Stimulus Opportunities
Is there an entrepreneurial windfall in your state's federal stimulus program?
by Yank Elliott, MBA & IAHBE Writer

Every catastrophe, economic or otherwise, carries a number of opportunities all around its fringes. You have probably heard the frequently repeated phrase from the White House Chief of Staff, Rahm Emanuel, and others to the effect that “any crisis is too good an opportunity to waste�—meaning to use it as an excuse for pushing an unpopular idea through Congress. That is just what this article is about, i.e., the President’s economic stimulus program and the opportunities surrounding it. We discuss possible ways to take advantage of this program, as well as how you will need to put significant effort into finding what avenues are open for you to profit from the stimulus.

Here is an example of an opportunity that came from the current economic crisis. A friend bought a pricey condo in Las Vegas and moved there a few years ago to live off her 401k and indulge her love of gambling. Along comes the stock market crash and about half her 401k flushes down the toilet in a matter of a few days. Looking around for a way to begin to recoup some of this loss, she realized that Las Vegas real estate has lost over half its value and there might be an opportunity there. A distressed condominium came on the market for $40,000, just 20% of its value a year ago, which was $200,000. Realizing the former owners, who could no longer afford the property, still need a place to live, she bought the home and rented it to some other former owner who needs a place to live but can no longer afford to own one. Rentals in upscale areas of Las Vegas range from $1,000 to $2,000 a month or more. In a few years this income should replace a big part of the lost 401k. You will see there are a lot of other ways to profit from the economic ruins all around us. Keep an open mind as you read.

Many knowledgeable economists and investors have expressed ideas about how the economic situation will play out. Some of them are discussed in this CNN Money article (http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html ) and show how bad times offer opportunity because of changing conditions. Here are some of their ideas:

Real estate, after already losing over 25% of its value in most places, is likely to fall at least another 15% before it hits its low next year. An economics professor from NYU, known as Dr. Doom, made this prediction along with recognizing the mortgage collapse that brought down the global economy. Imagine the opportunities available around this big change. Do you remember the opening example of my friend who purchased the $200,000 property for $40,000? There are thousands of similar opportunities out there which can be done by a home-based entrepreneur. To participate, you must thoroughly research the property to be sure there is nothing wrong with the structure or the neighborhood. Keep your credit clean and search for a lender; in spite of the gloom and doom in the media and by Donald Trump about there being no available credit, there are banks in most areas, probably the smaller ones that did not stick their necks out too far, who may finance your projects. I know this is true because I just got a small mortgage myself.

No more 15% investment returns. This is the thinking of a large bond trader from the giant Pimco firm who saw the sub prime problems coming way back in 2007. You may recall several notorious examples of large return guarantees, such as those made by Bernie Madoff and other “investment advisors.� A couple of years ago I researched a reasonable rate of return for an investment portfolio, like a 401k, and there were many advertisements of 12% to 15% returns. After a few inquiries to friends in the business, I decided to use 5% to 8% as reasonable expectation. Our trader suggests, in view of the rough and dangerous way out of the current recession, or whatever you call it, the best investments could be high-quality corporate bonds and preferred stocks of banks and financial institutions. He expects the best value to be in those firms partnering with the government-backed programs like the Troubled Assets Relief Program (TARP). Though returns will be limited by the government, they will almost be guaranteed to be able to pay required interest and dividends. You may wonder how this is an opportunity for a home-based entrepreneur? A lot of you have suffered severe losses in your 401k plans and other investment programs. This could be another way to make some of these losses good.

The Price/Earnings ratio is used by a Yale professor who accurately called the dot.com bubble as well as the collapse of the housing market. The ratio he uses is the stock price divided by its ten-year average earnings. The simplest form is just to use current earnings, but this professor believes a ten-year average is much more conservative. His average of all ratios was way high in 2000 at 44; the current ratio is 13, a bit lower than the overall average he has calculated which is 15. After the stock market crash of 1929, this conservative P/E ratio was about six, much lower than now. Do you see the possibilities around this opportunity for your small investment program? If you buy a stock near its low, you will likely profit over time. Be cautious with any investment plan you may choose to pursue. This current downturn is being made worse because everyone is scared and there seems to be nobody to offer reassurance. The result is there is no spending—the savings rate is very high and no government stimulus will restart things until confidence returns. However, the patient and savvy investor will eventually make some money.

