Networking on the River

New Business Minnesota’s annual Networking on the River event is June 17, boarding the Anson Northrop sternwheeler at Harriet Island in St. Paul. We are expecting close to 200 people to attend.

If you want to forget the recession blues, get on board. Few long faces are expected. These people are networking like crazy and building their businesses despite the economic gloom.

New Business Minnesota is putting on this even as part of its Startup Meetup group, which now has more than 1,600 members. The Startup Meetup group is now the largest independent networking group in the state of Minnesota.

Networking is Hot, Hot, Hot

There are some bright lights in the 2009 economic sky. The intensity of B2B networking is increasing at New Business Minnesota, easily outpacing 2009.

Every month we run a networking event for new businesses called a Startup Meetup. In 2008, we averaged 60 to 80 people who would gather at a bar and exchange business cards, talk about each others’ businesses, what we sell and what we need. 

Then came January 2009. We met at Kokomo’s Island Cafe at the Mall of America and drew 200 people. In February we held an event at Costco that drew 300.

March 19 we’re meeting at O’Gara’s Bar and Grill in St. Paul. We already have more than 400 RSVPs.

It could be that the economy is forcing people to increase their marketing efforts by doing more networking. It could be New Business Minnesota is doing a great job of promoting the startup market and bringing together startups and businesses that support them. Or it could be that people are seeing new opportunities and going after them.

I don’t want to be too optimistic, but from what I can see from the trenches of the startup market, the first quarter of 2009 is a welcome relief to the last quarter of 2008. People are starting to breathe again.

How Bad is the Recession?

During the recession of 1981-82, I was the editor of the Shakopee Valley News, a weekly newspaper just outside the Twin Cities. I wrote many stories about the local jobs that were lost and the businesses that closed. I thought I had done a great job of documenting and opining about the horrible conditions.

One day an elderly woman came into our office to set me straight. Here is what she told me, as best as I can recall:

“When I was a young girl, my mother and I went into Shakopee to do some shopping. Out front of the drug store was a man and a wheelbarrow. He was wearing dirty and tattered overalls that badly needed mending. His hat was rumpled and soaked with sweat.
In the wheelbarrow was a pile of dirty clothes, a wooden carpenters tool box….a little girl who looked to be about three years old.

“I could tell my Momma was upset about something as we approached him. She wanted to see if they were hungry, but fist started with some small talk about the weather. Then she asked him where he was headed. She thought he was moving things to a nearby truck. I’ll never forget her face when he replied to her. ‘Well, I heard there was work in North Dakota.’
“He was walking. With his daughter. All his possessions. To find work he heard MIGHT be available. In North Dakota.

“I came to your office today to tell you that we’ve been through worse. So don’t go making things seem worse than they are. Just tell it like it really is.”

A Startup Stimulus Plan?

A recent letter to the editor in the Wall Street Journal pointed out how proposed economic stimulus packages coming out of Washington fail to address the potential of stimulating the startup market.

The letter writer, Eugene Severens of Annapolis, Md., addressed comments made by Sen. Judd Gregg’s , who wrote in a column that most jobs in America are created by small business expanding or entrepreneurs starting businesses. Gregg’s recommended cutting their taxes first.

Severens astutely responded that most business start as sole proprietorships and any proposed business tax cuts should use individual tax laws as wells as corporate tax laws.

He points out that no stimulus proposals recognize the counter-cyclical nature of sole proprietorships.

Severens writes: “According to the IRS, there are over two million first-year self-employed business filers every year. We can expect these numbers to increase for the coming tax season as laid-off workers and distressed, but enterprising, household turn to self-employment.”

Severens cleverly refers to these businesses as “shovel ready” opportunities to stimulate the economy by creating jobs and sparking new purchasing as these new businesses buy computers, office supplies, cellphones, and contract for bookkeeping and phone services.

Severens proposes a startup business tax credit to get them a needed boost, along with a business literacy outreach program.

He concludes: “Unfortunately, the role of these brand new startups in our economy is largely ignored, and , not disconnected, they have no Beltway lobbyists representing them during the current job stimulus debate.

I’m not sure how I feel about Washington’s stimulus mania, but I like the that Severens is helping educate policy makers, or at least  WSJ readers, that the startup market has a significant role to play in the current economy.

Network Group Exploding

A year ago, my business partner Scott Plum and I started a networking group at Meetup.com. We called it Startup Meetup. The goal was to introduce startup companies with the resources that can help make them successful.

So we promoted through the meetup.com family, our website at www.newbizminn.com and through the pages of our monthly newspaper, New Business Minnesota. I noted in an earlier post that our group had 700 registered members and was attracting 60 to 80 to our twice monthly gatherings.

Our next meeting is Jan. 14 and we already have 215 registered to attend. Our Startup Meetup group now has 829 members. That’s the power of our promoting our events in our targeted newspaper, on our web site and good word of mouth. Oh, I should say that the events are fun and productive since it’s totally focused on networking.

We are quickly becoming one of the largest business meetup groups in the world. We rank No. 1 in the Just Start Category, No. 31 in the Entrepreneur category and No. 15 in the Small Business Category.

Everything is New Again

When gas prices topped $4 a gallon this summer, all the old gas saving tips came roaring back from the 1970s. TV reporters graciously helped befuddled consumers with advice such as: properly inflated tires give the best fuel economy. Jack rabbit starts waste gas. Speeding wastes gas. You can reduce you gasoline expenses by carpooling or riding a bus or light rail. Walking or riding a bike will also save gas. Wow!.

