Thursday, July 31, 2008

Report: Small Business Confidence Rebounds in July

Report: Small Business Confidence Rebounds in July
Monday, July 28, 2008

After sinking to its lowest level in June, economic confidence among small business owners rebounded in July, as the number of those who said they are experiencing cash flow issues decreased significantly and general economic confidence began trending upward.

The Discover Small Business Watch jumped in July to 84.6, up 12.8 points from 71.8 in June.

"Based on the results we've seen over the past six months, cash flow is one of the key indicators that affects small business owners' confidence in the economy," said Ryan Scully, director of Discover's business credit card. "Given the substantial decrease in cash flow concerns that were reported this month, it's not surprising that economic confidence also rebounded with a double-digit increase."

July Key Findings:

  • 33% of respondents say they have experienced cash flow issues over the last 90 days, a significant decrease from 42% in June.

  • 17% of small business owners think the U.S. economy is getting better, an increase from 9% in June.

  • 28% of owners say that economic conditions for their business are getting better, an increase from 23% in June.

  • 17% of respondents rated the economy as good or excellent, an increase from 12% in June.

  • 29% of owners will be increasing spending over the next six months on business development activities such as advertising, inventories and capital expenditures, up from 23% in June

    The Discover Small Business Watch also regularly tracks trends in how small businesses are using credit with their customers and the rate of delinquencies they are seeing. This month, 27% of owners said they extend credit to their customers and 70% of this group indicated that their customers have delayed a payment or asked to delay a payment in the past three months. Slightly more small business owners - 32% - were extending credit to customers in April 2008; however delayed payments and requests for extensions that month were higher, at 73%. In September 2007, 30% of small business owners were extending credit to their customers and 64% received delayed payments or requests to delay payments.

    "As shifts in the housing and credit markets continue to impact consumers' spending habits, small business commerce will likely experience a slowdown as a result," said Scully. "The good news is that even though small business owners are seeing customers delaying their credit payments, it doesn't appear to be having a negative impact on their cash flow."

    Click here to view the results of the Discover Small Business Watch survey for July in their entirety.

    FW: WSJ: Giving a Lot for Saving a Little (Gates Foundation)


    Giving a Lot for Saving a Little

    Gates Foundation to Invest in Programs to
    Help Collect Deposits for the World's Poor
    July 31, 2008; Page A11

    The idea that small loans can awaken an entrepreneurial spirit among the world's poor won a Bangladeshi economist the Nobel Peace Prize in 2006 and released a flood of money into thousands of "microcredit" programs on the bet that the poor are good borrowers.

    Now, the world's largest private philanthropy is betting that they are also good savers.

    [Opportunity International]
    Opportunity International
    Opportunity International's mobile banks bring a modern banking system to the poor in rural areas.

    The Bill and Melinda Gates Foundation plans to donate hundreds of millions of dollars over the next few years to programs designed to spur savings in poor countries, officials at the Seattle foundation say. It is the philanthropy's first focused effort in financial services and is part of a broader push by the foundation into programs to help improve basic infrastructure in the neediest regions of developing countries.

    "We're going to focus very heavily on using our resources and our voice to put savings back on the world agenda," said Bob Christen, director of financial services for the poor at the Gates foundation.

    The bet on saving, which has become an important measure of the health of developed economies, is based on the belief that there is widespread, unmet demand for savings programs even in poverty-stricken areas. Savings are already a fundamental part of many developing societies, in the form of physical assets; poor people world-wide store their wealth for future use by keeping livestock, hoarding coffee and buying jewelry.

    In some countries, the needy appear ready for more. Six banks focused on the poor -- in the Philippines, Thailand, Indonesia, Benin, Uganda and Colombia -- found that demand for savings accounts outstripped demand for loans by a six-to-one ratio, according to a 2006 study by the Consultative Group to Assist the Poor, a World Bank-backed think tank that advised the Gates foundation on its financial-services strategy.

