jueves, 26 de junio de 2014

The Worst States for Minority Business Owners (BusinessWeek)


Tucson, Arizona
Tucson, Arizona
Not all states are created equal when it comes to providing opportunity to minority entrepreneurs. In Florida, there’s one minority-owned business for every 11 minority residents, the highest rate of minority entrepreneurship in the country. Iowa’s ratio, at one business for every 43 residents, is the nation’s lowest.

Those numbers are based a report published by the Small Business Administration’s Office of Advocacy that estimated (PDF) the number of minority-owned businesses in all 50 states, plus the District of Columbia, in 2011. To put those numbers in perspective, Bloomberg Businessweek compared the SBA data to the number of minority residents in each state, as reported by the 2010 Census(PDF).
One thing that stands out in the chart below is that states with large minority populations tend to have higher rates of minority entrepreneurship, and vice-versa. Arizona is one outlier. It had the tenth-highest minority population in 2010, but just one minority business owner for every 31 minority residents, placing it 41st among the 50 states and District of Columbia. Vermont, with few minority residents but a relatively high rate of minority entrepreneurship, stands out at the other end.


There are sure to be nuances lost in the data. For instance, the mix of ethnicities that make up each state’s minority population might influence the business ownership rate. The state’s overall economy might, too.
On the other hand, states set policies, such as government contracting programs or education initiatives, that can promote minority entrepreneurship. Bank discrimination against minority business owners who want commercial loans is an additional factor that may make some states worse for minority entrepreneurs.
The data should also prove interesting to new Small Business Administration boss Maria Contreras-Sweet, a Mexican immigrant who founded a bank that specializes in lending to Hispanic-owned businesses. Contreras-Sweet has broadcast her desire to build a more inclusive agency. Paying attention to states that have been more—or less—successful at supporting minority entrepreneurs may be one place to start.
Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

jueves, 19 de junio de 2014

Grading Small-Business 'Friendliness' (BusinessWeek)


All else being equal, would-be entrepreneurs should consider moving to Idaho, Texas, Utah, or Virginia, and fleeing California, Illinois, and Rhode Island. The first four states received A+ grades for small-business “friendliness” in a study published this week by local services startup Thumbtack and the Kauffman Foundation. The last three states got Fs.
The research, based on more than 12,000 completed surveys, asked respondents to grade their cities and states on the ease of starting a business and hiring workers, the fairness of the tax code, and the impact of government regulation. Beyond the letter grades, the survey yielded some interesting results. The complexity and cost of obtaining business licenses was the most important issue for business owners. The bigger a business gets, the more owners are likely to believe they pay too much in taxes. Black business owners were more likely than whites to give their states high scores for being favorable to small business.
One thing the friendliness survey isn’t good at is predicting where people will start a business. California, despite a failing grade on business friendliness, had one of the most active startup rates in the country last year, according to an earlier Kauffman study.
Likewise, Virginia’s high marks in the small-business friendliness survey didn’t prevent more establishments from closing than opening in the year ended September 2013, the latest date for which U.S. Bureau of Labor Statistic is available.
The Thumbtack/Kauffman survey seems intended more as a way for cities and states to evaluate their policies than as road map for potential entrepreneurs. After all, there are lots of reasons why entrepreneurs choose one place or another to start a business, including market opportunity, the pool of workers with the right skills, and the most basic consideration—where a person wants to live.
Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

viernes, 13 de junio de 2014

The SBA's Plan to Boost Loans to Minority Entrepreneurs (BusinessWeek)


Maria Contreras-Sweet at the White House on Jan. 15
Maria Contreras-Sweet at the White House on Jan. 15
The Small Business Administration has a size problem. To help Main Street businesses recover from the Great Recession, the agency increased the size of the loans it was willing to guarantee. That helped boost the dollar amount of loans it backstopped last year by 40 percent from 2009 levels, to $29.6 billion.
The big boost to loan volume wasn’t matched by a similar increase in the number of SBA-backed loans. As a result, the size of the average SBA loan increased, to $547,000 last year from $372,000 in 2009.
That shift is good for lenders because it takes a comparable amount of time and effort to underwrite a loan for $1 million and a loan for $100,000; larger loans generate more revenue from interest. It’s bad for the smallest U.S. businesses, including those owned by minority entrepreneurs who already face an uphill battlegetting credit.
To help those business owners, the SBA is trying to promote smaller loans. In October, it waived a 2 percent fee for loans of less than $150,000—a move the agency says has already led to a 15 percent increase in small loans. And today, SBA chief Maria Contreras-Sweet said the agency would speed up approvals for loans of $350,000 or less, relying more heavily on credit-scoring processes that the agency has been developing for more than a decade.
“We’re making these changes, knowing it will simplify and streamline the lending process and get more small loans into the hands of entrepreneurs, especially the underserved,” Contreras-Sweet said today in a speech hosted by the Center for American Progress, a Washington think tank. That should help minority-owned businesses in particular, she said, because 80 percent of SBA loan applications from black and Hispanic business owners are for $150,000 or less.
Speeding up the approval process for small loans may also prevent more business owners of any race from taking on expensive debt from merchant cash-advance providers and other nonbank lenders. Those loans, often marketed as being approved quickly, can carry annualized interest rates in excess of 100 percent, many times more than the single-digit interest rates typical of loans backed by the SBA.
The new policy, which takes effect next month, will pare by as much as 50 percent the time it takes to originate an SBA loan by eliminating the need for certain financial analyses, according to the Wall Street Journal.
There’s a flip side to easing the approval process. Earlier this year, the SBA drew fire from Senator Jeff Sessions, an Alabama Republican who worried that government guarantees and lax oversight were leading banks to make bad lending decisions. “The lender still makes a profit while taxpayers shoulder the cost of the default,” wrote Sessions in an April letter to Contreras-Sweet. Along those lines, simplifying the approval process for small loans sounds like a good thing for small business owners—unless it encourages banks to make loans that business owners can’t afford.
Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

jueves, 12 de junio de 2014

The Waiter’s Role Changes as Restaurants Encourage Ordering via App (BusinessWeek)



