Financing
A few weeks ago I got a call from an angry neighbor who wanted to know if our neighborhood bylaws include any restrictions on door-to-door salesman.
She called me because I'm the president of our neighborhood civic association and one of my main jobs is fielding tons of phone calls from irate neighbors who want me to make their lives easier.
I thought it was an odd question for her to ask. So many people who have been laid off or have seen their hours cut have chosen to start direct sales businesses, including door-to-door sales, so I figured let's help out those in our community that need a hand.
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I keep hearing lately how a recession is a good time for people to start businesses.
Call me cynical, but this sounds like something a crazy person would say, or someone just being counterintuitive to get attention. There’s a lot of that has been going around lately.
“It’s completely counterintuitive,” agrees Thomas Koulopoulos, author of "The Innovation Zone: How Great Companies Re-Innovate for Amazing Success.”
But he still thinks there’s some benefit to unleashing your entrepreneurial dreams during a crummy economy.
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I cleaned out my closet this past weekend and I came across a horrific suit from the 1980s. The shoulder pads were too big, the waist was too small, and the bright orange and green fabric was anything but just right.
The 1980s were not only a frightening time for fashion, the decade also ushered in one of the worst recessions on record -- even worse than the one we find ourselves in now.
So, in an attempt to look on the bright side of life, I'd like to point out that the economy could be in worse shape than it is right now.
It could be 1980.
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The federal government has been pouring money into failing financial behemoths with what appears to be little to no oversight. Executives at these major financial firms that caused the collapse of the financial system are even getting bonuses for jobs not well done.
But just mention some help for small businesses and the "we-need-scrutiny naysayers" crawl out of the woodwork.
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This week my father came to the taping of the show. He's an entrepreneur and an investor. My mother was an entrepreneur. Both of their fathers were entrepreneurs. My brother is one too. And so am I.
Clearly, there's something in our blood.
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I know banks are tightening the screws on lending but before you head over to your local loan shark, let's think outside of the business-financing box for a second.
There are a few sources of money we haven't thought about -- credit unions and microlenders.
These are not traditional pathways to money for small businesses, but things are changing.
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I was recently searching through the dress rack at a gem of a consignment shop in Mystic, Conn., called Pennywise, and I felt compelled to ask the store's owner how business has been.
I'm usually fighting back other women when I rifle through such shops, so I wondered why the store wasn't packed given the fact that discount shops tend to fare better during a recession.
But Donna Maden, the owner of a 22-year old family run consignment shop, told me sales are down substantially this year.
"There's just not a lot going on. Not a lot of people. Not a lot of tourists," Maden explained.
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We're debuting a new segment in the show in a couple of weeks where we get small business owners’ take on important questions from the floor of the nation’s biggest trade shows.
Earlier this week I went to the 2009 Toy Fair at the Jacob K. Javits Convention Center in New York. As the mother of two kids, I found it hard to walk through the show and not get distracted at every turn, but once I got my fill of testing out new toy trucks and pens that light up, I did get the chance to get to the task at hand: Getting a reading on how the companies at the show feel about their prospects in this economy.
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This economy has got me scratching my head a lot lately.
There are just so many things I don't get, especially when it comes to financing. We're told constantly that banks, venture capital firms and other lending institutions are reluctant to hand out loans, and tons of small business owners I talk to tell me they're being squeezed because of the tight reins on financing right now.
So how the heck did a company that hasn't made a red cent get $35 million in venture capital money?
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With the credit markets gummed up, everyone is holding their breath and waiting for banks and other lenders to re-open their money spigots. But for many small businesses the funds may be too little, too late.
Until recently, GiGi Stetler's 35-employee business -- RV sales Broward in Fort Lauderdale, Fla. -- was booming, hitting sales of more than $20 million in 2007.
In 2008, the business "crashed," she said. Sales plunged to $11 million, and three months ago she let go of the bulk of her staff and now only employs nine. A decline in sales and the tightening of credit was the double whammy for her business.
"We can barely pay the electric," she laments.
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