Small Business

Small Business Optimism Skyrockets: December 2016 Report (Small Business Economic Trends - NFIB)

Small Business Optimism Skyrocketed in December Small business optimism rocketed to its highest level since 2004, with a stratospheric 38-point jump in the number of owners who expect better business conditions, according to the monthly National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today.

“We haven’t seen numbers like this in a long time,” said NFIB President and CEO Juanita Duggan. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy.”

The Index reached 105.8, an increase of 7.4 points. Leading the charge was “Expect Better Business Conditions,” which shot up from a net 12 percent in November to a net 50 percent last month.

“Business owners who expect better business conditions accounted for 48 percent of the overall increase,” said NFIB Chief Economist Bill Dunkelberg. “The December results confirm the sharp increase that we reported immediately after the election.”

The other two big movers in the survey, “Sales Expectations” and “Good Time to Expand,” jumped by 20 percentage points and 12 percentage points, respectively.

“This is the second consecutive month in which small business owners reported a much brighter outlook for the economy and higher expectations for their businesses,” said Dunkelberg. “In this month’s report, we are also finding evidence that higher optimism is leading to increased business activity, such as capital investment.”

Sixty-three percent of respondents made capital outlays, an eight-point increase over November. Also, the net percent of owners reporting inventory gains increased six points.

“Business owners are feeling better about taking risks and making investments,” said Duggan. “Optimism is the main ingredient for economic expansion. We’ll be watching this trend carefully over the next few months.”

Despite sharply higher optimism, hiring activity remained flat in December. Job creation increased by 0.01 workers per firm and job openings dropped two points. According to the NFIB Jobs report, released last week, finding qualified workers remains a persistent problem for small business owners.

“The labor market is getting tighter,” said Dunkelberg. “That’s good news for workers because they can command higher compensation, but many small business owners aren’t yet confident enough to raise prices to offset the higher labor costs. Owners are still in a pinch, but the overall picture for December was very positive.”

INVENTORIES AND SALES

The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months compared to the prior three months improved 1 percentage point to a net negative 7 percent. The surge in consumer optimism did not produce a noticeable improvement in sales at small businesses, perhaps because of the growth of internet sales which might detract from retail holiday business.

Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose 20 points, after a 10 point rise in November, to a net 31 percent of owners, the highest reading since October 2005 with a reading of 40 percent. The reduction of “policy anxiety” is surely responsible for some of the remarkable improvements in sales expectations and rising consumer sentiment. The expectation of important cost relief from deregulation and tax reform is strong among small business owners and consumers, all of which is yet to be accomplished and has a hard political road to travel. But the data indicate that business owners are indeed very optimistic.

The net percent of owners reporting inventory gains gained 6 points to a net 3 percent (seasonally adjusted), a rather strong report, as long as those inventories are built to meet rising consumer demand and not a result of weakening sales.

The net percent of owners viewing current inventory stocks as “too low” improved 1 point to a net negative 3 percent, still more feeling stocks are too high than too low. The surge in expected sales gains should absorb some of these “excess stocks”. The net percent of owners planning to add to inventory improved was unchanged a net 4 percent, a good number reflecting expected stronger demand.

CAPITAL SPENDING

Sixty-three percent reported capital outlays, up 8 points from November and the highest reading since January 2013. Reports of expenditures tend to rise late in the year reflecting tax driven outlays (expensing), but this is a solid number even if weak compared to other expansions and is the second highest reading in the recovery. Of those making expenditures, 46 percent reported spending on new equipment (up 10 points), 23 percent acquired vehicles (down 2 points), and 17 percent improved or expanded facilities (up 2 points). Six percent acquired new buildings or land for expansion (up 1 point) and 13 percent spent money for new fixtures and furniture (unchanged). Overall, a nice pickup in spending.

The percent of owners planning capital outlays in the next 3 to 6 months jumped 5 points to 29 percent, the highest reading since December 2007, the peak of the last expansion but well below the high readings in the mid-90s of 40 percent. Seasonally adjusted, the net percent expecting better business conditions rose 38 percentage points to a net 50 percent, adding to the19 point gain in November. The seasonally adjusted net percent expecting higher real sales rose 20 points to 31 percent of all owners, after a 10 point gain in November. This optimism appears to be transitioning into strong spending plans as well as increases in actual outlays, a component of growth that was missing in the recovery.

Source: NFIB - http://www.nfib.com/surveys/small-business-economic-trends/

 

Small Business Loan Information Overload

In today’s world, we literally have access to an ocean of information. With very little restrictions, people can freely swim in the open sea of the Internet, just as you are reading this article on your laptop or mobile device. The amount and variety of information available to us is appreciably infinite and the search cost has become much lower. Although this has greatly improved our ability to make a more educated choice, it has also created a band of low quality, often inaccurate and misleading information.

