Stake for Small Business Owners this Election Season

What’s at Stake for Small Business Owners this Election Season

19:40 29 June in Blog

Stake for Small Business Owners this Election SeasonU.S. presidential elections are a marathon, not a sprint, and this race has been exceptionally grueling—both for the candidates and the public at large. But more concerned than the average U.S. citizen are small business owners, who have responded to the uncertainty by delaying new hires, forgoing new equipment orders, and avoiding all but the most essential investments. We’ll tell you why confidence is slipping and what small businesses can do to buck the trend.

An Unprecedented Election Season?

Every presidential election captures the nation’s attention, but this year’s race seems to have no precedent. Whereas most Americans tune into the race after the primaries are over and the Republicans and Democrats have chosen their respective nominees, both parties saw unconventional candidates challenge the status quo during the primaries and capture the attention—and votes—of millions. Now that the primaries are over and Donald Trump and Hillary Clinton are set to face off in the general election, the future and the direction we’re heading remains as unclear as ever.

Small Business Owners Uncertain

According to a survey conducted by the Wall Street Journal and Vistage Worldwide Inc, one-third of business owners report that uncertainty over the coming election is negatively impacting their business.

Though small business owners are responding in different ways, the overarching theme is this: they have opportunities to grow their businesses, but they’re hesitant to spend the money. It’s not just the election causing concerns—there’s also global concerns, like the recent exit of the U.K. from the European Union, which threw global markets into a brief tailspin and the tenuous state of the Chinese economy. Closer to home, there’s also uncertainty over the timing and impact of future interest rate hikes.

Small-Business Confidence, by the Numbers

Given the picture we’ve just painted, it’s no surprise that small-business confidence fell to its lowest level since November of 2012 this month. Even industries that consider themselves ‘immune’ to political drama, like real estate, construction and development, are seeing activity dwindle. In the end, small businesses off all types face higher cost of capital than their larger counterparts, and that’s why they bear the lion’s share of the burden when uncertainty prevails and consumers reduce spending.

Luckily, there are several tools that small businesses can use to seize opportunities for growth—regardless of the prevailing political and economic climate.

Capstone Helps Small Businesses Boost Working Capital and Grow

For qualified clients, Capstone provides purchase order factoring, single invoice factoring, and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage or contact us directly for more information.

How to Grow Business in an Unnatural Economy - Capstone

How to Grow Business in an Unnatural Economy

21:58 15 June in Blog

How to Grow Business in an Unnatural EconomyStalled growth, disappearing jobs and a sense of foreboding are the defining characteristics of today’s economy. So, what or who is to blame? According to one theorist, the process of “creative destructions,” whereby the death of one business or industry gives rise to another, is failing. We’ll tell you why it’s happening and show you how Capstone’s single invoice and full-contract factoring allow businesses to grow along with demand, avoid taking on additional debt, and improve their balance sheets organically—even in an economy stuck in limbo.

The Numbers

A sobering job report released earlier this month showed the creation of only 38,000 new jobs —124,000 fewer than had been predicted — which is the lowest monthly total since September 2010. Furthermore, the Bureau of Labor Statistics reported that 94,708 Americans were not participating in the labor force during the month of May, bringing the participation rate to 62.6%.

A Limited Recovery

There’s no doubt that we’ve recovered from the Great Recession. The stock market has been on a 7-year bull run—although it has been tested recently. If you’ve tuned into the rhetoric coming out of the presidential race, you’ve heard the conviction that the recovery has been rather one-sided—that the gains of the last 7 years have benefitted a select few while the majority of the population has been left on the sidelines. No matter where you stand politically, the notion of a limited recovery seems to be supported by an analysis of Census Bureau data.

A Tale of Two Counties

According to the Census Bureau, the net increase of new business establishments is just 2.3% since 2010. Compare that with a 6.7% net increase during the 1990 recovery and a 5.6% net increase during the 2000 recovery. What’s worse—over half of the 166,000 new businesses formed in the United States since 2010 are located in just 20 counties. In short, a select few geographic areas are prospering, and the rest of the country is losing businesses and losing jobs at an alarming rate.

Aggressive Oversight and Misplaced Regulation

Touted as the culprits of the financial crash, banks and financial institutions, the drivers of growth since time immemorial, have been forced to tighten their lending requirements. The unintended consequence, of course, is that businesses’ traditional sources of credit have dried up. An enduring irony of the Dodd-Frank Act, which among other things was designed to limit the size of financial institutions, is that its burdensome requirements have actually forced many small community banks out of business—making the Big Banks BIGGER, not smaller.

If a lack of funding weren’t bad enough, businesses are now contending with rising federal regulatory compliance costs and state licensing requirements. And here the bitter irony continues. The new wave of regulations have disproportionally harmed small businesses—the symbol of the American Dream and American industriousness—not the large corporations the regulations were meant to control. A report ordered by the U.S. Small Business Administration found that the per-employee cost of federal regulatory compliance was $10,585 for companies with 19 or fewer employees. Companies with 500 or more employees, by contrast, paid an average of $7,755 per employee to stay compliant. Added to compliance costs are a rapidly multiplying number of state and local licensing requirements. 5% of employees required certificates or licenses in 1950. Today, the number stands at 30%.

