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May sees jobs increase of 2.5 million

Courtesy of MarketWatch

Employment rose by 2.5 million in May and the jobless rate declined to 13.3%, according to data Friday from the Labor Department that was better than economists had been expecting and indicated that an economic turnaround could be close at hand.

Key takeaways:

  • Non-farm payrolls rose by 2.5 million in May and the unemployment rate fell to 13.3%.
  • Wall Street estimates had been for a decline of 8.3 million and a jobless level of 19.5%, which would have been the worst since the Great Depression era.
  • Much of the gain came from those classified as temporary layoffs due to the coronavirus-related economic shutdown.
  • Leisure and hospitality represented almost half the jobs gained.

The country is not out of the clear yet, especially with a possible second wave expected, but this is some positive (even if temporary) news.

SBA EIDL Application

The Emergency Economic Injury Disaster Loan (EIDL) application from the Small Business Administration is fairly straightforward.

If you need assistance in filling it out, please contact me today as funds are limited and applications are coming in quickly.

4/16/2020 UPDATE: A loan officer from the SBA called me today to let me know that they will send an email with a .gov link (https://covid19relief.sba.gov/#/ do NOT click on any other URL extensions as there are many scams out there). Once I clicked on that, I resubmitted the same application which then takes me to the approval process.

Adaptability is the most powerful trait

You have probably noticed the deluge of advertising that is targeted to the new reality of being at home. This is obviously a response to the global pandemic we are all being affected by. The following is a breakdown of what is happening and how your business can harness the post powerful trait: adaptability.

Adapt Through Marketing Strategy Marketing

Aired prior to the COVID-19 crisis but replayed recently Campbell’s realized that people are stockpiling canned food. Set to a wholesome and nostalgic soundtrack without pandering to panic buying, they capitalized on an opportunity to remind customers of a classic pairing. On a side note, the music choice was oddly relevant — Thank You For Being a Friend was the theme song to the ’80s sitcom The Golden Girls and the elderly are among the most vulnerable to COVID-19.

Also, more people are telecommuting and are realizing their home computers might not be suitable for work so Dell aired a commercial for one of their newest laptops. Peloton, home office chairs, etc. are all advertising the benefits of being healthy and productive at home. Also, mental health app Talkspace, Delta Airlines offering free flights for medical volunteers, online education, bidets, and more are using this opportunity to advertise their products and services.

Adapt by Seizing the Opportunity

Adaptability Charles Darwin - Your Startup Guru
Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)

When disruptions happen, it is important to consider alternatives in order to adapt to the new environment. I have advised a new restaurant client to pivot their business model from a brick and mortar location to a commercial kitchen or food truck and adjusted their ad hoc financial projection model to reflect the pivot. Of course, depending on the stage of a business pivoting to a commercial kitchen or truck is not an option; which is why I always provide tailored consultations to each client.

Many people have a lot of downtime now with not having to go into work. It is a good time to take a break from watching the news and start mapping out the idea that you’ve been mulling. Who is your target market? Where will you be located? What are your startup costs? These are all questions you should know the answers to or be actively seeking if you are serious about taking the next step. If you do not know the answers or want a second opinion on, I always provide free consultation so send me an email. Afterwards, those pushup challenges on social media are also a good healthy distraction too from all the dire news.

These are better practices than gouging prices like that hand sanitizer guy.

sanitizer price gouging guy

A lifeline for small businesses

COVID 19 Your Startup Guru

COVID-19 is devastating the world economy to a degree which caused circuit breakers in the US markets to halt trading twice and oil prices to plunge below $30 per barrel.  These macroeconomic tsunamis will cause waves to affect all aspects of daily operations for small businesses including closures, diminishing customer base, and supply chain disruptions.  However, there is some relief:

1.  U.S. Treasury to Help Advance Funds to Employers for Paid Sick Leave

Treasury Secretary Steven Mnuchin said his agency would advance funds to businesses so they can meet paid sick-leave requirements under a new House bill to combat the novel coronavirus.

In a statement late Saturday night, Mr. Mnuchin said employers will be able to use cash deposited with the Internal Revenue Service to pay sick-leave wages. For businesses that wouldn’t have sufficient taxes to draw from, the Treasury would make advances to cover the costs, he said.  Read the full article here.

2.  The Treasury Department is not your only option, SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

  • the U.S. Small Business Administration is offering federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).  Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
  • Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the Coronavirus (COVID-19).
  • SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
  • Once a declaration is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on our website: SBA.gov/disaster.
  • SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
  • SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.

In order to get the process started to receive SBA’s Economic Injury Disaster Loans, contact Your Startup Guru here today

Just a friendly reminder

To buy local today if possible

Nearly 400 Investors With $32 Trillion In Assets Step Up Climate Action To Support Paris Agreement

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FYI, if you’re a greentech or cleantech company, there may be some capital available for your business.

Read more about the Investor Agenda here.

See a need, fill a need

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Often entrepreneurs come up with their business idea because of their own personal experiences or that of someone in their circle of friends & family.  This is a great strategy but sometimes doesn’t tap into a market large enough.

In episode #850 of Planet Money, The Fake Review Hunter the hosts interview Tommy Noonan, creator of SupplementReviews.com.  SupplementReviews.com is a highly popular website that provides unbiased user reviews of health supplements.  However, Tommy soon found that there were reviews that were suspiciously positive.  Because Tommy’s entire website was based on authentic user reviews, fake reviews became an existential threat.  After a lot of research, he found that some of these reviews were being written by the supplement companies themselves.  He uncovered so many fake reviews that he started noticing a pattern; almost like a modus operandi.  They were often single product/brand reviews, used fake pictures, lots of reviews in a short period of time, and/or only had one review.  Sometimes the “reviewer” would give positive reviews for one brand and negative ones to competing brands.