Take healthcare for example, a study has shown that over 80% of all Americans look online for health information. More and more patients are going to their doctors having already researched their symptoms on the Internet, and already convinced of their own diagnosis. What is more, doctors are also increasingly turning to the Internet, with nearly half of doctors reporting using the notoriously inaccurate Wikipedia as a source of medical information.   

If you Google “information overload” you will be inundated with information: more than 7 million hits in 0.05 seconds. Some of it is mere noise; obscure companies promoting their services and even more obscure bloggers sounding off. The overall impression is at once overwhelming and confusing. “information overload” is one of the biggest irritations in modern life and it's getting worse every day.  

Amazon has filed lawsuits against users who wrote fake reviews on products for pay but admit that the activity is still prevalent, not only on Amazon but Google and other review websites.  Furthermore, countless web pages and affiliate blogs selling everything from merchant cash advances to vitamins, sex pills to dietary supplements; all boasting bogus results and misleading cues.  The Internet has made it possible for us to buy virtually anything we can imagine, regardless of how ludicrous it may be. Returning to the ocean analogy, we’re now playing in much deeper waters, where the waves are high and winds are strong. To make the most of the current environment, especially as it relates to small business owners whose success often depends on obtaining realistic and truthful information, business owners must filter through the nonsense and search through an ideal set of information to maintain a competitive edge. Are you educating yourself on truthful information, or fake offers, teaser rates and false promises?   

One of the larger financial blogs on the internet boasts about making it simple to find the best deals on all types of financial products, from: credit cards, insurance, small business loans to mortgage rates, etc. However, this site is nothing more than a large affiliate marketing platform and much of their content is written only for keywords and placement on Google. No question about it, they have SEO down to a science but their content is misleading and inaccurate. So we decided to dig deeper and finally found a little link that led to a page titled, "how we make money." Here are the highlights: "We make money when you get the funding you need. Some of the loan providers on our site pay us a referral fee when customers like you get approved for a loan. Some of the financial institutions with products on our site may pay us a referral fee when customers get approved for certain products. When you click to apply for those products through our site, we may receive compensation from the company that issues that product. While we try to feature as many financial products on our site. We recognize that our site does not feature every product available on the market." How unbiased can they be, if they are only steering you to a few sites that pay them referral fees?

While education and research is imperative for success, too much information can shroud sensible decision making. Especially, when most of the the information you are absorbing is false. People are getting bombarded with information from all angles, and instead of becoming more educated and knowledgeable, often times they only wind up getting frustrated and extremely confused. The Internet has been proven to be a double edge sword; one blade allows you to efficiently work through business matters and obtain information that otherwise may not had access to, while the other can hurt your effectiveness, as you have to constantly decipher what is right or wrong, authentic or apocryphal. Just as fire is a wonderful servant but a terrible master, information on the Internet, especially as it pertains to finances, need to be carefully digested.

Small business loan and merchant cash advance marketplaces have been flourishing in the last few years, and so has the number of specious lenders increased. The old adage of what seems too good to be true, probably is. Yet, so many people forgo the legitimate and obtainable funding offers to grow their business, while wasting their time searching out unfounded loan options that simply don’t exist. Chasing butterflies we like to call it. Thousands of consumer reports indicate fake, fraud, or misleading instances of online small business loan offers, which not only waste time for consumers but result in negative outcomes. Every day, seemingly smart business owners get locked into small business loans that they don’t understand and may very well put their business in jeopardy, all because they heard what they wanted to hear and refused to listen to reason.

Many of the propositions discussed here have been supported through recent research and suggest that too much information may hurt consumer decision making. Through a series of established economic models and numerical analyses, the researchers find that an intermediate amount of information is better than too much, or unlimited information.

Whether you like it or not, the tide of the Information era is looming larger by the day, and it is up to your prudence to navigate through these waters in finding the best small business financing options for your particular business. Especially for an important decision as getting a small business loan to fuel your growth initiatives or simply meet payroll; you should avoid listening to the song of sirens and steer toward a reliable and knowledgeable loan provider and resource such as LVRG. 

Small Business Finance, Small Business Loans & Small Biz Funding. Could There Be Too Much Information Out There?

In today’s world, we literally have access to an ocean of information.  With very little restrictions, people can freely swim in the open sea of the Internet, just as you are reading this article on your laptop or mobile device.  The amount and variety of information available to us is appreciably infinite and the search cost has become much lower.  Although this has greatly improved our ability to make a more educated choice, it has also created a band of low quality, often inaccurate and misleading information.