Then last night, while watching a movie on cable, the ultra-hip host kept giving tips for home heating efficiency. Keep doors and windows closed when its cold out side. Did you know you could save money if you lowered your thermostat or reduced the temperature on your water heater? There’s more! If you caulk seams and cracks around doors and windows you can keep more of your heated air in the house. Put those storm windows on. Wrap those windows in plastic. He forgot to tell us to put little foam rectangles into all exterior wall electrical outlets.

It seems like someone just raided the consumer tip hotline vault from 1977 and is recyclilng it.

Here’s what’s coming next. Some TV station will start and Consumer Common Sense segment. Each day they’ll broadcast tips like: To stretch your family food budget, try serving smaller portions. You can feed a family of four twice if you only serve one hamburger to each person, rather than two. Or, you can save a lot of money by drinking $4 a bottle wine rather than $15. Did you that buying larger quantities of things, such as at Sam’s Club, will also save you money?

My guess is that most people do a pretty good job of pinching pennies. Is there really anyone who doesn’t know that stocking up when there is a sale is a good idea?

One last cost-saving tip. If you skip shaving on Saturday and Sunday, that’s 104 days a year of not shaving. If you get 17 shaves per blade and buy four blades in a pack, you can save more than $20. Or you can save even more by using the same blade until you can’t take the pain anymore. That’s my favorite. It makes you stronger in the long run. Recessions aren’t for pansies.

Hanging with the Newbies!

With all the doom and gloom about the economy — you know, the part with companies failing and the growing number of unemployed — I have the privilege of working with the newbies, as in new businesses that are being formed.

As the publisher of New Business Minnesota and New Business Denver, I was approached recently by a TV reporter who wanted to know if anyone was seriously considering starting a business in these tought times. I think I shocked him when I told him that Minnesota has more than 44,000 businesses register with the state in 2008 and Colorado had more than 60,000.

Sometimes I feel like most of the media hangs out at the morgue while I get to spend quality time at the nursery.

Working with news businesses is very rewarding in a recession. These new entrepreneurs are so full of hope and enthusiasm. It’s uplifting. The morning paper is full of stories about the end of the world as we know it, I I’m going to meet with 152+ people attending a meeting of startups and businesses that want to work with them. They see a new world unfolding for them, one in which the American dream is still real and obtainable.

The economy got you depressed, take an entrepreneur out for a drink. You’ll feel better.

This Recession is Way Different than ‘81-’82

Last time we had a major recession was in the early 1980s. Here are a few of the many way that the world has changed. In 1981 there were:
No personal computers, no cellphones, no faxes, no Internet, no email, no cell phones, no free unlimited long distance phone calls, no ATMs. You get the idea. If you think starting a business in a recession is hard now, imagine doing it in the 1980s.

Here’s another thing that has changed. Back then, the government offered jobs training programs for displaced (laid off) workers. Workers would be retrained as welders, or typists, etc. Never mind that they were training more people for welding that the market needed. It was more efficient, I suppose, to use the assembly line approach to keep retraining costs down. I remember news stories at that time where 80 new welders were entering a market that only had eight openings.

Today, a lot of those programs thankfully have been revamped, consolidated and dumped. The programs have been broadened beyond industrial or trade jobs to include the potential entrepreneur. The Small Business Administration program is called Growing America Through Entrepreneurship, or Project GATE.  The program’s goal is to create, support and expand new businesses by helping more workers become self-employed.

Though I’m dubious about the ability of the government in entrepreneurial matters, it is a good idea to recognize that a 50-year-old-accountant who is out of work, might be better off getting a microbusiness loan from the SBA, taking a few courses from SCORE and getting some direction in starting a business than taking a welding class.

 

 

 

 

LLCs are taking over.

The number of new corporation filings – Domestic Corporation is the official designation – with the Minnesota Secretary of State’s office are down 13 percent or 1,030 through the first 11 months of the year.

With all the dire economic news, it would be tempting to chalk up the sudden decline to the broader financial malaise.

What’s really happening in Minnesota is new companies are choosing the Limited Liability Company organization format rather than Incorporation, according to the Secretary of State’s office. From January through November 2007, there were 8,750 corporation filings with the state. For the same period in 2008, the number was 7,720.

In the later part of 2008, the SOS office is seeing a surge in LLC filings and with one month to go, things are getting even busier. 2008 is the first year that LLC filings have exceed Assumed Name filings.

And the Minnesota Department of Labor and Industry has some new rules for independent contractors in the building and construction trades that are causing more of them to file for LLCs. As of Jan. 1, 2009, they have to file for an Independent Contractor Exemption Certificate unless they have already filed with the state as a corporation, LLC or partnership.

The exemption costs $150 to apply for, and $150 a year to renew. The LLC costs just a little more initially, but has lower renewal fees and tax and liability advantages. Though this is causing a surge now, it will provide an ongoing reason for more LLC filings in the future.

If you’re starting a business or even if you’ve been operating for a while, business organization is one of those questions you should talk to both your attorney and accountant about.

A trend toward LLCs suggests that there is a reason for its ascendancy.

 

 

 

 

Predicting the Future Through a Rearview Mirror

The science of economics has broken new ground. Einstein would approve. Time is not what us mortals think it to be. Alfred the great said time can warp and fold in on itself.

It now appears that economist have found the same to be true in their world. As a team of researchers approached light speed, time warped so much that they found themselves look directly at December 2007. This time around, they could clearly see that a recession was beginning. It was identified as a dwarf black hole, the beginning of a full fledged black hole.

Using this new rearview technology, soon economists be able to tell us about six months ago and whether it was all we thought it was cracked up to be.

If you are a startup business, you may well be interested in the potential of this technology to answer questions like: What kind of new business should I have started last year? Should I have created that new job in June or filed for bankruptcy? My bottom line looks good right now; is my business about to fail?

Predicting the future has always been difficult. Now, however, predicting the past has become a challenge.