Federal agencies were just one percentage point short of the government-wide goal to award at least 23 percent of small businesses with contracts, according to the U.S. Small Business Administration (SBA).
But judging from the small business administration’s second annual scorecard, small business procurement is looking better all the time.
In 2007, small businesses won a record $83.2 billion in federal prime contracts. That was an increase of almost $6 billion from 2006, and each socio-economic group increased its share of federal contracting dollars by at least $1 billion.
The Small Business Administration, however, said in the statement that the failure to meet the overall goal “reflects the need for the federal government to bolster its efforts across government.”
“This year, the SBA made it more challenging for federal agencies to meet their goals, due to our initiatives to cleanse the federal contracting database of bad data, and ensure that small businesses receiving small business contracts meet the definition of small,” said Sandy Baruah, acting administrator for the Small Business Association. This is good news for small businesses because it means the government will need to work harder to get federal contracts into the hands of small businesses.”
Not included in the totals were the $3.9 billion worth of contracts for which size was not indicated in the federal government's official database, nor the $64.8 billion small businesses received in subcontracts.
Small businesses gaining fed contracts
Getting Rich In Online Advertising
By Dorian Sweet
If you've been in online advertising for the past several years, you know what a bad time can look like in this thriving, vibrant industry. I don't think we've ever returned to the pre-Y2K-party-every-night days of yore. Instead, we've rebounded and become stronger and a little more sober.
Despite that, we may be headed for some familiar times. The financial failures of others are impacting many aspects of advertising and specialized Web experiences. Big budget online productions will feel the weight of the budget-cutting blade soon, if they haven't already.
Does this mean a long siege of "nephew-ware" banners and Web sites until big budgets come back?
What happened to the Internet's consistent rise in media spending? Has the steady, deliberate, and rational growth of the adolescent post-crash online world reached its young adult plateau?
This could be an allegorical moment in the Internet's enigmatic young life. In tough times when there are layoffs, it's last-to-come, first-to-go.
Hopefully marketers with a solid online advertising budget have evolved beyond that idiom. In some ways they have -- they're spending more online than ever before. Just because the spending slows and doesn't flow into online is some measure of the new ad channel's acceptance.
On the other hand, online budgets aren't that big comparatively. So an across-the-board cut in marketing spend is a bit unfair, considering that with the reduction in disposable cash many consumers will spend lots more time in the virtual world.
Apart from selling stuff, this may be the perfect time to build (dare I say it) a brand relationship with the stay-at-home online shut-in.
But how to make the most of that online dollar spend with an ever-imminent shrinking budget? Here are a few ways that might help:
* Look at interactions. When dollars are plentiful, reach and frequency are usually the rule. But now we must think about what got people to interact. Even more, we need to know how many interactions they had with what you created. Each interaction event is an opportunity to delight or deter a user from your brand's intent.
* Evaluate time spent Now ask yourself, if you saw a :30 TV spot 100 times, that would equal five minutes of a repetitive message. So if someone spent five minutes on your rich media ad and had multiple experiences with your brand, would that be the same or better? Time is the gold of the technological world we live in. How it's spent will become the currency we value, no matter what the screen.
* Assess brand relevance Does your brand matter to people online? Are you trying too hard to be a relevant brand to a fickle online audience? This isn't easy to face, but some brands in a depressed economy should stay away from the highly persnickety online user. For example, don't waste someone's time, or your money, selling a floor wax through a rich media experience.
For some, video online will be another place to put the :30 TV spot, and nothing will change that mentality. Trying to make the Internet like TV is short-term thinking as our user base moves from the living room couch and becomes free-agent consumers of all things interesting to them.
The recent financial strife may just separate the wheat from the chaff and encourage innovative use of rich media, rather than the "set-it-and-forget-it" online video advertising we see today.
In difficult times, can we learn more about ourselves as thinkers, marketers, and people? The wow factor may be less important to those under budget constraints and the true application of technology may ultimately matter more than ever. Our financial situation may be the beginning of what we may consider an age of digital enlightenment.
Getting Rich In Online Advertising
By Dorian Sweet
If you've been in online advertising for the past several years, you know what a bad time can look like in this thriving, vibrant industry. I don't think we've ever returned to the pre-Y2K-party-every-night days of yore. Instead, we've rebounded and become stronger and a little more sober.
