Oregon has moved to improve regulatory flexibility for small businesses operating in that state. The new law implements key elements of regulatory flexibility model legislation drafted by the Office of Advocacy of the U.S. Small Business Administration. Similar to the federal Regulatory Flexibility Act, the model legislation encourages entrepreneurial success by requiring state agencies to consider the impact of their policies on small business before they issue final regulations.
Specifically, the new law enhances Oregon’s administrative procedure laws by including a requirement that state agencies analyze the economic impact of a proposed regulation on small business before they regulate. It also requires state agencies to conduct a review of existing rules every five years to ensure the rule has had its intended effect and that there is a continued need for a rule. This new bill is an addition to existing regulatory flexibility laws in Oregon and completes a good regulatory framework for small businesses in that state.
The bill’s primary sponsor Representative Kim Thatcher said, “Small companies are the backbone of our state’s economy and should not have to shoulder disproportionate regulatory costs and burdens. Not only does the new law require agencies to understand the economic impact of their actions on small business before they regulate, but it also requires agencies to review existing regulations which may unduly burden small business.”
Random Acts of Goodness
Here are a couple of examples that show the good in people in the aftermath of Katrina:
Business owners in Montgomery, AL are helping to defray the costs of all of the refugees that have come to their city from the gulf coast.
From Inc.com:
Spared the physical trauma of hurricane, Montgomery’s business community is helping bear the cost of hosting Katrina’s victims who have come in need of medicine, health care, shelter, and jobs. Anna Buckalew of the Montgomery Chamber of Commerce expects this labor of love to last for several months as federal agencies sort out recovery and rebuilding of Gulf cities affected by Katrina.
Colleges and universities are helping to find temporary places for the 100,000 college students displaced by the storm to continue their studies.
From USA Today:
The school of public health at Atlanta’s Emory University has arranged for 30 international graduate students from Tulane’s school of public health to attend classes temporarily. Jesuit universities, including Connecticut’s Fairfield University, the University of San Francisco and Seattle University, are taking students from New Orleans’ Loyola, also a Jesuit school. The University of Richmond said it will accept about 20 undergraduates and several law students tuition-free for the fall semester.
We are hearing so much about the bad acts of people in New Orleans. I hope that over time it is the good acts like these that we will remember from these difficult times.
SBA Offers Assistance for Katrina Victims
The SBA has a web site that provides information on assistance programs for small businesses in the wake of hurricane Katrina. Given the magnitude of the disaster, many of these entrepreneurs may not know how to access this information. Please pass along information to family or friends who own businesses, and also and customers and suppliers who you may know in the gulf coast area who need help.
From Inc.com:
On Wednesday, Small Business Administrator Hector Barreto vowed to be “swift in our efforts” to help small business owners rebuild their lives.
“We’ve been there before, and we’re ready to provide recovery aid again,” Barreto said in a statement.
Michael Lampton, a spokesperson for the SBA, said the priority was to help storm victims get to safety and back on their feet.
“Most people are going to want to get themselves together before checking in on their business,” he said.
Adding to their woes, many businesses not leveled by the storm are now facing rising floodwaters. That and continued looting.
Please be generous with your support for the victims and keep them in your prayers.
Economic Recovery from Katrina
new dog old trick offers an assessment of the economic impact of Katrina. And as he rightly points out, it is more than just oil. Construction materials will be in great demand over the coming months as folks begin to try and rebuild.
While government assistance will be critical in the short-term, I hope that the small business owners who have dominated that part of the country’s economy will be able to start rebuilding their lives soon. These entrepreneurs will be the key to creating jobs in the area and restarting the local economies. However, given the magnitude of this disaster it may take a long time for this process to gain any momentum.
Through all of this there will be a temptation for governmental officials to get too involved. Usually any attempts they make to “fix” the problems end up with much worse unintended consequences. Coyote Blog rightly points out that if we try to cap the price of oil, for example, we will merely trade the problem of higher prices for the problem of long gas lines. Prices will go up for oil and construction supplies in the short run, but this too will pass. It is due to a temporary shortage that will work itself out in a relatively short time.
Unfortunately, when government tries to get too heavy handed in “managing” such a crisis much of what they put in place never goes away and rarely does much good.
We have a strong and healthy economy. It will heal itself, so let it work. Once the immediate disaster relief is over, get government out of the way.
Hiring in a Competitive Labor Market
Just like that we have gone from the media worrying about jobless rates being high, to worrying about tightening job markets making it tougher for small businesses to compete for workers.
From Inc.com:
On Thursday, the Bureau of Labor Statistics reported that initial jobless claims fell by 4,000 the previous week, data that may indicate strong demand for labor, especially in the small business sector.
William Dunkelberg, an economist with the National Federation of Independent Business, said that small businesses have been having a harder time finding the employees they need to grow. Earlier this month, the NFIB found that 21% of businesses surveyed have job openings they cannot fill. Seventy percent have encountered difficulty finding qualified people.
Looking forward, the NFIB survey found that 20% of businesses plan to increase their workforce. “There’s no question that labor markets will stay tight,” said Dunkelberg.
Most of the current economic expansion is taking place due to small businesses. Many have started over the past couple of years and have not had experience in hiring in tighter job markets.
So here are a few things to keep in mind:
1. Keep Staffing Forecasts Current. Even if you are a small business, you need to think down the road for the next two or three years to anticipate what your hiring needs may be. Forecasts should be updated every few months to adjust for changing conditions and the changing state of your business. Keep your eye on long term trends within the labor market segments you will need to be hiring from. Some types of employees will be particularly hard to find, so extra effort will be required.
