PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

It’s Startup Week

By at 23 August, 2018, 10:01 am

Small Business Insider

 

by Karen Kerrigan-

The economy is going strong and more people are looking to start businesses. That’s always good news – especially during Startup Week – because entrepreneurship and startup activity have suffered over the past decade or more. A stronger economy, higher confidence and better policies are creating a more favorable environment for startup activity and startup success. But there’s a key challenge holding back the potential of many startups – access to capital.

That is why SBE Council continues to advocate for Senate action on JOBS Act 3.0, the JOBS and Investor Confidence Act, a package of bills that passed the House on July 17 by a vote of 406-4.  As I noted in a media release following passage of JOBS Act 3.0:

“Capital is the fuel that drives entrepreneurship and sustainable economic growth. Small businesses and startups need a continuous flow of capital to launch, compete and grow, and JOBS Act 3.0 addresses an array of regulatory barriers and costs – from launching a firm to exit – that impede opportunity and growth.”

Startup Week is All About Action

Therefore, it is very important that small businesses and startups communicate with U.S. Senators – especially Democrats – to let them know of your support for JOBS Act 3.0. There is absolutely no reason to oppose this legislation. Every Senator should be an advocate for action!  Again, JOBS Act 3.0 passed the House with massive bipartisan support (406-4).

Call your U.S. Senators at 202-224-3121 and tell them to support this bill!  It is bipartisan, it is needed, and it would make a big difference for startups and small businesses.

Startup Ideas in Growth Sectors

Til Death We Will Spend
Did you know August 18, 2018 was the most popular wedding day of the year? According Yahoo! Finance: “Almost 30,000 couples are set to marry, with associated guests spending an estimated $1 billion on gifts and attire for the happy events, the site says.”

The wedding business is booming, and if you are looking for ideas to start a business in this area check out the 50 Best Unique Wedding Related Business Ideas for 2018 at Profitable Venture.

Dining Out: Spending Surges
As reported by Yahoo! Finance, “spending at U.S. restaurants surged over the past three months by the most on record, making it both a bright spot for the economy and a risk if appetites for eating out return to normal. Sales at food-service and drinking establishments rose 1.3 percent in July to $61.6 billion, the Commerce Department reported on Wednesday. That brought the three-month annualized gain to 25.3 percent, the fastest pace in figures going back to 1992.”

Americans’ appetite for dining out continues to grow and entrepreneurs can profit in this space if they have a great idea, great service, great food and can adapt to shifts in the marketplace, and of course the competition.

This is the type of business where you can start small, be super creative, and effortlessly test the marketplace. These resources, What You Need to Know to Open a Restaurant by The Balance SMB and How to Start a Successful Restaurant from bPlans.com are good places to start for your research. Bonus resource: How to Start a Food Truck Business, and additional tips (and links to more helpful information) can be found here.

Finally, here’s all the relevant stats about the industry courtesy of Toast:
60+ Industry Stats for Restaurant Owners

New Law Enables Employee-Ownership

Buying an existing firm and building upon its success is another path to business ownership. According to our friends at Locavesting.com, there will be a lot of these businesses available as “2.3 million Baby Boomer business owners employing some 25 million Americans are set to retire.”  As the article points out, one option for selling a business could get a boost with the passage of “Main Street Employer Ownership Act,” which was signed by President Trump as part of the National Defense Authorization Act (more on the NDAA below under Legislative Update).  As noted by Locavesting: “The landmark bill is the first significant employee ownership-related legislation in two decades and the result of years of groundwork by worker advocates. It makes Small Business Administration (SBA) loans and technical assistance more accessible for companies transitioning to employee ownership.”

Startups Take Note: Your Sideline Business Better Be For Profit

In a recent Big Ideas for Small Business® blog post, small business expert Barbara Weltman writes that if your business activity is merely a “hobby,” you have one option for reporting on your tax return: Report all of your income from the activity, and deduct none of the expenses.  She notes that the IRS has nine factors to assess a profit motive to determine whether an activity is a business or a hobby: “The bottom line is that it’s up to you to demonstrate your profit motive by marshalling these factors if your business write-offs are called into question.”

Back to the issue of capital access….

As you may know, SBE Council was a champion of JOBS Act “1.0,” which made equity and debt-based crowdfunding legal. It took a very long time for the Securities and Exchange Commission (SEC) to write the regulations for Title III of the Act, but now that regulated crowdfunding (Reg CF) is off the ground, it is showing great promise for many types of small businesses in almost every corner of the country.

Listen to this informative and inspiring SBE Council-Forbes Books Radio podcast, where Sherwood Neiss, the author of the “Startup Exemption” and a successful entrepreneur in his own right, provides an update on Reg CF crowdfunding and what’s next on the reform front.

According to the latest data provided by Neiss (as of August 16), 1139 small businesses are being back by 149,431 investors with total commitments of $145, 429,398. Momentum is growing, but Reg CF can be a more effective tool for entrepreneurs and small businesses if the amount issuers can raise was increased from just over $1 million to $20 million. SBE Council joined a group of crowdfunding leaders and signed a letter to SEC Chairman Jay Clayton supporting such action. (Read more on about this in Crowdfund Insider.)

There is a petition on Change.org that calls for an increase to $20 million! Sign the petition by clicking on the image below. We could use your help to reach the 2,500 signature goal.

One more thing, Neiss reports that Belgium recently increased their crowdfunding limit to $5 million. Other countries are advancing reforms more quickly, as they are seeing solid results from crowdfunding. In the U.S., the results are positive as well – crowdfunding is an effective, transparent and investor-friendly way for entrepreneurs and startups to access capital, and in turn help the economy grow.

Happy Start-Up Week to all!

Yours in entrepreneurship and small business success,


Karen Kerrigan
President & CEO

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