    But while there are some early success stories in collecting deposits from the poor, in Indonesia, Bangladesh and elsewhere, the complexity and cost of delivering banking services in developing countries make the venture rife with challenges. Among them are strict banking regulations governing which organizations are allowed to hold people's deposits and the lack of bank branches in rural areas that would allow customers convenient access to accounts.

    "It's a more complex issue when you start to unpeel it," said Jim Bunch, director of investments at philanthropy Omidyar Network, which has invested about $105 million in microfinance organizations, some of which in recent years expanded into savings, insurance and other noncredit products.

    The effort also could lead the Gates foundation to forge ties with telecommunications operators, banks and retailers, all organizations with which philanthropists typically have had limited connections for reasons ranging from the pragmatic to the ethical. Says Mr. Christen: "It's a new world for foundations in general."

    That concerns some in the microcredit movement, which is embroiled in a debate over two opposing philosophies. Some believe that financial services for the poor should direct any profits back into services for the needy. The Gates plan is a nod to the other side of the debate, which holds that commercial enterprises -- banks and other profit-seeking businesses -- can best serve the broadest swath of people by using tools such as capital markets to fund expansion.

    The theme that the world's poor deserve better financial services is now a central plank of development in poor parts of the world, largely thanks to Muhammad Yunus, an economist who won the 2006 Nobel Peace Prize for small-loan programs he started in Bangladesh 30 years ago that have spread around the globe. His work helped to spark a boom in microcredit as businesses, governments and individuals in the rich world ponied up huge sums for new loan programs around the globe. In Silicon Valley, entrepreneurs started a Web site,, that lets individuals make small loans to poor entrepreneurs. Actress Natalie Portman lent her name to the microfinance group Finca International.

    The Gates foundation's decision to enter the field is an example of what likely will be a range of new programs as Bill Gates begins working full time at the foundation, which has an endowment of $35.9 billion. The finance work is part of an expansion the foundation made two years ago into global development that includes investments to help small farms.

    The foundation's efforts could have a broad impact on microfinance, which to date is largely focused on microcredit, not savings. By applying its considerable weight in an area, the Gates foundation has the power to draw people, new ideas and fresh money.

    The foundation tested the microfinance waters through investments of about $300 million over several years in a range of services, including loans and insurance. A review of those programs and a broader study this year persuaded foundation officials to aim predominantly at savings, Gates officials say.

    The foundation hopes to make early progress in countries including Brazil, the Philippines, Mexico, South Africa and India, which have much of the infrastructure needed for establishing savings programs, Mr. Christen says. Ultimately, though, he expects the foundation to focus a "significant portion of our funds" in Africa.

    The Gates foundation in June completed an $11.7 million grant to Oxfam International to start training programs and group-savings programs, mainly in Mali and Cambodia, a foundation spokeswoman said. The foundation is considering similar grants to two other nonprofit organizations, she said.


    The strategy comes as the microcredit movement is attracting questions about whether the small loans actually help to alleviate poverty. Many recipients of microloans build sustainable small businesses with their borrowings, and their success stories abound. But some borrowers use their funds for consumption and in other ways that help smooth the volatility of daily life in the short term but may do little to elevate their living standard. Mr. Christen acknowledges that the impact of savings is hard to measure.

    The first challenge, though, is finding ways to offer accounts at a low cost. Since each transaction will likely be a small amount of money, the cost per transaction to the bank and the depositor has to be negligible. And many of the poorest people are in rural areas too far for banks to reach. The trick will be to extend the concept of the bank branch to local stores, kiosks, post offices or even cellular phones.

    The Gates foundation's funding will go to grantees with plans to set up rural savings programs and to research, as well as to training and new technologies. It will also go to educational programs for central bankers and other ways of "encouraging" governments to make regulatory changes needed to open savings to a broader group of people, foundation officials say.

    There are models, including a service called M-Pesa run by mobile operator Vodafone Group PLC, that allows Kenyans to use their cellphones to deposit and withdraw through a network of thousands of local stores. Still, "it's going to be tough to get downmarket with savings products, because the math doesn't work very well," Mr. Christen said.

