactions (regardless of whether or not the property county is identified by Wells Fargo as at risk) when the appraiser identifies any of the following:

• Declining property values
• An Oversupply
• >6 months marketing time

For example, take a $700,000 primary residence purchase at 80% LTV in a market where the appraiser indicates declining property values. The LTV must be reduced to 75% as 80% is maximum financing and the appraiser has identified declining values.

So if you’re looking to take make a purchase, make sure you have enough cash to put down 25% or more, or be prepared to pay extra on a second (if available). My guess is that these new policies are going to slow down real estate transactions and make it tougher for banks to get rid of their REOs, it will encourage people who want to move to stay put for a few years, and make it hard for time home buyers.

For most small businesses the two companies that will have the greatest impact and issue “credit scores” are Dun & Bradstreet (D&B) and Experian. The D&B rating is compiled in their Paydex Score and Experian provides a business Credit Ranking Score.

In my experience, establishing a business line of credit for a corporation is based on a combination of your Experian or D&B score, years in business, revenue, personal FICO scores for at least 80% of the owners, and the credit utilization on owners personal report(s).

For example, Washington Mutual recently issued a revolving line of credit (under $100,000) based on the following criteria:

• credit line less than 15% of annual revenue
• 2.5 years of operations preferred
• an Experian score of 80 or higher
• personal FICO scores of 720+
• personal credit utilization of 25% or less

From this they calculated an internal risk rating on a 200 point scale. Based on your score you would fall in one of several tiers (all with a different margin rate). The closer to 200 the lower your margin (i.e. 1% instead of 2%). If you received a credit line you would get a variable interest rate of Prime + your margin.

For certain industries that they consider high risk like real estate they have higher standards and lower credit lines (10% of revenue instead of 15%).

When applying for a business line of credit you should shop around and find out what the underwriting guidelines are for each bank. Also, the type of documentation that you need will factor into how easy it will be to process your application. Every bank is different and some banks are more aggressive in order to obtain the rest of your business. So be prepared to move your checking accounts as well if you don’t have an existing relationship with the bank.

The fact is that until you reach a level of success where you have millions of dollars in annual revenue, the owner’s personal FICO scores and credit report are often more important than D&B or Experian Business. But as you grow, the importance of these scores will increase.

The secondary market for loans has dried except for “conforming” loans. This has made it hard for people to purchase or refinance real estate in an already difficult housing market. Here’s my summary of the good and bad of the Economic Stimulus Act of 2008 that Bush will sign soon sign into law:

• The best part is that it will be retroactive to July 1, 2007. This will allow banks to improve their balance sheets by selling of existing jumbo loans. With improved financial stability it’s likely that the banks will then begin to loosen some of the extremely tight lending standards that have been in effect for months. This will help add liquidity to the market.

• The next best thing is that the new conforming loan limit will no longer be a national number but instead vary by region. If they qualify, borrowers could obtain “conforming” loans up to 125% of an area’s median home price (maximum of $729,750). This will help adjust for variations in housing markets.

• The worst part of this package is that it is temporary. It is slated to expire at the end of 2008. Therefore, congress will need to act again in order to provide long-term solution. This will cause more liquidity problems in 2009 unless congress acts.

Most people talk only about the “rebate” checks but I think more people should talk about the new conforming loan limits. These adjustments are only temporary, but they will likely have a larger impact on our economy than a few hundred dollars per person.

Before just jumping into advertising…you need to determine the type of experience that you want your users to have. Some businesses should never have advertising…for others it is a means of funding the operating costs of a service. TV is a good example, ABC doesn’t charge users a fee to watch their shows…but everyone knows it costs money to produce them. In exchange users are willing to watch commercials. HBO on the other hand is a paid service and users expect it to be commercial free. Both provide similar content but the “price” and “experience” are different. You first must decide is your website ABC or HBO? Some businesses like magazines or newspapers get away with both. You just need to determine where you’re going to fall.

If advertising is indeed right for you then you need to have all of the statics, analytics, and traffic to validate your value to the advertisers. You need to know your target market. Why would I pay to communicate to them? What’s in it for me? Affiliate programs such as LinkShare or Commission Junction are the best for testing the various types of advertising that would be most effective. While you don’t get paid unless the user accomplished a goal, you will be able to see traffic flow and obtain hard data that can be used to sell to others.