Despite that, we may be headed for some familiar times. The financial failures of others are impacting many aspects of advertising and specialized Web experiences. Big budget online productions will feel the weight of the budget-cutting blade soon, if they haven't already.
Does this mean a long siege of "nephew-ware" banners and Web sites until big budgets come back?
What happened to the Internet's consistent rise in media spending? Has the steady, deliberate, and rational growth of the adolescent post-crash online world reached its young adult plateau?
This could be an allegorical moment in the Internet's enigmatic young life. In tough times when there are layoffs, it's last-to-come, first-to-go.
Hopefully marketers with a solid online advertising budget have evolved beyond that idiom. In some ways they have -- they're spending more online than ever before. Just because the spending slows and doesn't flow into online is some measure of the new ad channel's acceptance.
On the other hand, online budgets aren't that big comparatively. So an across-the-board cut in marketing spend is a bit unfair, considering that with the reduction in disposable cash many consumers will spend lots more time in the virtual world.
Apart from selling stuff, this may be the perfect time to build (dare I say it) a brand relationship with the stay-at-home online shut-in.
But how to make the most of that online dollar spend with an ever-imminent shrinking budget? Here are a few ways that might help:
* Look at interactions. When dollars are plentiful, reach and frequency are usually the rule. But now we must think about what got people to interact. Even more, we need to know how many interactions they had with what you created. Each interaction event is an opportunity to delight or deter a user from your brand's intent.
* Evaluate time spent Now ask yourself, if you saw a :30 TV spot 100 times, that would equal five minutes of a repetitive message. So if someone spent five minutes on your rich media ad and had multiple experiences with your brand, would that be the same or better? Time is the gold of the technological world we live in. How it's spent will become the currency we value, no matter what the screen.
* Assess brand relevance Does your brand matter to people online? Are you trying too hard to be a relevant brand to a fickle online audience? This isn't easy to face, but some brands in a depressed economy should stay away from the highly persnickety online user. For example, don't waste someone's time, or your money, selling a floor wax through a rich media experience.
For some, video online will be another place to put the :30 TV spot, and nothing will change that mentality. Trying to make the Internet like TV is short-term thinking as our user base moves from the living room couch and becomes free-agent consumers of all things interesting to them.
The recent financial strife may just separate the wheat from the chaff and encourage innovative use of rich media, rather than the "set-it-and-forget-it" online video advertising we see today.
In difficult times, can we learn more about ourselves as thinkers, marketers, and people? The wow factor may be less important to those under budget constraints and the true application of technology may ultimately matter more than ever. Our financial situation may be the beginning of what we may consider an age of digital enlightenment.
Business failures inevitable, say banks
By Jean Eaglesham and Jane Croft
Banks warned on Thursday it was “inevitable” that businesses would fail in the coming recession, as the government failed to extract any concrete pledges from lenders to improve their treatment of small companies.
The warning will disappoint ministers who had indicated the £37bn part-nationalisation of the banks would lead to concessions for businesses and consumers.
Bank executives including John Varley, chief executive of Barclays, Eric Daniels, chief executive of Lloyds TSB, and Gordon Pell, a director of Royal Bank of Scotland, met Alistair Darling, chancellor, and Lord Mandelson, business secretary, at 11 Downing Street on Thursday for talks on lending practices in the credit crisis. But the talks ended with only a promise that the banks would meet small business groups in coming weeks.
Lord Mandelson told MPs this week he and the chancellor would use the meeting to tackle banks on their lack of “understanding and sensitivity” to the plight of small businesses.
But the British Bankers’ Association, the industry group, said “commercial realities” made it “inevitable that some businesses will not survive” the recession.
Gordon Brown, prime minister, has put support for small businesses at the centre of his banking rescue plan, requiring HBOS, Lloyds TSB and RBS to make lending available at 2007 levels in return for £37bn of taxpayer-funded equity.
The Conservatives said Mr Brown’s pledge on lending was “meaningless”. “The rhetoric does not match the reality on the ground – it’s as deceitful as it is fanciful,” said Alan Duncan, shadow business secretary.
“Lending to small businesses is drying up,” he said. “Even now, banks are cancelling overdraft facilities at two days’ notice and driving many good small firms to the wall.”