Take healthcare for example, a study has shown that over 80% of all Americans look online for health information.  More and more patients are going to their doctors having already researched their symptoms on the Internet, and already convinced of their own diagnosis.  What is more, doctors are also increasingly turning to the Internet, with nearly half of doctors reporting using the notoriously inaccurate Wikipedia as a source of medical information.   

If you Google “information overload” you will be inundated with information: more than 7 million hits in 0.05 seconds. Some of this information is interesting: for example, that the phrase “information overload” was popularized by Alvin Toffler in 1970.  Some of it is mere noise; obscure companies promoting their services and even more obscure bloggers sounding off.  The overall impression is at once overwhelming and confusing. “Information overload” is one of the biggest irritations in modern life and it's getting increasingly worse.  

Recently, Amazon has filed lawsuits against users who wrote fake reviews on products for pay but admit that the activity is still prevalent, not only on Amazon but Google and other review websites.  Furthermore, countless web pages and affiliate blogs selling everything from dietary supplements to business loans boast bogus results and misleading cues.  The Internet has made it possible for us to buy virtually anything we can imagine, regardless of how ludicrous it may be.  Returning to the ocean analogy, we’re now playing in much deeper waters, where the waves are high and winds are strong.  To make the most of the current environment, especially as it relates to small business owners whose success often depends on obtaining realistic and truthful information, business owners need to filter through and search through an ideal set of information to maintain a competitive edge.  Another words, are you educating yourself on truthful and unbiased information, or just reading an affiliate website temping you with fake offers, in an attempt to entice you enough to click on a banner, or fill out an online application, so that they can earn a commission? 

While education and research is imperative for success, too much information can shroud sensible decision making.  Especially, when most of the the information you are absorbing is incorrect, or only half the truth. People are getting bombarded with information from all angles, and instead of becoming more educated and knowledgeable, often times they only wind up getting frustrated and extremely confused.  There is so much inaccurate and flat out false information being pumped into the public, it's hard to distinguish between reality and make believe. It’s one thing if you are buying the latest model basketball shoe from a popular retail website, you know if you order a size 10 Nike Air, you will get a size 10 Nike Air.  But when your livelihood and the livelihood of your family rides in the balance of obtaining the proper small business financial advice, you must be able to sift through the nonsense and understand that not everything on the internet is fact; nor are all small business loan sources created equal.  The Internet has been proven to be a double edge sword; one blade allows you to efficiently work through business matters and obtain information that otherwise may not had access to, while the other can hurt your effectiveness, as you have to constantly decipher what is right or wrong, authentic or apocryphal.  Just as fire is a wonderful servant but a terrible master, information on the Internet, especially as it pertains to finances, need to be carefully digested.

Peer to Peer (P2P) lending and Fintech platforms have been flourishing in the last 5 years, and so has the number of specious lenders increased, just as some of Amazon’s reviews have become tainted.  Banner ads fill your screen and pop-ups appear on every web page you visit offering teaser rates on business loans and merchant cash advances with ridiculous rates.  It's been said that common sense isn't so common after all.  Do you really believe that a random telemarketer will offer you a small business loan at bank rates, while overlooking poor credit, minimal time in business, lack of cash flow, tax liens, judgments and bankruptcies?  The old adage of what seems too good to be true, probably is.  Yet, so many people forgo the legitimate and obtainable funding offers to grow their business, while wasting their time searching out false and unfounded loan options that simply don’t exist.  Hundreds, perhaps thousands, of consumer reports indicate fake, fraud, or misleading instances of online loan offers, which not only waste time for consumers but result in negative outcomes.  Every day, seemingly smart business owners get locked into small business loans that they don’t understand and may very well put their business in jeopardy, all because they heard what they wanted to hear and refused to listen to reason.  

The greatest “search cost” for small businesses is time.  By forgoing reasonable and credible loan terms and rates in search for a better offer, business owners have been led to believe that shopping is the best way to find that better offer, which typically winds up lowering their credit score and often puts them in a negative cash flow cycle.  This pattern can ultimately cause a negative impact in their operation and spiral out of control if not careful.  That’s right, often times the search for that “better rate” puts them in a worse position they were in to start with. Instead of wasting valuable time to find unobtainable and unreasonable loan terms and interest rates, small business owners are better off researching a trustworthy and competent alternative financing providers who have the knowledge, experience and wherewithal to advise you properly.

