The Need To Outsource

Most small business owners start out doing everything themselves. If you continue doing everything, your business can’t grow. That leaves two options: outsource or hire local employees.

The do-gooder government has made hiring local employees a real hassle. pay requirements, Equal Opportunity, payroll taxes, and the possibility of getting sued if you try and fire someone, just to name a few.

Your other option is outsourcing. It’s just like hiring the services of an independent contractor and in the new digital age that contractor can be local, national or international. Contractors can by hired for a specific project or for continuing operations.

Here are the advantages of outsourcing: Read more.
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New FTC Guidelines On Endorsements and Testimonials

The Federal Trade Commission has just released guidelines (pdf) concerning the use of endorsements and testimonials in advertising, including Internet ads.

Here are a few excerpts:

“Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser.”

“Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers”

“If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.”

In the last quote the FTC is trying to quash the “Results not typical” or “Results may vary” caveat that some advertisers use. The FTC says you should include what typical results really are. It goes on in an example about a weight-loss product:

…if consumers cannot generally expect to achieve such results, the ad should clearly and conspicuously disclose what they can expect to lose in the depicted circumstances

The guidelines contain a ton of examples and hypothetical situations and covers customer, expert and organizational endorsements. Read more.
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Make Money Or Create Wealth?

As a small business owner or entrepreneur is your objective to make money or to create wealth? There’s a difference.

Bernie Madoff made money. The investment bankers on Wall Street made money. A construction worker who built a road paid for with government stimulus money made money. The Federal Reserve printing 2 trillion dollars out of thin air literally made money. They didn’t create wealth.

Capitalism is starting to get a bad name. But, if you are a small business owner you are a capitalist. Whether it’s a bread slicer, an ebook or a wedding cake, you are creating a product. You are adding value.

Steve Forbes wrote a recent editorial called Capitalism: A True Love Story. He decries the theory that

capitalism is fundamentally based on greed and is immoral; that it enables the rich to get richer at the expense of the poor; that free markets are Darwinian places where the most ruthless operators unfairly crush smaller competitors and where the cost of vital products and services, such as health care and energy, are almost beyond the reach of those who need them; and that capitalism unchecked breeds corruption à la Bernie Madoff and Enron and encourages obscene bonuses, excessive pay packages and unwarranted golden parachutes. Capitalism is also being blamed with renewed vigor for a range of social ills, from air pollution to obesity.

He goes on to say that if it weren’t for capitalism there would be no personal computers, no cell phones, no Internet. People of all income levels have benefited from capitalism. Read more.
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Government vs. Small Business

I try to give solid advice to budding entrepreneurs looking to start an online business. But every so often I am going to drag out the soap box, stand on it and shout, like a bearded radical inciting the citizens in the town square.

First of all, the U.S. Government, especially now, is NOT a friend of small business. It is turning into the most anti-capitalist, anti-profit, anti-business government I’ve ever seen.

I’m not even going to how we got into the current economic crises, but the links below will give you an idea…

2000 – The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks.

2004 – Ex-SEC Official Blames Agency for Blow-Up

[An SEC] rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.

The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

2008 – Barney’s Rubble

Mr. [Congressman Barney] Frank was publicly arguing for an increase in the size of their [Fannie Mae & Freddy Mac's] combined $1.4 trillion portfolios right up to the day they were bailed out. Even now, after he’s been proven wrong about a taxpayer guarantee, he opposes Treasury’s planned reduction in the size of the portfolios starting in 2010…

The resulting economic crises has put the government in control of investment banks, insurance companies, auto companies and over half of the home mortgages in America.

The government strong-armed Bank of America into paying 18 billion dollars too much for Merrill Lynch, told major banks they WOULD participate in TARP whether they wanted to or not, and short-changed Chrysler bondholders in favor of the UAW, then complained the bondholders were being greedy.

Next step – health care. A lot has happened since I wrote about the health care plan last month. An estimated 1.5 trillion dollars over 10 years, perhaps now whittled down to only a trillion, to “fix” something that over 70% of Americans are satisfied with.

Read more.
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