Government officials said the talks were “constructive and positive” and not “read the riot act territory”. Ministers did not attempt to impose any constraints on the amounts or costs of their lending, said insiders.
“It was more a general discussion about intent. There were no detailed talks about areas like pricing,” said one. Another said the banks had told ministers they could make loans available but “not force the demand” from a shrinking sector.
Lord Mandelson, who will chair the meeting with small business groups, said the talks would allow business and banks to resolve their differences.
Angela Knight, chief executive of the BBA, said there were limits to the help banks could offer. “What we can’t do unfortunately is reverse a poor economic situation,” she said. “As talk turns to recession, it seems inevitable that some businesses will not survive, even with the best assistance that banks, government and voluntary agencies can give them.”
Investment tips for crisis times
Ram Prasad Sahu, Jitendra Kumar Gupta in Mumbai
In an uncertain market where stock prices are witnessing a free fall, it is time for investors to rejig their portfolio to limit losses and opt for stocks that offer stability and decent returns.
Among the two key barometers of the Indian equity markets, the Sensex has fallen by more than half from its January 2008 peak of 21,206 points. The gradual decline over the last nine months, and the sharp fall over the last couple of weeks, have eroded a substantial chunk of investor wealth.
With the demand situation not looking good and liquidity problems persisting, investors are clueless as to where the markets would be headed over the next year.
Don't miss: Five mantras to survive a slowdown
The Smart Investor spoke to money managers to assess what their outlook on the market is and what strategies one needs to adopt to tackle the meltdown.
The negatives
The main macroeconomic parameters, be it the GDP, interest rates, the fiscal situation, credit growth, the IIP numbers -- all point to a muted phase of growth over the next few quarters. The International Monetary Fund in its World Economic Outlook projections for 2009 has cut India's GDP growth forecasts to 6.9 per cent.
While this is marginally down from the estimated 2008 GDP of 7.2 per cent, it is substantially down from the nearly 9 per cent GDP growth rate experienced in 2007. Compounding this is the fact that advanced economies, which are engines of world consumption, are expected to grow at just 1 per cent in 2009.
Indian manufacturing activity, too, is down with IIP (manufacturing) growth restricted to 4.9 per cent during April-August 2008 (against 10 per cent in the previous corresponding period); it was just 1.3 per cent in August 2008. Credit growth to the consumer durables sector and autos, good indicators of spending trends are hardly encouraging.
While credit for durables has fallen by 33 per cent for the year till June 2008 y-o-y, auto loans have barely moved registering a growth of just 1 per cent in the same period.
India's current account balances too are precarious as compared to China's, which continues to attract investments on top of a huge trade surplus. While FIIs together own only 25 per cent of Indian equity, it is their high ownership of free floating stock that makes it difficult to stop the markets slipping down dramatically when they decide to pull out and which results in a worsening of the current account deficits.
While factors such as fund flows and economic growth are external, elections to state assemblies and to Parliament over the next six months are internal factors which will significantly impact sentiment. Pre-poll uncertainty, a vote-on-account Budget and a delay in investment and policy decisions mean that positive cues may emerge only in the third quarter of 2009.
The positives
However, all the information is not negative. Inflation, which has been responsible for the monetary policy tightening and subsequent rise in interest rates, and which has also brought spending and investments to a grinding halt, is trending down at 11.4 per cent for the week ended October 4.
A dip in commodity prices (crude oil and metals) means that the figure would dip below the double digit market much before the current fiscal runs through. A cut in interest rates, which is on the cards sooner than later, could boost business and consumer confidence and keep the sentiment quotient on the markets high.
Thus, analysts believe that while fundamentals might take some time to improve, sentiment (the other key determinant of equity prices) might improve as speed of response is much better now than in the past crashes. Says Nilesh Shah, deputy managing director, ICICI [Get Quote] Prudential AMC, "The response to the 1929 crisis came four years later in 1933 and was to the tune of $ 78 billion in value. The response to the current crisis has been much swifter. Governments across the world have swung into action and pumped more than $3 trillion so far."
However, the bounce back won't come in a hurry. Says Amitabh Chakraborty, president equity, Religare Securities "Don't expect a V shaped recovery, there is still pain left in the system." A more prolonged U-shaped recovery would mean that markets are likely to be move sideways for at least two quarters. While the fiscal situation due to high oil prices has worsened, Srividhya Rajesh, fund manager, Sundaram BNP Paribas, believes that India's growth numbers, though lower, will top most other markets.