The credit market is the subject of this article. (http://money.cnn.com/2008/10/08/pf/money_crisis.moneymag/index7.htm ) The authors say those with good credit scores, a stable job record, low debt repayments, and a substantial down payment can get a mortgage. Interest rates are so low, this is an excellent chance to refinance an existing mortgage or buy new property. Small business experts are also saying now may be a very good time for a passionate entrepreneur to begin a new venture. As large businesses fall apart, small business owners can see what went wrong and found their own new business on sound principles after learning from the mistakes of others. When the economy is down, there are also deals available on advertising, equipment, and office space.

Now, let’s look at the President’s Economic Stimulus Package. This is supposed to allocate money to all the states with specific instructions as to how it should be used to stimulate new jobs which are expected to help restore confidence. There is no way the government can force people to spend money, but merely having a job, if you have been out of work for a while, will encourage more consumer purchases. In the process, the government hopes to acquire not only new jobs, but better roads and bridges, housing for the homeless, sustainable energy sources, home “greenization,� improved medical facilities, and a host of other things to improve the quality of life for all Americans.

But guess what things have become obstacles to the quick utilization of these funds (supposed to be distributed to projects within 120 days)? One concern for the success of this program has always been how to get it out of the respective state capitals to the communities that will actually perform the projects. Just by having to go through the governor, a tremendous amount of political action gets mixed up in the process. Look at Texas and Louisiana. Last I heard the governors were refusing to accept any of the money because of “strings� attached, usually meaning the programs must be maintained without Federal funds after the stimulus runs out. Could be the state legislatures will have something to say about acceptance.

Another problem also is political and it concerns what to do with the entire amount of money. The South Carolina governor seems to want to pay down state debt rather than spend it on new projects, thus defeating the whole idea of the stimulus. I don’t think Congress will allow this to happen.

Many states have not given much thought about where to allocate funds. They get all this money and the legislators stand around for a while arguing about whose constituents will get their fair share. All the delay causes confusion among the citizens and they have problems finding how and where to get into any of the programs. This was supposed to have been completely transparent through state Websites listing all about the Stimulus. The ones I researched were missing sites, some were grossly incomplete, and a few were very good.

The projects included in the Stimulus all carry some opportunities around them. Anyone wishing to participate may need extra training, a license to do business, and other requirements. These state Websites are very important for showing what is available. In those cases where information is short, we have tried to show you how to get information you need. In no case will you be relieved of having to do some work to see what is out there and what you have to do to participate. Some of these opportunities could require relocation to communities where the jobs are. This might require a participant to seek others in the same situation and perhaps rent some kind of very temporary housing as a group. Mutual transportation could also present a problem to be resolved.

To illustrate how states are using the stimulus and the information available, I chose three states in the top 10 with highest unemployment. This list (http://money.cnn.com/pf/features/lists/state_unemployment/ ) was compiled by CNNMoney in the Fall of 2008 and many of the percentages have risen considerably since then. Michigan, No. 1, was chosen because its unemployment is highest; California, No. 3 is very large, and North Carolina, No. 8, because I live here and would like to find some opportunities for me and my friends.

At this time information about the Michigan stimulus money is fragmented, not available all in one place. You can find out about some programs that may provide fringe opportunities in Michigan related to highways and bridges here.( http://www.uppermichiganssource.com/news/news_story.aspx?id=268216)  The stimulus package gives the state $847 million for these purposes. Check your state representatives for possible opportunities that you might be qualified to pursue.

The Michigan stimulus plan encourages contractors to get their licenses; this can be done using programs offered by the CBT Development Corporation,( http://www.contractorlicenseexam.com/)  some of which can be taken in your home. There should be all kinds of sub-contractor jobs available around these projects.

The Michigan Certified Development Corporation (MCDC) (http://www.michigancdc.org/)  is a non-profit corporation certified by the U.S. Small Business Administration (SBA) to provide SBA 504 financing throughout Michigan. The stimulus provides at least $373 million to MCDC; see if you can use some of it.

The governor is also going after stimulus money for investing in projects such as the manufacturing of lithium-ion batteries for electric cars, second-generation biofuels, and turbines to harvest the abundant wind from the Great Lakes. These green industries could replace former Rust Belt jobs with thousands of new jobs. There should be some outside entrepreneurial opportunities here, as well.