2. Base Staffing Plans on Milestones, not on Time. Never tie your staffing plans to the calendar. The passing of six months is not what will require you to hire new employees. Know what the triggers are in your business that will necessitate more employees. For example, it could be things like a certain number of clients, sales levels, or production levels for employees. More managers and supervisors it should be based on the number of first line employees each can effectively supervise. And don’t forget the needs of support staff in areas like billing and sales. As labor markets tighten, you may need to move these triggers up earlier in time. It takes time to get employees up to speed. Know how long it will take to recruit, hire, and train new employees for each position you are planning to hire so they can be ready to work when you really need them. If you could hire and train workers in 60 days a year or two ago, you may now need to plan on a lead time of 90 or even 120 days in a competitive job market.
3. Measure Your Employment Triggers. Work with your bookkeeper or controller to give you quantitative reports on your key employment milestone triggers, and insist that you get these reports regularly. You need to have the timing of the hiring process accurate, so the chances of not having staff to support growing demand are minimized.
4. Never Just Hire Warm Bodies. Hiring someone just for the sake of hiring rarely works. Mediocre hires make mediocre employees. This will only postpone hiring the right people and force you to get rid of the dead wood you just hired before you can hire the people you really need. This will actually hinder your ability to grow.
5. Keep Current on Wages and Salaries. Tighten job market will put some upward pressure on pay due to supply and demand. Stay competitive in your pay, and plan on pricing increases in advance to cover any increases in labor costs. Don’t let your pricing lag too much or cash flow will become a major issue as you grow due to shrinking profit margins.
6. Don’t Forget to “Close the Bank Door”. The single best staffing tool you have is retaining the good employees you have right now. Create a culture that makes good employees want to stay with you. You may have to pay a little more that you’d like to, but it is much more cost effective that constant hiring and training. And staff shortages can be very costly in terms of lost revenues.
And to those who have made the sudden shift from worrying about no jobs in the economy to worrying about not enough workers? Lighten up! This is a good problem!
Carnival of the Capitalists
COTC can be found at CaseySoftware.com.
Our Thoughts and Prayers are with You
My thoughts and prayers are with all of the people along the Gulf coast as their lives change forever from the impact of hurricane Katrina. The damage of the wind and water, the loss of electrical power, and the disruption of commerce will make it impossible for many small businesses to continue. I was in business the year that North Carolina was hit by three storms. One of them, hurricane Fran, hit those of us in the Raleigh area quite hard. Our business was able to survive the interruption of cash flow and business activity, but many of my friends were not so lucky.
Please keep them in your prayers not only as the storm hits, but in the weeks and months to come as they try to put their lives back together.
SCORE Some Advice
Last week I posted on the need for entrepreneurs to find an outside set of eyes to help advise and coach them. An option that many entrepreneurs have found extremely helpful over the years is to tap into the expertise of the retired business people who belong to SCORE (Service Corps Of Retired Executives).
I recently had the pleasure of being a luncheon speaker to the Nashville SCORE chapter. This group may be retired from their business careers, but they are not ready to retire from the world of business.
SCORE is a national organization with chapters in 389 cities. The SCORE volunteers include people with expertise in a variety of areas of business and most industry sectors. Many chapters also include more and more retired entrepreneurs. SCORE is a “resource partner” with the SBA.
The national SCORE website offers several tools to find assistance, including an “Ask SCORE for Business Advice” feature that allows for on-line counseling. They also have features to help find counselors by locality or area of expertise. The site also has some good generalized written information about entrepreneurship and small business management.
With any advisor or mentor, it may take a while to find the right person who fits with you, your business, and your needs. Build your network and eventually you will find people who can help over the long term. SCORE is another good source of people with the potential to be of invaluable assistance.
New User Friendly Site for Intellectual Property Protection
The US Patent and Trademark Office (USPTO) has introduced a new, user-friendly web site for small businesses to provide clear information on intellectual property (IP) issues.
A growing number of small businesses engage in some form of business overseas, including manufacturing and assembly, which opens them up to intellectual property abuse. The site offers some help in this area.
The site also offers reasonably clear steps to assess what, if any, intellectual protection a small business might need. If it looks like your business is vulnerable to IP piracy and theft, it is important to engage an attorney with experience in this area. Make sure the attorney is not only experienced in IP, but also in working with small businesses and their limited budgets. IP protection can get very expensive quite quickly, so be clear about the level of your risk exposure and the size of your budget. They probably cannot make you bullet-proof with any sized budget, but hopefully can begin to offer you some protection on this key asset.
Bankruptcy Filings Up, But Don’t Believe the Alarmists
The alarmists are wringing their hands. The deadline for the change in the bankruptcy law is approaching. We hear words like “record filings” and “bankruptcies soar” from the press. Keep your eye on the facts, however, and not the hype. Bankruptcies are, and will be, up a bit for the next few weeks. But so far, the increase is only 11%. I predict that total bankruptcies when looked at the entire year will not differ significantly from past years. And next year should be significantly lower. Businesses that truly need bankruptcy as an option will still be able to use this strategy, but the changes will no longer make it an easy way out. And it should not be the easy route, as that was never the intent of the law. Bankruptcy was intended to be the last resort, and the laws were established to make the process as orderly as possible.