Combined with cheap valuations, a 10 per cent downside from these levels and falling commodity prices, she believes, could make the markets attractive once more to domestic and foreign investors.
What should you do?
While the list of unknowns seem quite long and affect every company large and small, experts advise that you be prudent with decisions related to your equity portfolio.
While existing investors, who do not have need for funds, should not panic and exit their equity holdings as they are likely to book heavy losses, for new investors with a surplus to invest this is a good time to fish for quality stocks at reasonable prices. Says Hemant Rustagi, CEO, Wiseinvest, an investment advisory, "Adopt a bottom up approach and commit smaller amounts rather than make a lump sum investment at one go and time the market." Agrees Dinesh Thakkar, CMD, Angel Broking, "Invest 25 per cent of your surplus now and the remaining in dips spread over the next three months." This way you will not only benefit from an upside in stock prices but investment at these levels will also keep your downside to a minimum.
But, coming back to existing investors, they must also learn to book losses (reshuffle portfolio), if need be. That's because, if you don't, you may get stuck with companies that may be going nowhere, thereby losing an opportunity to make good the losses (by investing in a better company). Stocks like DSQ Software, during the dotcom rally in 1999-2000 are proof of the pudding.
Where to invest?
Stick to disciplined investing and do your homework thoroughly before committing your funds or you will be speculating which is not advisable on both counts of managing risk and enhancing returns. Preferably, add companies that are leaders in their respective businesses. In that context, let there be no size bias. But, what is important is that the companies should have reasonably decent prospects, sound management and strong entry barriers, apart from healthy financials that will help them tide the current rough patch. Besides these qualities, there are some more factors that need to be considered. They are:
High cash, low debt: To benefit from your investment in the current environment, follow the traditional conservative principle of cash is king. Look for companies which have a record strong positive free cash flow as it can be used to buy out businesses at firesale prices or strengthen operations. Moreover, in a worsening situation where equity markets are down and debt comes at a high price, raising money is not only going to be difficult, it might stretch the balance sheet. Companies that are less leveraged can expand and do not have to cough up cash at regular intervals to pay for interest costs.
While software and FMCG companies bring in a lot of cash due to high margins and low leverage, investors need to keep an eye out on how global demand plays out before investing in the IT sector. While FMCG and pharmaceuticals are defensive sectors, within the sector one could look at ITC (a diversified play), Ranbaxy [Get Quote] (valuations) and Sun Pharmaceuticals (growth prospects).
Funding blues: Resources locked in a current expansion or funding of acquisition allow little flexibility in operations. Notice that the market is already punishing companies, which have taken up huge expansion plans and need funds to take them forward.
Here, an example could be Jaiprakash Associates [Get Quote] (50 per cent price erosion over the last month), which is building India's largest private sector hydroelectric project at a cost of Rs 5,600 crore (Rs 56 billion), tripling its cement capacity and has aggressive plans in the real estate sector.
The company's intention to raise funds through the rights issue route also indicates its need for capital and comes at a time when established names such as Hindalco [Get Quote] and Tata Motors [Get Quote] have struggled to get their pricing right for their issues in a bearish market.
In contrast, NTPC was sitting on a cash pile of Rs 15,000 crore (Rs 150 billion) at the end of FY08 and can fund its mega plans by a combination of internal accruals and debt. It is also generating a cash profit of about Rs 10,000 crore (Rs 100 billion) a year. The fixed return nature of the power sector and internal accruals will ensure it grows at stable rates irrespective of market conditions.
Substantial price decline=value buy?: A sizeable decline in the share price of a company does not qualify automatically for investments. Some also tend to look at stocks in relation to their valuations a few months back, indicating that after a 50-60 per cent decline, their valuations look cheap.
But, that does not necessarily hold true. Says P K Agarwal, president, research, Bonanza Portfolio, a financial services firm, "Companies (in the capital goods sector for example) which performed in the earlier bull run might not be the best bets due to high interest rates, large capex and muted industrial and economic growth." Avoid construction and realty stocks which have dropped substantially as they require large amounts of capital to sustain their business.