Number 3, California, does not have a very good Website either. What they have is here. Use this site by finding a category of interest and click it to go to a page with details of the program. At the bottom of the page you will see Web pages and personal contacts for information. Two that could be of interest are:

Rural Business Enterprise Grants—$20 million
Coastal and Marine Habitat Restoration Grants—$170,000,000

More projects are available by clicking the Site Map link at the bottom of left sidebar on any page; then click the category you want and find an opportunity on the page that comes up.

Another stimulus program is Housing. A few opportunities for contractors and subcontractors under this category are:

• Community Development Block Grants
• Home Weatherization
• Lead Hazard Reduction
• Neighborhood Stabilization
• Public Housing

There is a Miscellaneous category here with opportunities like these:

• Small Business Administration Loan Administration
• Small Business Administration Micro Loans (to $35,000)

It’s a shame there is not a better Website for the California stimulus programs. You really have to hunt around for the very largest part of the plan, the one involving highways and bridges. The best information I could find was on the site of the California Statehouse Examiner. (http://www.examiner.com/x-4106-California-Statehouse-Examiner~y2009m3d18-Stimulus-in-Calif-Projects-greenlight-but-so-is-tax-increase ) Here you find that the California Transportation Commission approved 57 statewide projects for a total of $625 million on March 11. A total of $2.57 billion for transportation in California was earmarked by the Obama administration, a very large amount. One official said this grant is about jobs and more jobs. The state expects to start the first projects within 60 days. Opportunities for contractors and subcontractors are sure to abound here.

North Carolina, Number 8, has an informative site called NCRecovery.com. (http://www.ncrecovery.gov/ ) Here you find that North Carolina will receive $131,954,536 for weatherization which allows investing up to $6,500 per home in energy efficiency upgrades. There is also $75,989,000 for the state energy program which is available for home energy audits, development of renewable energy projects, and other innovative state efforts to help save families money on their energy bills. There should be peripheral opportunities around this as well as direct work for contractors and subcontractors.

The road and bridge projects also have opportunities associated with them for contractors and subcontractors. 70 projects covering all of North Carolina are about $466 million from the stimulus plan and this is only the first part of money the state will receive. It is expected 14,000 new jobs will result in the state from stimulus money. From this same NCRecovery Website you can find exactly where the new road and bridge projects will take place. NCRecovery also has links to individual counties and cities showing how much of the stimulus money is allocated to them and for what purposes.

For information about stimulus fund opportunities in other states search Google with terms like “(your state name or initials) state stimulus how used.� Once you begin to find information it is up to you to seek local and state politicians who represent you and ask them for help finding what you can get from the stimulus. This is a lot of money and its purpose is to provide jobs for people, including home-based entrepreneurs. If you fail to act, someone will out-hustle you and take what is rightfully yours.

Don’t waste this crisis—use it to your advantage. Now could be just the right time for you to build your financial security on the foundation of the President’s economic stimulus program. Do something about this chance to succeed.

This is repetitious, but it is urgent that you act IMMEDIATELY. Stimulus money projects must begin within 120 days of receipt of funds; most states already have them, at least in the state capital, so time is running. Contact all of your local and state politicians you can find to ask what projects will be done in your area and see if they can help you determine a niche you can fill. You may need some kind of certification, like a license, to participate, and you could require training, as well. Time is critical—GET STARTED NOW!

Manohar Mattu

Follow Me on Twitter: http://twitter.com/manu55

2009 Conditions Command Home-Based Work
Perfect Timing To Consider An Additional Income Stream
by Yank Elliott, MBA & IAHBE Writer

The U.S. economy, and with it the entire global economy, has been very sick for at least two years. After looking into a lot of economic problems facing small and home-based businesses, it is obvious things are potentially much worse than many in government would have us believe. It will be wonderful if, as some have been saying, we have reached the bottom of the decline. There’s no way to know right now—these rosy predictions are based on weekly unemployed people still increasing, but not as much as the previous week. Another favorable sign, say some, is GNP is not falling as fast as a few months ago, but it was still falling last month. This seems to be a little shaky reasoning, but nice, if true.