    The promise and problems are clear in Malawi, where the nonprofit group Opportunity International holds $15 million in 150,000 accounts in a banking system for the poor. The organization uses armored trucks equipped with ATMs that travel to rural areas where the bank doesn't have branches or kiosks.

    The bank is profitable and growing but is limited by the cost of reaching the rural poor, said Francis Pelekamoyo, board chairman of the group's Malawi bank. The trucks, laden with satellite, computer and security technology, cost $250,000, and the bank runs each of its new clients through an eight-lesson training course on financial products.

    "It's very expensive to introduce financial services to someone for the first time," Mr. Pelekamoyo said. With more funding, he said, "I would go deeper into rural areas."

    Write to Robert A. Guth at rob.guth@wsj.com1

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    FW: WSJ: Google to Extend Reach With Venture-Capital Arm

    The Wall Street Journal

    July 31, 2008

    Google to Extend Reach
    With Venture-Capital Arm

    Ex-Entrepreneur Hired
    To Assist in Setup;
    Brand-Name Advantage
    July 31, 2008; Page B8

    Google Inc. is working on plans to start a venture-capital arm, according to several people briefed on the discussions.

    The group will be lead by David Drummond, Google's senior vice president of corporate development and chief legal officer, according to two of these people. Google has hired William Maris, a 33-year-old former entrepreneur who has worked as an investor, to help set up the venture. How the group will be structured and what sort of investments it is likely to target remain unclear.

    Google executives previously have bandied about the idea of launching a venture-capital unit, and the plans could still fall through. Mr. Maris couldn't be reached for comment.

    The move would make Google the latest technology giant to take on a more-formal role in seeding start-ups. Intel Corp. has had a large venture-capital arm for years, as have Motorola Inc., Comcast Corp. and many others. In the consumer-Internet area, Walt Disney Co.'s Steamboat Ventures has invested in a number of Web start-ups. So has Inc., which has funded a number of young companies without structuring a formal fund.

    Their track records have been mixed. Corporate venture-capital arms have been hampered by challenges that traditional venture-capital businesses don't face. Venture capitalists invest in private start-ups at an early stage, usually in hopes of a big payout if the company is sold or if its stock goes public.

    Many start-ups fear that taking corporate money limits their options and comes with strings that could turn away other potential investors -- such as a right to buy the company at a later date. Some funds with less competitive compensation have struggled to retain managers, and corporate venture funds often don't allow senior employees to invest personal money in their funds, while other venture funds typically do.

    Corporate venture capitalists' share of overall venture-capital dollars invested in U.S. companies fell to 7% in the first half of 2008 from 8.4% in 2007, according to PricewaterhouseCoopers and the National Venture Capital Association. Corporate venture capitalists were involved in roughly 20% of the venture-capital deals signed during the first half of 2008, compared with 21% in 2007.

    With an abundance of venture-capital money available today, Google will have to convince entrepreneurs that it has something to offer that other investors don't. It has several advantages, including a brand admired by start-ups and the ability to offer sizable technical resources.

    The Mountain View, Calif., Web giant has long preferred to buy companies rather than invest in them, and has plenty of cash to keep doing so. But it has invested millions of dollars in companies ranging from Current Communications, which offers broadband Internet over power lines, to Meraki, a wireless-Internet-equipment manufacturer. The company said last year that it intends to invest hundreds of millions of dollars in renewable-energy projects in conjunction with its philanthropic arm, Google also has launched a number of informal funding programs, including contests for software developers.

    The new venture could help formalize those efforts and could help Google expand the footprint of some of its online-software products geared at small businesses. Other corporate venture funds have made investments as a way to gain experience in new product areas and markets.

    --Robert A. Guth contributed to this article.

    Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com1

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    Tuesday, July 29, 2008

    Wirth Business Credit -




    Contact:   Mary Haugen

                   Haugen Public Relations, for Wirth Business Credit





    New Business Financing Resource Comes to Chicago’s Western Suburbs

    Wirth Business Credit creates new opportunities for small businesses


    NAPERVILLE, Ill. (June 30, 2008) – Jerry Huang today announced the launch of his Wirth Business Credit operation, part of a national business finance company that specializes in providing small business owners with fast and flexible financing options. His office is located in Naperville and serves businesses throughout Chicago’s western suburbs.