Another stock that looks cheap is Reliance Communications [Get Quote] considering the scorching pace of growth in telecom. The company, however, is in the middle of a pan-India expansion of GSM network and is expected to spend Rs 50,000 crore (Rs 500 billion) in FY08 and FY09.
Despite sound business potential and growth prospects, the markets have drubbed the shares by 35 per cent over the last month. If you can handle volatility and adopt an aggressive approach to stock buying, you could add this to your portfolio.
Among other sectors where one can find stocks that offer value are financials, believe fund managers such as Sandip Sabharwal, executive director-equity and CIO of J M Financial AMC. He says that, with a likelihood of interest rates easing, investors could look at companies in the banking and financial sector space (PSU banks) which are available at cheap valuations and will outperform the market.
Other parameters: Dipping equity prices also make high dividend earning stocks a good idea. Check for past dividend record and the cash flow situation in the first two quarters and you will get a fair idea of what the annual picture will be like to arrive at a list of companies that are likely to make higher payouts.
Bongaigaon Refineries and Chennai Petro with a high dividend yield are two names that come to mind and fit the high dividend yield criteria at current prices. For investors who wish to invest in markets but don't have the patience or time to track every company, try index funds.
The benefit? You get a diversified collection of the bluest of the blue chips packaged in one instrument which is not only easy to track but is the cheapest low cost mutual fund scheme available in the market. Here, the Nifty BeES from Benchmark Mutual Fund could be looked at.
Despite a gloomy outlook and uncertainty, the current levels offer a great opportunity to invest. Historically a price-earnings multiple of 10, or 50-60 per cent off the top signals a bottom. At a consensus FY09 EPS of Rs 980, you are getting the entire Sensex basket, at just a little over 10 times.
While an investment now could give a substantial boost to your equity portfolio over the next two years, expect the medium term (up to 12 months) to be choppy in light of the global turmoil (still far from having achieved stability), domestic slowdown and impending state and national elections.
Only the new government will be able to bring significant reforms aimed at bolstering economic growth. So, for the time being, give a higher weightage to safety and thereafter, ensure that you don't pay a high price for stocks, even if they are expected to report robust numbers.
Tips from Browndorf PEM for successful investment banking
Browndorf PEM recently announced the launch of Browndorf Life Settlement Fund LP. This set of services is created to manage portfolios focused on longevity based or life-linked assets such as Senior Life Settlements.
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Oct 23, 2008 – Browndorf PEM is a full-service private equity management firm providing a complete suite of financial management and growth products. Browndorf, a company led by Matthew Browndorf, Esq., offers Wealth Advisory Services, proprietary private equity and hedge fund management services and independent investment banking services.
With their strategic vision, experienced team, legal structure, unique product mix and core affiliates, Browndorf offers custom-tailored independent offerings through a network of non-affiliated and independent investment banking services.
Browndorf PEM recently announced the launch of Browndorf Life Settlement Fund LP. This set of services is created to manage portfolios focused on longevity based or life-linked assets such as Senior Life Settlements.
According to Browndorf, investors in the alternate investment area get an opportunity to invest and profit from the future morality profile of the population. The fund is co-managed by Matthew C. Browndorf, Esq., a legal expert in the reinsurance and financial fields, and Jonathan T. Sadowsky, a former hedge fund portfolio manager at Barclays Global Investors in San Francisco, CA. with the help of innovative financial structures such as longevity contingent derivative swaps issued by the four major global financial institutions active in this space. These investment grade products provide an asset class that is uncorrelated to most other markets
How to survive a recession
Cook your own meals, travel domestically, invest based on goals: Tips on spending, saving and planning from financial gurus.
Pornnalat Prachyakorn
It's been a decade since Thais suffered through the last economic crisis. How much have people learned?
While economists agree that the country today is unlikely to suffer the massive bankruptcies and layoffs seen in 1997, there is no question that times are tough and will only get tougher. But some simple changes in your spending and savings habits can go a long way in making ends meet, according to personal finance experts. We asked three financial gurus for their top tips on how to survive a recession.
Spending
Former fund manager Siriwat sold sandwiches during the 1997 crisis.
It almost goes without saying, but the simple reality is that the less you spend, the more you have. When times are tough, you need to look at every single item in your daily budget and cut, cut, cut.