Meanwhile, the situation is eerily similar to that surrounding the 1929 Stock Market Crash and ensuing Great Depression. I was horrified to learn about the lax lending practices that were used after 1995. Before then, I was a real estate agent, and the most difficult thing I had to do was ask my customers to make a loan application. All the hoops they had to jump through, all the paperwork, and all the personal inquiries made this one of the most traumatic experiences anyone could possibly have. It destroyed many a sale, even if the prospects could have qualified, because they just quit after seeing what they had to endure. Look what happened. Somebody let down all the requirements for qualification and anyone, with no income at all, could qualify for a very large home loan. This worked well for a very few years of ever-increasing home values. When the increases turned down, the entire housing and mortgage markets collapsed. This was similar to the excesses that occurred prior to the 1929 events. Our current recession began in December, 2007, according to most economists.

All the numbers mean very little to most people; the only important thing is whether or not you have a job to support yourself and your family. The Great Depression started with the stock market crash of 1929 and ended with the US entry into World War II in 1941, more than a decade of suffering for many. In 1933, unemployment reached 24.9%, the highest in the Great Depression. The rate only declined to 17.2% in 1939, shortly before the war. What is our unemployment rate today? The Labor Department says 9.4%, down slightly from the previous 9.5%. But wait, the Federal Reserve says the real rate is over 16% if you include the unemployed who have just given up and quit looking for a job. In either case, there are a lot of miserable unemployed people out there.

According to Wikipedia, the poor economy affected people who still had jobs and had not lost everything. It made them begin to pay down their debt as fast as they could, but this caused prices to fall because people were not able, or were afraid, to buy goods and services. It also caused the value of individual assets to decline, the result of which was, the effort to reduce debt caused people to actually owe more than before debt reduction efforts. Have you heard anything like this recently? Many economists have said Americans have initiated the greatest saving rate in history which is exacerbating the economic decline. There are admonishments everywhere to reduce debt and destroy credit cards. Isn’t this exactly what happened in the Great Depression? A significant indicator that the Administration believes we are in a similar situation is the President’s announcement, months ahead of schedule, of the reappointment of Ben Bernanke as chairman of the Federal Reserve Bank. Why is this important? Mr. Bernanke is a respected student of the Great Depression and has renewed the view that massive saving and debt-reduction have worsened our present economy.

The many similarities to the present compared with the Great Depression indicate the recovery could take a long time. Where is the new war to stimulate our economy—we already have two in progress for over six years which are rapidly draining resources. There’s no white knight in sight, and we must realize that whatever the future may bring, it will be different. There may or may not be jobs available—those that are there could require a different kind of training, and they may pay nothing close to previous jobs. That’s the reason for this article, to expect difficult times for many years to come, and to discuss what steps you may wish to take. We’ll explore some things people are doing, and later, the possibility of a home-based business in the mix.

Peter Bregman, in a CNN Commentary, tells of a friend who is interested in a lot of things outside her work, which she really does not like. He says it is unlikely she will quit her job because she needs the money, but how nice it would be if she could decide to explore some of her other interests which seem to electrify her when she talks about them. Bergman says money isn’t everything in life—what contributions a person makes, the fun they have, and finding new relationships could be worth more; they may even save your life by allowing your true passions to rule.

The author says, even though the money continues good for some, the overspending life most are living, along with the debt that has been acquired to support our lifestyles, are all unsustainable. Perhaps a layoff, causing someone to examine every aspect of their life, is the best thing that could happen. Bergman suggests three things to do to enhance your opportunities:

Don’t spend more than one or two hours a day searching for a job. More actually reduces your chances because you get so involved in the search that you miss some important connections.

Focus on things you are passionate about and become involved with a network of people interested in the same things you are.

Only mention once that you would like to make some money from your passion. Be sure to do it that one time, however, so your network knows how you feel.

These two articles, here and here describe how some people have survived the poor economy and what still others are doing to get back on track with their careers, usually in new fields. Here are short stories about how a few affected people have decided to survive and move on.

When struck by disaster, most people are willing to do whatever it takes to protect their family. That is why a man who lost his job as manager of a restaurant accepted the task of delivering pizza for $10 an hour. Not only did he suffer a severe pay cut, he also became involved in irregular hours as well as some danger of being robbed. Every honest work is honorable and this allows his family to get along, and eventually he will be able to work into something better. Do what you must, and don’t worry about what others may think.

A couple living the good life in Beverly Hills both lost their jobs early this year, forcing them to move to their parents’ farm in Oregon. While searching for work, the couple spent their time to buy a used trailer on Craigslist and completely renovated it. During the past few months they have become involved with farm animals and manure. The wife now has a lower paying job than before, but is glad to have anything. The husband has started a career change and eventually expects to be a local produce farmer. They won’t return to Beverly Hills unless something remarkable turns up.

