Wealth Business

Archive for January, 2009

A lot has been written about the Federal Trade Commission (FTC) and its new guidelines governing endorsements and testimonials.  These guidelines affect how we must conduct our sales and marketing.  We all need to understand how we will do business going forward for our affiliate marketing as well as our business internet money online opportunity.

I will summarize three aspects below.  However, like anything that is written by the government, the devil is in the details.  I will provide a very high level view and you must dig deeper into each aspect to get the details and learn how you will deal with them.

1. Advertisers, such as you and I as affiliate and article marketers, who promote a product or service must clearly disclose our results so other potential consumers can understand what they can expect.  This clearly means that affiliate marketers and sales people must provide their potential consumers proof that using their product or doing their program will provide specific identifiable results.  Making statements such as you will make $150,000 the first month you start this program will require proof that the people paying for and doing the program can expect these results.  I think that we will see a huge reduction in a lot of websites that make false and wildly untrue claims.  This is fantastic and will help you and I reduce our markeplace of charletans and crooks. The 1980 guideline provided an “out” for the truly dishonest by simply providing a disclaimer to testimonials that the “results (are) not typical”.  The new guidelines have removed this “out” and will not protect the disceptive or give them safe harbor.

2. The new guidelines qualify “material connections” such as payments or free products must be disclosed.  This applies to anyone who gets a service or product for free and then promotes that product. They will be required to be forthright and identify this fact.  This is of particular concern for the rich and famous who are paid great sums of money to endorse a product.  I could give hundreds of examples about how abused this marketing technique has been.  You and I need to be aware that if we are paid or receive a product or service for free, this information must be disclosed.  This applies to bloggers, affiliate marketers and anyone selling or promoting someone else’s product or service online.

3. The endorsements by celebrities is identified in the new guidelines.  Although you and I likely do not have to worry about this for our affiliate and article marketing, celebrity endorsers will be held accountable for statements they make in their endorsements.  Both advertisers and endorsers can be held liable for false or unsubstantiated claims and failing to apply items 1 and 2 above.

Make sure you learn about the FTC guidelines and if you have any questions get the official document from the Government, FTC 16 CFR Part 255, Guides Concerning the Use of Endorsements and Testimonials in Advertising, effective December 1st, 2009.

Tougher times are expected for small and medium sized business. Business failures are expected to rise by a staggering 50% which means that failed businesses could peak around 32,400 in 2010; this would be the highest level recorded since 1992. The Federation of small businesses said that they had recorded a dramatic increase of 214% in the amount of calls to their legal advice line on redundancies from concerned small businesses in the fourth quarter of last year.

Their members are concerned about jobs and how to hold on to jobs; small businesses are usually the last businesses to make employees redundant. The calls are asking how to make employees redundant, how do I do it, what action should I take, this is extremely worrying when it is thought that 32,400 business may go bust. On average each small business employees approximately 5 members of staff; this means that 150,000 people could lose their jobs from small businesses this year.

The federation of small businesses is the voice of small and medium-sized businesses in the UK; they have over 215,000 members, who employ more than 1.3 million people with a combined turnover of £10billion. The federation of small businesses are proposing a five point plan. They believe that small business can help to get us out of this recession if the government were to give small businesses more contracts, the government improves employment paperwork, government improves access to traineeships or apprenticeships and improves the position of the banks giving money to small businesses. This will rely on the bank mangers releasing and relaxing the money supply to small businesses and not having a knee jerk reaction to this recession. As quoted by Stephen Alambritis.

This government under Gordon Brown and Alistair Darling need to realise that small businesses are the back bone of the economy and that they need to ensure that this recession is as short as possible. To do this they need to spend copious amounts of money to implement a massive job creation programme to keep unemployment down and taxation revenues up. Then hopefully we may ride out this recession!

It’s not just a case of the government supporting the Banks and the Car industry; we need more far reaching initiatives for employment across the economy. The recent incentive released by the government was to assist employers recruiting people who had been unemployed for six months or more. This initiative is flawed as the government will provide £2,500 to employers for training any new recruits as long as the new employee has been unemployed for more than six months. So now employers may be tempted to only recruit people who have been unemployed for six months or more for the additional money that is available.

Gordon Brown and Alistair Darling should look across the pond to Barack Obama’s newest policy to create 3 million new jobs in America. This initiative is expected to cost some $850 billion to implement along with other help offered to their car industry and the banking sector.

all listening attentively about lenders on the radio, television, newspapers, and the Internet of promises to be “small business friendly”, “small business oriented”, wanting to be your “personal small business advisor” and a panoply of packages taking care of all your business needs. What small businesses really need is money, not personal hand caring services. So is there anyone out there really making small business loans? Yes. If you know where to look you can find one.

You can generally categorize banks into: 1) 10% that are actually making small business loans now and are serious about doing so, 2) 70% who will talk to you directly and indicate they are not making small business loans at this time because of the economy, and 3) 20% that slap you on the back, invite you in, and readily take your application. It is the latter group that gives us the most heartburn. It is not unusual after the initial review of your application papers for a bank represented to signal you have a good chance. Overjoyed, you begin to make plans, including executing contracts and receiving quotes for inventory, raw materials, or merchandise. Two months later, after the fourth loan committee review, you get a call that they have decided not to make the loan. The reason has little if anything to do with credit. It is typically something that was never been mentioned before and after reflection, it seems like an excuse not to make the loan in the first place.

Loan brokers such as myself are victims of the same misleading behavior. I cannot tell you how many banks have looked me in the eye and said: “Sure, we are making lots of loans. For unsecured loans of $75,000 to $150,000, we just need a credit score above 680, in business for over a year and a half, and decent financials. Real estate security is not required. We would love to entertain your applications.” Right.

What they really do is pour over the applications and pick 1 out of 100 that has the following fantasy credentials: a platinum credit score that Bill Gates would be proud of and which could support a small country, gushing positive cash flow, little competition, executed contracts stacked high on your desk, then a booming market niche. In other words, someone who doesn’t need the loan in the first place. You know the old adage: banks only give money to people who don’t need it.

It is simply psychology 101. Banks are filled up with loan officers and they have to show they are busy. If their boss walks into their office and sees nothing on their desk, they might be laid off. They have to show they are busy earning their salaries, which means receiving applications and going through the review process. It’s gotten so bad that the other day we had a client whose grandfather helped found the bank, whose father was best friends with the president, and who had received two successful loans before. Even he was turned down. Nor do they tell you the large SBA commercial loan department job layoffs of employees throughout the nation.

To prevent being too caught in this trap, look your banker in the eye and ask these questions:

1) “Tell me honestly. I don’t want to waste your time or mine. I know the credit crunch is quite depressing and there is really no secondary market. Are you actually entertaining small business loans at this time or should I wait.”

2) “How many small business loans have you personally made in the last 30 days?”

3) “What are the loan terms of the last three loans you made, including interest rate and monthly payments, for the amount of loan I am seeking?”

4) “How long will it take before I get a definitive answer?”

5) “Can you briefly describe to me the process I have to go through to get the final approval? Will you be the one making the final decision? What other people superior to you or committees will make that decision?”

But do not despair. There actually are real live prime lenders out there making small business loans. They just need to know where to look. In the next article I will discuss if such loans are available to startups.