This is when Tommy had his a-ha moment.  If his website had fake reviews, others would also probably have them too.  So he created another business that aligned with one of the juggernauts of the internet, Amazon.  Tommy’s site which uncovers fake reviews is called ReviewMeta.com.

 

How to find a need

As mentioned at the top of the post, most rely only on their personal experiences or that within their network.  Sometimes the need is obvious.  For example, at a 7-Eleven in Shirley, New York one 7-Eleven sells more coffees than any other franchise in the US; all because of one store manager than knows virtually every customer’s name and greats them.  No special location mojo or customer flow algorithm, just old fashioned customer service. You can read more about it in my post Competitive Advantage and Coffee.

Other times it is not that obvious.  In that case, you have to hustle in a different manner.   How do you do more “work” when you’re already working to the bone?  Find efficiencies:  know your customers, know your competitors, lower your expenses,  by working to learn more doing more research in episode #700 of Planet Money, Peanuts and Cracker Jack.  In Boston’s Fenway Park, Jose Magrass is the top seller.  One year, on opening day he sold 500 hot dogs, $2750 worth of hot dogs in a single game.  In fact, Jose has been the top seller for over 5 years.  Part of his secret?  He has a spreadsheet where he analyzes many factors beyond just the weather such as what his competing vendors are selling and what fans are likely to purchase depending on the price of their seats.  For example, behind home plate diet coke sold better because possibly that is where the “vain people” sit.  That kind of analysis is impressive.

The Cryptocurrency Conundrum

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Cryptocurrencies took quite a hit in 2018 and have not been a good year for the market so far. Having reached a valuation of $834 billion as of January 7, 2018, CoinMarketCap reported that the market witnessed a drastic plunge of about 66%, losing over $553 billion. Bitcoin recorded a huge loss of over 50% in February, with valuation dropping below $7,000. Ethereum and Ripple also suffered similar drops, both recording losses of over 40% during the same month.  Even as of late March, the leading currencies have not bounced back as of March 21, 2018.

bitcoin price


crypto prices

Most signs point to a bubble.  Market speculation that drove prices to an untenable price for the time being.  This bubble was exacerbated by the unregulated nature of cryptocurrency.  For example, banks are required to physically hold a certain amount of cash in reserve, also known as Regulation D, which allows for an amount of liquidity in the market in case of lean times.  Given the unregulated nature of cryptocurrencies it is possible that market manipulation was also behind the plunge. In 2013, Bitcoin rose from $150 to $1,000 within a period of 2 months. A rise that researchers have found was caused by one person. Last month, one anonymous investor bought $400 million in Bitcoin.  For securities transactions such as stocks and bonds, the identities of the buyers and sellers are known and recorded.  In cryptocurrency transactions, the transaction is known but not the entities.

However, to understand a little about what is happening, it helps to understand what cryptocurrency is.

What is Cryptocurrency?

According to Wikipedia:

A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.[1][2][3]Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies. Cryptocurrencies use decentralized control[4] as opposed to centralized electronic money and central banking systems.[5] The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.[6]

Bitcoin, created in 2009, was the first decentralized cryptocurrency.[7] Since then, numerous other cryptocurrencies have been created.[8] These are frequently called altcoins, as a blend of alternative coin.[9][10][11]

That is a lot to digest so to summarize and generalize:  cryptocurrency is an electronic asset that is created through among other methods, “mining” (the details of digital asset creation go beyond this post). Once this digital asset is created, a record of its created is added to a decentralized ledger.  This ledger is known as a blockchain.  Blockchain is like a title chain in real estate; everyone knows who owned it in the past and who owns it now.  Furthermore, transactions using cryptocurrency is also recorded in the blockchain.

The blockchain is starting to look more useful than the actual cryptocurrencies, but more on that in a future post.

Differences from other currencies

Crypto isn’t going away but probably won’t replace sovereign currency because it doesn’t have that backing of an entire nation. There’s more power when you have a nation that promises the worth of something vs many individuals that aren’t a cohesive entity

A nation has natural resources, a military, existing contracts, labor forces, etc. that can be used to back the value of their currency. Crypto does not. They are kinda like fidget spinners. Some people highly value it and trade it but not likely to replace dollars.

Similarities to commodities

More than a “currency” cryptocurrency seems to have properties similar to commodities such as silver in that people can “mine” it too.  That said no government uses, say rubies, as their official currency.

Cryptocurrencies are also relatively unregulated like commodities.  Beyond futures contracts and derivative markets the industry did not see much action beyond the Commodity Exchange Act of 1936.  Other than a few laws, regulatory bodies such as the Commodity Futures Trading Commission did not see much action until Dodd–Frank was enacted in response to the 2008 financial crisis.

For the reasons mentioned, it seems like a judge also agrees that cryptocurrencies are commodities.  Maybe it is time to call them cryptocommodities.

Are Cryptocurrencies here to stay?

Probably not going away but many hurdles block mainstream adoption. Of course, if a government officially recognizes it then it’s all systems go.  For now, China says no and S. Korea is hesitant.  Furthermore, Warren Buffett considers cryptocurrencies speculative.

Cryptocurrency will probably end up like precious gems and metals; worth something but will not upend sovereign currency. Buying a car in wheat is possible but not as convenient as with traditional currencies.  Although some dealerships accept some cryptocurrencies.

The Importance of Planning

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Excess inventory, cost management, and other issues are a reality for most businesses.  When uncontrolled, a business can face inadequate cash reserves and even bankruptcy.

To mitigate these issues, proper industry and market research coupled with financial planning for contingencies is crucial for any business.  Whether you’re in the ideation phase or are already up and running, knowing how much to allocate to the various activities a business engages in is difficult so contact me and let’s create a strategy that works for your business.

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