Many of the propositions discussed here have been supported through recent research by Miguel Villas-Boas and others, who suggest that too much information may hurt consumer decision making.  Through a series of established economic models and numerical analyses, the researchers find that an intermediate amount of information is better than too much, or unlimited information.

Whether you like it or not, the tide of the Information Era is looming larger by the day, and it is up to your prudence to navigate through these waters in finding the best small business financing options for your particular business.   Especially for an important decision as getting a small business loan, revenue based loan, term loan or merchant cash advance to fuel your growth initiatives or simply meet payroll; you should avoid listening to the song of Sirens and steer toward a reliable and knowledgeable loan provider and resource. 

 

Want the best small business loan rates & terms? STOP SHOPPING FOR THEM!

The trend of shopping small business loans may be more damaging than you realize.

If you own a small business, chances are you've probably looked into the myriad of financing options available to you. In today's online and digitally connected business world, nearly all small business owners have 'shopped' banks, loan brokers, online lenders, loan platforms, etc., simply to see what kind of financing options are being offered. Heck, you don't even have to go out and search for financing anymore, it's practically being thrown at you from every angle. From telemarketer solicitations, loan brokers harassing you, social media constantly in your face, postcards arriving in the mail, flyers landing on your desk, banner ads flooding your search engines, pop ups appearing on every website you visit and emails flooding your inbox. All promising the lowest rates, best terms and instant pre-approvals for hundreds of thousands of dollars simply for having a pulse! These days, you can't get away from all the small business loan offers if you tried.

While the options for a small business owner to obtain capital is plentiful, just like everything else in life, too much of a good thing isn't always a good thing. While the theory behind shopping small business loans to find the best rates and terms may sound like the prudent method, in reality you may actually be hurting, not helping your chances of finding the best possible financing options you are so desperately in search of. That's right, the more you shop for the "perfect" deal, the least favorable one you may wind up with. 

With literally thousands of online lenders, affiliate websites, bloggers and millions of other sources offering financial advice for small businesses, coupled with the constant barrage of loan offers being thrown at anyone who has ever searched for a loan online, it may seem like the best option is to shop around. With the non-stop promotion of "free quotes," gift cards in return for filling out loan applications and web platforms being created for the purpose of having lenders fight for your business, small business owners have been led to believe that the more they shop for money, the better "deal" they will find. Nothing could be further from the truth! Not to mention, the shady business of pushing a one-size-fits-all loan solution onto small businesses with varying needs could be more damaging than anything else. 

Regardless of whether you are looking for your first small business loan, stacking cash advances to stay afloat, or looking for a new lender after a bad experience, chances are that your online shopping could actually put you in an even worse position than before. Here's how:

When a lender receives a small business loan application from someone who is shopping, typically there are 2 outcomes:

1. If a lending company can see that you've applied on multiple occasions with multiple lenders, they will know that you are not committed to any specific company and will try to lure you into a contract using 'offers'. Keep in mind, many lenders work together or are connected in some fashion. So in essence, every time you pass your loan file around or submit another application, each lender already knows where the file has been and what was offered. 

2. In some cases, lending companies may turn down applications due to the fact that they have received the same business' application too many times in the past without closing. Nobody likes their time wasted and a lot of effort goes into loan packaging and underwriting. If lenders know you are non-committal and just kicking tires, you will get declined before the file is even considered. 

In addition, you must know that your credit report shows ALL the lending companies that you've applied to. Having a credit report that shows numerous inquiries by different lenders is a huge red flag and typically leads to outcomes #1 and #2. That is, not to mention, every time a lender pulls your credit report it can actually have a negative effect and drive your credit scores down. 

Finally, all of this shopping can get you labelled as a "High Risk" applicant. The numerous credit inquiries, hard credit hits and small business lending applications make you appear desperate for a loan (regardless of whether you are or not). To the online lending companies, it appears as though you are trying to get the maximum loan amount and are either unable to qualify or unable to commit. 

In the end, the trend of shopping for small business loans has inadvertently lead to business owners doing more harm than good. Lending platforms, affiliate websites and small business blogs are all looking to gain big money by steering small business owners into loans that may or may not be an appropriate fit for their business, and are offering all sorts of inaccurate small business lending advice from so-called 'experts' in order to sell these loans. 

It is important to remember that small business financing is meant to be an individual solution that fits your specific business, business model and goals. Business loans are NOT meant to be bought, sold, or haggled over. So, before you start filling out countless applications and forwarding your financial information to anyone and everyone promising a "better rate," consider your business' complete financial standing, the purpose of the loan and just how 'shopping' for the best rate could negatively affect your credit standing and the future of your business.