    Wirth serves small business owners whose financing needs range from $5,000 to $500,000 by providing lease financing for business critical equipment. According to a recent Equipment and Leasing Finance Association Report, U.S. Businesses leased nearly $600 billion in capital goods in 2006, yet credit lines are the dominant form of financing in the small business segment. Currently, small businesses use leasing for less than 7 percent of their equipment investments, while larger businesses use leasing for nearly one third of their equipment investments. Wirth sees an opportunity to bring leasing as a financing option to the underserved small business market, making more efficient use of small businesses’ existing capital base.


    Huang saw a unique opportunity through Wirth to support the area’s underserved small business market as a local representative for a national company that specializes in small business finance.  “Wirth focuses exclusively on small business owners,” he explained. Huang also notes that he and his sales directors, Darren Callahan and Frank Rogers, all have significant backgrounds in small business as owners, executives and vendors, covering a wide range of industries such as manufacturing, restaurants and retail, insurance, and technology.  “As former small business owners, my entire team understands the special challenges small businesses face.  We want to provide financing, but also partnership to support the growth of businesses in the region.”


    “Wirth provides local business owners with face-to-face service and a direct connection to a national finance and leasing company’s depth of resources,” he explained. “We look forward to supporting this area’s small business owners and entrepreneurs, many of whom may be struggling to secure financing and credit in today’s economy, and to help them manage their finances so they have working capital to grow. Through Wirth, we can provide affordable, flexible and fast equipment leasing and financing options that help businesses succeed.”


    Business owners, equipment vendors and consultants who work with small businesses can find more information on Wirth Business Credit’s local services at or they can call Jerry Huang directly at 630-303-9325.


    Wirth fills a gap left by many traditional business financing sources

    Commercial lenders often are reluctant to provide crucial financing for small businesses. They may require significant down payments and their approval processes can be lengthy. As a result, many small business owners turn to family or friends for loans, which can strain relationships. Or they max out personal credit cards or use home equity loans, which can be expensive and risky alternatives.  However, those options are losing are losing viability as credit card companies tighten credit lines, even on credit-worthy customers, and home values continue to decline.


    Here are a few ways Wirth Business Credit is different from equipment leasing brokers and commercial lenders:

    -          Provides customers with personalized service and a direct link to their financing source.

    -          Focuses exclusively on helping small businesses.

    -          Finances a wide variety of items including computers and software, office equipment and furniture, restaurant equipment, auto repair equipment, construction equipment, telephone systems and materials handling equipment, plus soft costs such as installation cost, freight, associated consulting fees and sales tax.

    -          Offers a streamlined, one-page application for transactions under $50,000, which can be approved within hours. Larger transactions require a bit more information, but still can be approved in just 48 hours.

    -          Provides fixed rate leases so business owners don’t have to worry about rising interest rates impacting their bottom line

    -          Can structure monthly payments to fit the customer’s budget.


    “At Wirth, we understand what it takes to build a business from the ground up and we know that sound financing can be the difference between success and closing the doors,” said Matt Boettner, Wirth Business Credit vice president and general manager. “We’ve created a company committed to delivering financing options that meet the needs of small businesses, and small business owners have responded.”


    About Wirth Business Credit

    Wirth Business Credit and its affiliates have nearly 20 years of experience helping small businesses succeed. Wirth is a subsidiary of Winmark Corporation (NASDAQ: WINA), a franchisor of more than 850 small businesses nationwide. Winmark Corporation’s award-winning family of brands represents the largest resale retailer in North America: Once Upon A Child®, Plato’s Closet®, Play It Again Sports® and Music Go Round®. Each business recycles goods and offers affordable options for consumers by buying and reselling quality used brand name items such as clothing, sports equipment, musical instruments, baby equipment and furniture. Winmark also owns Winmark Capital, which offers tailored leasing programs for medium and large-sized companies.