In strange circumstances, sometimes strange things happen. One couple, after a job loss left them heavily in debt, moved in with the wife’s ex-husband when he offered his home to them. It has worked so well they all plan on continuing the arrangement until the wife’s two children finish high school, even if the financial situation improves. They say, “If it ain’t broke, don’t fix it.”

Now consider an older worker of 67 years who lost her job. She really had no prospects at all, but she did have two masters degrees and Internet savvy. She used a webcam to produce some motivational videos posted mostly on CNN. Because of these videos, she recently got a job with a company that helps parents get better tuition deals from universities. A point here is to do something to get your talents exposed to potential employers.

Realizing money is not the ultimate fulfillment; one unemployed person accepted a job in public service realizing the pay was nowhere near what they had been getting, but the satisfaction from doing the job each day is considered a win. The money is not so important.

For those seriously interested in changing careers here are some resources that may be helpful:

• If the change you want means returning to school, this site may help you find money you need.
• To understand how student loans work, go here.
• The Department of Labor can direct you to local One-Stop Career Centers by clicking here.

This CNN article mentions some actions a terminated employee should take, or not take, in order to get the most from the time before another job comes along. They are:

• Never treat unemployment as a vacation. Do constructive things related to your career.
• Before anything, look after your finances. Apply for unemployment benefits, work through severance issues, and determine health-care coverage. Then, do you have any money available?
• If no job turns up in your preferred industry, be creative and offer some service, other than a regular worker, perhaps as a volunteer or other unpaid situation.
• Maintain a proper diet and regular exercise. Your health is the most important asset you have. These positive actions can stir up opportunities.
• Whether interested in world travel or not, spend at least 30 minutes daily learning a foreign language. In most parts of the U.S. there is a large influx of immigrants with associated markets attached to them. Most marketers will welcome a multilingual employee.
• To ease into a new career, search for an internship in your preferred industry. When you perform as an excellent intern, if a job becomes open, you will certainly be high on the list of prospects.
• Use professional associations related to your chosen industry as a way to increase your network. Try to get into leadership positions to further project yourself and your abilities to your group.
• Create one of Napoleon Hill’s Master Mind Groups so you can run your big ideas by them. Be sure all your members tend to have positive attitudes; you certainly need nobody thinking negatively at this time in your life.
• Take classes that will improve your professional abilities. These will look good on your resume.
• CareerBuilder.com conducted a survey showing 81% of employers view volunteer activities as applicable work experience. This means you should volunteer in work that is important to you. Such activities often put you in contact with those who can help with your job search.

Here’s where we are today. The economic situation in late summer, 2009, is quite similar to the early days of the Great Depression, which lasted about 12 years. Our current recession, by those standards, has hardly begun, but the real unemployment rate of 16% is close to those of the 1929 variety. The point is this: we have no idea when job losses will stop and an upturn in employment will begin. Even when it does, the jobs will not be the same; they may not pay as well; and they could be in a far away place. We have seen some solutions, but most of those assume a return to something like before the recession. A more realistic approach is to begin a sideline business now and continue to build it after you get a new job so this does not happen to you again. All the reasons for having a home-based business that have always existed are still here, plus the added impetus of defending against a prolonged recession.

There is another reason some ought to look at working at home—that is the “boomerang” twenty-somethings who have spent up to $100,000 of their parents’ money for a first class education and still can’t find suitable employment that enables them to support themselves. They have returned home. Some parents welcome this, especially the “helicopter” parents who have hovered over every movement since birth. Others lay down rules, including rent and food charges, to encourage offspring to leave the nest. There are still others who realize the children are having real problems and are trying to get financially able to set out on their own. These parents are supportive and try to help with accumulation of funds. In all these cases, starting some sort of home-based business makes sense as a way to provide extra money and possibly, eventually a full time living.

People lucky enough to have jobs continue to have the same problems with big companies they have always had. Scott Adams, creator of Dilbert cartoons, has been quoted as saying corporations discourage creativity. He and other employees developed their ideas outside the corporation after work, and Adams says “the corporation is designed to eliminate creativity.” When the corporate environment stops furnishing an atmosphere of open communications, time for oneself, work that makes a difference, and creative instincts, employees begin to want to leave. When an employee says they are leaving for more pay or benefits, they more likely are really saying, “The pay I get for this job isn’t worth what I have to put up with.” A home-based business, over time, can very well provide the vehicle to escape this corporate atmosphere you dislike.