On Tuesday, BJ’s Restaurant and Brewhouse (BJRI), a chain of 151 casual dining restaurants, launched a new app that allows diners to place their orders before they arrive and pay at the end of the meal, removing the need to wait for a server to bring you a menu, take your order, and deliver the check and change. To make sure the food’s hot, the kitchen doesn’t fire up your meal until you’ve been seated.
Courtesy BJ’s Restaurant and Brewhouse
BJ’s chief executive Gregory Trojan believes the traditional flurry of tasks handled by waiters distracts them from their more important job: being hospitable. The app, he says in an interview, aims not to reduce staff or turn servers into robots who just transport food from the kitchen to the table but to relieve them of certain duties so they can be more attentive to customers.

The larger problem Trojan hopes the app will address is speed. In traditional full-service restaurants, all that service takes time, which is bad during peak hours when turning over tables means sales. He says that by allowing customers to take care of ordering and payment themselves, the average one-hour meal is cut down to about 35 minutes. To further encourage time-strapped diners to order ahead, BJ’s puts them on a wait list to be seated once their mobile order comes in, rather than when they arrive at the restaurant.
By quickening service, Trojan also hopes to better compete with fast casual restaurants, which in recent years have lured many customers away from full-service with quality food served quickly, at lower prices. BJ’s same-store sales decreased 1.1 percent last year.
“We have seen too many restaurant companies eliminate the ability to build sales by trying to save on labor by cutting their sales force, reducing the number of hosts at the front desk, and minimizing kitchen staff,” said CFO Gregory Levin during an earnings call in May. “Therefore, we must and we will hold our line in labor so that we continue to provide great service to our guest and not make rash labor decisions that could tarnish our brand going forward.”
Courtesy BJ’s Restaurant and Brewhouse
While the app reduces the amount of running around servers have to do, during testing in Southern California, BJ’s found that customers who ordered ahead actually tipped more—although it’s worth noting that the app automatically sets the gratuity to 18 percent, which can be adjusted up or down. It’s also worth pointing out that as of now, you can’t split a check if you pay by app.

BJ’s is just the latest restaurant to remove waiters from the ordering process. Panera (PNRA), in an effort to reduce errors that occur during ordering, is trying a new store format in which customers can order by kiosk or smartphone and have their food brought to their table. McDonald’s(MCD) has also been experimenting with kiosks overseas.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

miércoles, 11 de junio de 2014

All It Took to Cure Baldness Was a Laser Beam, a Garage, and an Indiegogo Push (BusinessWeek)


Theradome Laser Helmet
Theradome Laser Helmet
You know what’s still made in America? Laser spewing hair helmets.
Last August, a startup called Theradome began selling a device—aptly named the Theradome Laser Helmet—that promised to regrow peoples’ hair. Almost one year later, the company has sold thousands of the products, which look a bit like the lovechild of a bike helmet and an Apple laptop. The device sounds too good to be true. Wear it twice a week for about 20 minutes per session, and soon enough you end up looking like Redfoo. In more clinical terms, Theradome boasts that 100 percent of users will see some kind of hair regrowth after six months of use and that, on average, people will have about 40 percent of their hair come back. “We stop your hair loss; we thicken the hair you still have, and then you start seeing hair growth,” says Tamim Hamid, the founder and chief executive of Theradome.
I first ran into Hamid a couple of years ago. He’s a former research engineer at NASA, who, among other things, built a speech-recognition system for the space shuttle. After seven years with NASA at Kennedy Space Center, Hamid moved to Silicon Valley and got into the biomedical device market. He did four startups that made products that solved other peoples’ problems. For the fifth, however, Hamid decided to go after a cause near and dear to his scalp: his once lustrous, thick black hair had started to thin, and he figured near-total baldness was about a year away.

jueves, 5 de junio de 2014

Everybocy needs a matress...but nobody likes buying one...

Caspersleep.com Wants to Sweeten Your Dreams


We spend a third of our life asleep, but Philip Krim, 30, thinks most people are doing it badly. “Quality sleep ties to happiness, job satisfaction, being better in relationships,” he says. “Yet no brand comes to mind when you think of sleep.” He wants Caspersleep.com, his mattress startup, to win the night.
Since April, Krim and four co-founders have sold one type of bed, a memory-foam core with a latex top, which arrives via UPS (UPS) or Uber in a mini-fridge-size box. The mattress, which I tried for two weeks, has the squishy embrace of a Tempur-Pedic (TPX) bed. The latex foam stays cool, and the whole thing offers enough bounce for a bored kid. It’s shallow yet provides firm support. At $850 for a queen, Casper isn’t cheap. But the materials are U.S.-made, and similar beds at Sleepy’s and other chains cost up to $4,000.
These stores dominate mattress sales, so “consumers know very little about what they should buy,” Krim says, noting that a few minutes in a showroom isn’t enough to determine a bed’s quality. “The experience is driven by a commission salesman who’s good at lying about what you need.” Most recommend Sealy, Simmons, or Serta, the three brands that control half the market.
So far, Casper has raised $1.6 million of funding led by Ben Lerer, the venture capitalist who specializes in trendy, urban upstarts such as Everlane and Warby Parker. The mattress has been back-ordered since its launch. “You know who needs a mattress? Everybody. But nobody likes buying one,” Lerer says. Investing in Casper, he adds, “was a very easy decision.”
Soller is a deputy editor for Bloomberg Businessweek.