NASE on Micro-Business

Archive for June 2009

When talking about those small, rectangular pieces of plastic you keep in your wallet, many people use these words interchangeably.  However, as this informative Small Business Trends article shows, these words can mean a big difference to you and your business.  Check out the considerations that author Adam Jusko outlines in the article to make sure you’re choosing the right card for you.

Hat tip: Small Business Trends

As I watched the news announcing the 150 year sentence for Bernie Madoff, the mastermind behind a multi-billion dollar Ponzi scheme, my thoughts were focused on his victims. In this time of economic uncertainty, their nest eggs disappeared before their eyes and they will likely never receive full restitution. Like Madoff’s victims, the self-employed also experience a high level of uncertainty about whether they will achieve financial security to allow them to retire.

Close to 4o percent of micro-business owners are not at all confident or have little confidence that they will be able to save enough money to retire. The NASE also found in a 2007 survey that an overwhelming percentage – 8o% – do not offer retirement plans of any type for either owners or employees. The greatest barrier, reported by 62 percent of respondents, is the cost of administering and contributing to a retirement plan. More than one-third of micro-business owners acknowledged they were not saving for retirement at all.

The issue of financial security has increasingly become a growing concern for the self-employed due to our nation’s economic woes. The financial market’s meltdown coupled with the housing crisis has led to sharp declines in spending, leaving the self-employed with declining revenue yet increasing costs of doing business (i.e. health care). There is less and less money to put away for a rainy day.

With over three-quarters of micro-business owners indicating that they are relying on the federal government as their primary source for financing retirement, our policymakers must prioritize helping Americans, such as the self-employed, to save more for the future.   If they fail to do so, our government will be left footing a very large bill.

Every time we ask the self-employed to tell us what’s on their mind, they don’t disappoint. This week, I’ve been knee-deep in efforts surrounding the recent release of our survey on the health reform perspectives of the self-employed.

Here are some cool tidbits I learned from the results (print version):

  • The self-employed are following the health care debate like hawks. When asked how many had heard the term “public option” in relation to discussions surrounding reform, two-thirds indicated they were familiar with the term, and of those, 71 percent identified it correctly as “a health insurance program run by the government and open to anyone in need of health coverage.”
  • The top two health tax proposals favored by micro-businesses are providing tax credits to businesses and the self-employed to offset health care costs and reforming the tax treatment of health coverage so that, regardless of whether health insurance is purchased individually or accessed through an employer, the worker receives the same tax benefits.
  • The majority of respondents were neutral on a recent suggestion of a cap on the employer exclusion. However, there were quite a few who strongly opposed such a cap.

The above figures are cool – in the Public Affairs department, we LOVE having stats to pass along to media – but I always enjoyed being able to wade through individual responses. Our response system is completely anonymous, and even though I can’t “put a face” to each comment, reading them always gives me a better understanding of what people out in the “real world” are thinking. Many survey respondents gave specific comments on the public option, mandates and other issues impacting the health care reform conversation. Here are just a few examples:

I do not think the government should become an insurer. I do think the government should regulate private insurers more.

I do not agree with the government mandating how businesses should run. They have been unsuccessful with their own budgets. What qualifies them to stipulate this to successful businesses?

Employers should not provide coverage. Let individuals subscribe to whatever plan they want and let employees take home money to purchase insurance instead of the employer purchasing for it for them. Individual needs are different.

I do not think the government should be able to pick and choose the businesses that are required to carry health insurance for their workers.

I would prefer that the government not be involved in providing my health care. However, I also cannot continue to provide health insurance on my own through private insurers if they continue to increase premiums at the current rate. If I could not afford private insurance, I would hope that there would be some other option rather than no insurance. If that is a government policy, then so be it.

NASE Members: Do you have a comment to add about health reform or any of the topics mentioned above? I’d love to hear from you. Just leave a note below, drop us a line on Twitter (@NASEtweets or @koberlander) or visit our Facebook sites (Group and Fan pages) to weigh in.

President Barack Obama spoke via ABC News’ “Nightline” to Americans about health care reform during a special edition of the program from the White House on June 24, 2009. The President specifically addressed the concerns of the self-employed and small business owners in response to a question from Gary Cloutier, a self-employed body shop owner from Massachusetts, who is currently unable to afford health insurance.

President Obama’s comments on the self-employed and health care reform start at the 4:00 mark of this video clip of the interview.

The other clips of the interview are also well worth watching!

Volunteering makes you feel good, and according to this Small Business Trends article, it can also be good for your business.  From giving business to other small business owners to teaching your skills to people in your community, author Lisa Barone suggests a bunch of great ways to make new connections, which could lead to new business.

What kinds of things have you done in your community lately?  Have these activities led to new business or contacts?

[Hat tip: Small Business Trends]

facebook logoNASE has jumped from a Facebook group to a Facebook fan page. It’s a subtle difference, but one that we think gives a better user experience.

On our group, if you posted a question on the wall, it was hard to reply directly to your question. Instead, we had to create a new wall post, but there might be three or four other comments in between your question and our answer.

On the fan page, when you post a question or comment, a thread is created, so you can know immediately what others said about your post.

It’s also a lot easier for us to post up pictures — like of our Achievement Award ceremony last week — and video — like of our staff and members testifying on your behalf on Capitol Hill.

So take a look, and join our Facebook fan page! Post on the wall and let us know you’re there!

As all small-business owners know, access to capital and credit is important to running a business.  However, the economic downturn has made access almost unattainable as banks are tightening lending standards and cutting lines of credit.

According to the National Small Business Association, 59 percent of small businesses were relying on credit cards to help finance their day-to-day operations as of April, up from 44 percent at the end of 2008.  Small-business owners have also been spending more on their credit cards, making up 11 percent of revenue for Visa and MasterCard today from 3 percent of revenue in 1998 according to the Nilson Report as cited by The New York Times.

Despite the large numbers of small business owners using credit cards, and the amounts they are spending on these cards, three-quarters say they have experienced a large decrease in credit limits over the last six months.  Small businesses were not included in the Credit Cardholder’s Bill of Rights legislation signed into law in May by President Barack Obama.  That legislation limits excessive fees and interest rate increases on existing balances beginning in 2010.

Credit card companies say they have had to restrict credit to small businesses because of rising defaults and uncertainty, but as banks cut credit limits, the credit scores of small businesses are hurt as well, making it even harder to get other types of credit.

Tighter lending standards mean higher credit scores are necessary to qualify for loans.  Despite some various entertaining commercials on television, according to this Washington Post article, getting an accurate credit score is confusing and expensive.

Most lenders base your creditworthiness on your FICO score, which is calculated from information in credit reports from the three major bureaus, TransUnion, Experian and Equifax.  Experian and TransUnion have developed their own “educational scores” that consumers can access by paying $14.95 per month for a credit-monitoring service, however the fine print reveals these scores are not the same as a FICO score.  Equifax gives FICO scores to anyone paying $14.95 per month for its credit-monitoring service.  Many consumers have found large discrepancies between the educational scores from these bureaus and the FICO score that most lenders use.

Consumers can access their FICO scores through Equifax.com or myFICO.com.  While nervewracking, if you have paid your bills on time, don’t have negative public records such as bankruptcies, and have used less than 30 percent of your available credit, you probably have a good credit score.

Do you monitor your credit score regularly?  Have you been surprised by differences between your educational score and your FICO score?

Hat tip: The New York Times, The Washington Post

Previously: Credit Card Bill Might Leave Small Businesses Out, New Credit Card Law Missing Micro-Biz Protections


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