Every professional should have at least one business on the side, with home-based operations being the easiest to operate. Why is this? Because of the high level of education required, and what the public expects, these people are often stressed for enough wealth to do what they must do. A medical doctor, for example, normally lives what most people would call the “good life;” a good marriage, nice children, gorgeous home, lots of nice toys like boats and cars.

What’s missing in this picture? First, the doctor is missing. He’s working ridiculous hours to keep the money rolling in to pay for all these things you see. The other thing is a lack of surplus money to invest in the future when retirement becomes an option. All the money is being spent to support a way of life, or repay educational expenses. It is said most doctors leave school with somewhere around $150,000 in student debt. With their expected lifestyle and family expenses, where will all the money come from? Perhaps a home-based business or two will help.

We’re advocating home-based business, or other small business operation, so, what kinds of things can you do in such a business? You need to have a passion for what you are doing. After working at a real job for years, how will you find a business you can successfully operate? Look at every idea you like. Don’t try to do exactly as others are doing. Put your personality and your knowledge of the idea to work. Find something about the idea that everyone else has missed. When you do you will succeed. Go out on a limb. Stop worrying about how to make money for someone else. Find something you like to do that people will pay for and make your own way. With the Internet, it’s easier than ever. Forget Corporate America. Every single company out there would like for you to give them every moment of your entire life for free! That’s a fact. They only grudgingly pay because they have to.

Two books with helpful new ideas about work are:

The 4-Hour Workweek: Escape 9-5, Live Anywhere, And Join The New Rich, by Timothy Ferriss.

Free Agent Nation: The Future of Working for Yourself, by Daniel H. Pink.

If you encounter doubts about your ability to successfully operate a home-based business, remember self-doubt is something completely within the control of the individual. It’s up to each person to overcome any doubts he has. One important source of help is Think and Grow Rich, by Napoleon Hill. This book has inspired untold numbers of people to improve their position in life and it still does this. Mr. Hill said "the most powerful instrument we have in our hand is the power of our mind." For a YouTube video of Napoleon Hill, visit here, and search his name for other inspiring videos of his talks. Another book helpful for restoring self-confidence is The Power of Your Subconscious Mind. In this book Joseph Murphy outlines the unbelievable power within each of us. I have personally used these techniques to accomplish diverse results such as helping sick friends through difficult times, making sound financial decisions, and showing me how to write difficult articles. They can help you, as well.

Please pay attention to the ideas we’ve discussed. The current economic situation is perilous, and nobody has any idea what will happen. Consider a home-based business as part of your overall financial strategy, just like investments, savings, or real estate.

Entrepreneurs create their own recovery

Hardy business owners are running uphill, growing their companies despite the recession.

By Ian Mount

October 8, 2009: 3:41 PM ET

(Fortune Small Business) -- Back in August, Federal Reserve officials suggested that the Great Recession was ending and the U.S. could expect "a gradual resumption of sustainable economic growth." But even with stock market indexes and the bottom lines of large financial firms bouncing back, small businesses can expect a longer slog to economic health.

"Small business performance is a lagging indicator of recovery in the same way that unemployment is," says Villanova University business school professor John Pearce II.

And it's likely that small businesses will find this recovery even slower than previous ones. The downturn has especially hurt construction firms, retailers and food service providers, the vast majority of which employ fewer than 20 workers. To make matters worse, more than 110 banks have failed (http://money.cnn.com/news/storysupplement/economy/bank_failures/) since early 2008, most of them community thrifts catering to the financial needs of local firms.

Here's how a few savvy entrepreneurs are turning these headwinds to their advantage.

Penny pinchers. The prolonged recession, paired with expectations that recovery will be slow at best, has been particularly damaging to premium firms that sell high-margin products and services.

On the flip side, companies that offer affordable consumer products or business services aimed at helping firms cut costs are faring better. For example, Joe DiVittorio, owner of Eddie's Pizza in Hyde Park, N.Y., saw revenues increase slightly this year even as his customers clutched their piggy banks. "We haven't raised our prices in more than a year," he says. "We think people will keep their lifestyles at a lower scale."