Siriwat Voravetvuthikul knows. The former fund manager made headlines during the 1997 crisis when he put away his tailored suits and took to the streets to peddle sandwiches along Silom Road.
Every little bit helps, Mr Siriwat said. "Eating out can be a huge expense. It's not just the restaurant bill, but the cost of travelling as well," he said.
"You should try and cook your own meals at home."
Next is to rethink your shopping habits. Most people will automatically cut back on big-ticket items such as a new plasma television, car or computer. But the little things count as well - delaying purchases of new clothes and gadgets can save considerably. Ask yourself: Do you really need the latest and greatest, or can last year's fashions stretch for another season?
"The key to surviving a crisis really depends heavily on each individual," Mr Siriwat said. "But it's important to stop buying the things that aren't really needed."
Reungvit Nandhabiwat, the secretary of the Thai Financial Planners Association, suggests that one look closely at vacation plans when times are tight.
"Travelling in Thailand might be just as interesting as travelling abroad, and certainly it costs less money," he said.
But if your heart is set on going abroad, forgoing a luxury five-star hotel in favour of a simple bed-and-breakfast inn can translate into hundreds or thousands of dollars in savings. Mr Reungvit said transport and accommodation expenses can typically be scaled back without significantly hurting the overall experience.
Reungvit: ‘‘Whether good times or bad, one should always plan for the unforeseen.’’
Of course, transport costs matter not only when you're on vacation. The daily commute in Bangkok's notorious traffic can cost thousands of baht each month in fuel and tolls.
Mr Reungvit said public transport and carpooling are two ways of cutting time and expense. Even simpler is limiting trips to the grocery store to just once a week instead of every other day.
Savings
But cutting back on spending is just one side of the personal balance sheet. If you can also boost your revenues, it can make a difference to your bank account at the end of each month.
Selling off old clothes, books and household appliances in a second-hand market can be a quick way to raise cash.
Mr Siriwat said tapping one's inner entrepreneurial spirit was another option.
"Focus on selling the basics. Everyone needs to eat and drink," he said.
"I'm not talking about setting up a fancy restaurant. And know your limitations. If you can't cook, find someone to do it for you while you do the selling."
Selling insurance, cosmetics or home appliances part-time is another option. Direct-sales companies such as Amway often provide training courses that can prove valuable down the road.
Mr Siriwat said one of the most important things any consumer can do when times are tough is to erase debt.
Interest payments on credit cards or personal loans, while limited under the law to 20-28% per year, still add up quickly. Best to pay off your entire credit card balance each month, or else rely on cash and debit cards to enforce spending discipline.
"The concept of the sufficiency economy is important. It's best not to borrow too much from the banks, or better yet, don't borrow at all," Mr Siriwat said.
Umapan Charoenying, first vice-president and head of consumer financial planning at Kasikornbank, agreed that managing one's debt was key to financial survival.
"Debt shouldn't consume too much of your income," she said, adding that consumers should seek to pay down loans with the highest interest rates first.
Planning
While it's easy to become consumed with day-to-day obligations, Mr Reungvit said it was important to also consider your long-term needs.
The more you invest today, the more you will have tomorrow remains a truism - raiding your retirement account or children's savings fund might raise needed cash today, but could have painful consequences for the future.
Mr Reungvit said asset allocations should be made based on when expenses come due. If your child will go to college next year, low-risk bonds are a smarter choice than stock.
"But if you are saving for retirement in 20 years, then by all means, continue to invest in stock. Don't be concerned about market declines today when you're dealing with a long-term investment," he suggested.
Ms Umapan agreed that one needed to match investment strategies with long-term goals.
"You should have a clear objective in mind with your saving, then you can establish the right plan," she said. "With every paycheque, the first thing you should do is separate what you need for savings and investment. Use the rest for your expenses."
Fixed deposit accounts are suitable for those lacking financial discipline, Ms Umapan said. Many asset managers can also help set up automatic contributions to long-term equity and retirement mutual funds, which in turn can help significantly in cutting one's annual income taxes.
Mr Reungvit advised that whether in good times or bad, one should always be prepared for the unforeseen.
"In a recession, forget about 10% annual raises. You should just try to reduce the risk factors that could make your financial situation worse," he said.
Health insurance, property insurance and life insurance premiums might seem like optional items to many. But when disaster strikes, insurance protection can make all the difference to one's financial security.