And Evolve IP,( http://www.evolveip.net/)  a Wayne, Pa., firm that manages computer networks and VoIP telephone systems, signed some $30 million in contracts during the recession. Why? Largely because its services help clients trim their tech staffs, says co-founder and COO Guy Fardone.

Left behind. "The U.S. hasn't led the way out of the recession -- it's been China and, to some degree, Europe," says Mark Zandi, chief economist and co-founder of Moody's Economy.com.

In the U.S., Zandi predicts, the industrial Midwest and states slammed by foreclosures will continue to lag, while such tech centers as Austin, Boston, Seattle and Washington, D.C. -- as well as globalized businesses -- will do better.

Take Alpha Software, (http://www.alphasoftware.com/) a Burlington, Mass., firm that helps companies automate tasks like insurance-quote generation. Co-founder Richard Rabins expects a 10% revenue boost in 2009, in part because nearly a third of his sales come from Asia, Australia and the U.K.

Corporate meltdown. An 18.7% drop in business investment during the first half of 2009 rocked the small businesses that provide their larger brethren with buildings, equipment and software. But the $400 billion in contract spending in the American Recovery and Reinvestment Act -- 23% of which is supposed to go to small businesses -- has turned government into a savior for some. (http://money.cnn.com/2009/06/19/smallbusiness/stimulus_forest_fires.smb/index.htm?postversion=2009062215)

(According to stimulus-tracking site Recovery.org, $103 billion in stimulus had been disbursed through mid-September. Although Uncle Sam is notorious for failing to meet contracting set-aside quotas for women, minorities and small businesses, it's fair to assume that at least part of this sum made it to small firms.)

Austin-based flooring seller and contractor Commercial Flooring Systems (http://www.commercialflooringsystems.com) once got 80% of its business from corporate and high-tech clients. But after business slid 27% during the first quarter of 2008, company president and founder Scott Coll, 47, shifted four project managers and salespeople to work with architects and designers who specialize in government and healthcare contracts. That move spurred 13% revenue growth in the second quarter. Although 2009 revenue is down about 15% from 2008's $8 million total, 60% of Coll's business now comes from government and the healthcare sector.  

To write a note to the editor about this article, click here. (fsb_mail@timeinc.com)

A new road and 25 jobs: What stimulus cash buys (http://money.cnn.com/2009/05/15/smallbusiness/what_stimulus_cash_buys.smb/index.htm?postversion=2009051807)

Manohar Mattu

Join Me on Twitter: http://twitter.com/manu55

Visit My Blog: http://mlmattu.blogspot.com

The New Economy
And Why Home-Based Entrepreneurs Should Be Excited About It
by Elizabeth H. Cottrell, IAHBE

Finding stability in the midst of chaos

100 years ago—even 60 years ago—many, many more people than now lived and worked in the same neighborhoods, growing much of their own food, buying whatever else they needed from neighborhood businesses, and were, for the most part, more self sufficient. They knew their food was fresh and which of the locally-made products were of good quality. Now I am not going down a ridiculous nostalgia road, here. Things in “the good old days” were not all good, and we need only look at the Great Depression, the Dutch Tulip Bubble, the Dust Bowl, and other crises to know that destabilizing conditions have occurred and created havoc from time to time; but the current economic crisis and crumbling of the financial system in the United States and throughout the world has created a trend towards more small-scale, simple, controllable, and local operations that, combined with technological advances that allow us to work from home, could be creating the most monumental opportunity for home-based business entrepreneurs ever to occur. The most recent issue of Yes! Magazine (subtitled, “Building a Just and Sustainable World”) has devoted most of its Summer 2009 issue to their vision for a New Economy, and it has all kinds of implications for those of us who work from home. Order a copy now from http://www.yesmagazine.org or call them at 206-842-0216. For subscriptions, call Toll-Free: 1-800-937-4451—and no, I’m not on their payroll ;-) .

Also don’t miss our own IAHBE writer Yank Elliott’s pieces recently on opportunity in the midst of chaos and his new article on business funding from micro-lenders. This is right in synch with trends in this New Economy. As Yes! Magazine’s Executive Editor Sarah van Gelder describes the New Economy, it is “built on new forms of money, and on democratic finance and business.” People are learning that they can live without Wall Street and create a more manageable and more stable way to finance and run their businesses with local and cooperative sources. Yank has been preaching this in several of his articles, and it’s true – your local banks, your local credit unions and other local organizations may be just what you need, because most of them never forgot that they must serve rather than take advantage of their customers. I serve on the board of a local community bank, and I know that we never made a subprime loan or participated on a mega-deal. We’ve been accused of being too conservative, but we know that we’re not helping a client by making them a loan they can’t afford. Our customers know, too, that we’ll work with them every step of the way and go to bat for them as long as they’re trying. When we get out of these tough times, they won’t forget that our bank stuck by them when the going was really bad.

Less is More

Other themes emerging in the New Economy that harken back to more old-fashioned habits are cutting back, doing with less, and getting rid of wasteful consumption in many aspects of our lives. We allowed ourselves to mindlessly ratchet up our standards of living just because we could, and it has fueled an unsustainable economy which has come crashing down around us. The silver lining is that we CAN be more self-sufficient and we CAN be happier with less—much less. And guess what…these habits of thrift and lower consumption are also good for our most precious possession, Mother Earth. As President Obama’s stimulus package goes into effect, new jobs are being created to build more earth-friendly city infrastructures, weatherize homes, increase the use of renewable energy, build public transit systems, and many other projects that have been delayed for far too long. These are being done with overriding goals in mind: to improve health, happiness, and environmental quality.

What Should Home Business Entrepreneurs Do to Take Advantage of the New Economy?

Look for service opportunities to help people adapt. Perhaps you can create info-products that help people find their own opportunities in the New Economy or help them find how to take advantage of Stimulus Package monies or other funding sources that are becoming available.

Stay on top of new jobs being funded and new businesses that need subcontracted services as they crank up their own economic engines based on money flowing in from the stimulus package.

As larger businesses downsize, look for needs they may have in your area of expertise which they may be willing to outsource to you.

Look critically at your local community and try to identify gaps that need filling to be a more self-sufficient community. Is there something important that people have to drive to a big city to buy or get? That gap may be the key to a business opportunity if you can fill that need.

If you have land or a building with additional space, consider a business that creates a platform or venue for cooperative efforts of others and allows them to showcase their wares, crafts, or products: e.g., a farmer’s market, a craft store, an art gallery. By working together, you can provide them with an opportunity and provide yourself with an income stream.

Consider multiple usage of any facilities you own to help someone else and increase your own income stream. Can a congregation without a church building use your warehouse on Sunday? Do you have specialized equipment (a color copier or a copier or scanner that can handle larger-sized documents) that other home-based business owners can lease from time to time?

Donate used equipment and furniture to local nonprofits or thrift store and get a tax deduction. Don’t throw anything away if someone else can use.

The New Economy Resource Guide

If you’re interested in learning more, Yes! Magazine has compiled this large list of resources, tools, and books they used in researching their articles. It includes links to research and policy organizations that can offer further insights, suggestions, and tips.

Learn all you can about changes that are occurring. Get to know other home-based and small business owners and patronize them or refer customers to them whenever possible, especially those who are also community supporters and responsible citizens. Help organize cooperative efforts that benefit everyone. Be a positive-thinking leader in this time of uncertainty and trouble. Help as many people as you can in your community to understand and benefit from the changes, and you will be seen as someone who can be relied on and trusted. This will help you build your own brand and business and serve you well far into the future.

Home business entrepreneurs have long known the quality-of-life advantages of working from home. An economic tsunami has forced the rest of the world to look again at some things we’ve known all along. Welcome them with open arms and perhaps you’ll create yet another business niche for yourself at the same time.

SOURCES

Caley, Nora. “Raising Funds from Micro-Lenders for Your Home Business.” Home Business Magazine Website. May 6, 2009, .

Carter, Zach. “Small Banks, Radical Vision.” Yes! Magazine. Issue 50, Summer 2009, page 34.

Christian, Diana Leafe. “The EcoVillage Movement Today.” EcoVillage Newsletter. May, 2008.

Malvaux, Suzanne and CNN staff. “Obama Vows to Help Small Businesses.” CNN.com. March 16, 2009.

Schwartz, Judith D. “Dollars with Good Sense: Local currencies value time, build community, and keep business moving even when credit dries up.” Yes! Magazine. Issue 50, Summer 2009, page 30.

Van Gelder, Sarah. “31 Ways to Jump Start the Local Economy.” Yes! Magazine. Issue 50, Summer 2009, page 46.

Van Gelder, Sarah. “The New Economy Starts Now.” Yes! Magazine. Issue 50, Summer 2009, page 1.

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