A Metaphor for our Economic Ecosystem

There are many apt metaphors that describe what’s happening to the U.S. economy, but one of our favorites has to do with Smoky the Bear and forest fire prevention. Forest fires aren’t pretty, but they’re a natural and necessary phenomenon. They clear away the old, dead wood and give new generations of plants the space they need to grow. If the old, dead wood remains propped up for too long, the ecosystem ends up with less growth, less diversity, and a few individuals soaking up all the sunlight. And when a fire does finally come along, it’s much bigger and more destructive than it ever needed to be.

Boost Working Capital with Capstone

Capstone gives small and midsize businesses that are negatively impacted by Dodd-Frank and other constrictive legislation the working capital needed to seize opportunities for growth. For qualified clients, we provide single invoice factoring, construction factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. Please visit our homepage for more information.

Interest Rates Predicted to Rise - Capstone Explained

U.S. Economy Picking Up Momentum in Q2; Interest Rates Predicted to Rise

19:56 27 May in Blog

Interest Rates Predicted to Rise - Capstone ExplainedAfter another harsh winter, the American economy is stabilizing and beginning to shrug off concerns of a prolonged slowdown or recession.

According to the latest economic gauges, industrial production is increasing, inflation is firming, and the housing sector is continuing to pick up momentum. All of these factors, combined with data reflecting retail sales rebounds, job gains, and rising consumer confidence, point to improved — though still less than spectacular — growth potential for the second quarter of 2016.

Interest Rates

Fed officials afraid of financial market volatility and poorly performing overseas economies have kept a steady hand on short-term interest rates throughout 2016. A domestic growth rebound in Q2 could be just the inspiration they’ve been looking for to raise rates this summer. Their next opportunities come at the policy meetings scheduled for June, July, and September.

John Williams, President of the San Francisco Fed, recently told the Wall Street Journal that the data is starting to make a strong case for rate increases not just in June, but potentially more than once in the next few policy meetings.

Despite Positives, Some Forecasters Remain Cautious

First quarter 2016 gross domestic product (GDP) increased only 0.5 percent over Q1 2015, but growth might be poised to accelerate.

Since the end of the recession, Q1 GDP growth has consistently been weak, followed by a rebound in Q2. The latest reports of modest but definite growth in highly important sectors would suggest that the same pattern is about to repeat itself in 2016.

Macroeconomic Advisers, a forecasting firm, estimates that GDP will expand at a rate of 2.3 percent this quarter. The Federal Reserve Bank of Atlanta estimated an even higher growth rate of 2.5 percent.

However, it’s not all sunshine and roses. Despite all the positive data starting to roll in, many forecasters are still leery about the economy’s current health as well as its general outlook for the future. Earlier in May, a Wall Street Journal survey of economists revealed an estimated 20 percent chance of a recession taking place in the U.S. sometime in the next 12 months.

Boost Working Capital with Capstone

For qualified clients, we provide purchase order factoring, single invoice factoring and full-contract factoring for work performed under contract with credit-worthy accounts. We have highly experienced professionals on staff to facilitate the purchase of work in progress and progress billing-related accounts receivable. To learn more, please visit our homepage.

MTA Rebuilding Infrastructure & Resiliency – Opportunities for NY Contractors and MWDBEs

19:00 03 April in Blog

 
Capstone Capital Group, LLC attended the Fix & Fortify Sandy Recovery Work conference for DBEsand NYS Certified MWBEs held on March 28, 2014 at Club 101 in New York City.  Over 300 participants related to the construction, transportation, financial, and municipal industries attended the conference as representatives from the MTA (Metropolitan Transportation Authority) in conjunction with the US DOT (US Department of Transportation) unveiled their contract opportunities for the LIRR, Metro North, and NYC subway systems.  These MTA projects mean big opportunities as small businesses in New York have been invited to submit bids on the projects. 
From rebuilding entire subway stations to replacing vital components in the majority of the 656 miles of track and tunnels affected by flooding, to implementing preventative initiatives for maintaining resiliency, the “Fix & Fortify” program has created an unprecedented amount of projects for small businesses and MWDBEs (Minority Woman and Disadvantaged Owned Business Enterprises.) 
The Fix & Fortify conference follows right on the heels of Governor Cuomo’s unveiling of a $4.9 Billion Coordinated Transportation Resiliency Program on March 27, 2014.  The US DOT has pledged approximately $3.8 billion in funding allocated for Sandy recovery and resiliency projects. The resonating message throughout was “Fix & Fortify”; rebuild stronger and smarter to prevent future destruction. 
A speaker at the conference, Alphonso David, Deputy Secretary for Civil Rights of the New York State Governor’s Office spoke of the importance of identifying barriers for small businesses and MWDBE contractors to overcome.  Over the years and through many clients, Capstone has been able to identify unique barriers that small businesses and MWDBEs face, the main one being lack of access to sufficient capital to expand their businesses. 
Capstone has been able to structure a business funding platform specifically to support the working capital needs of these types of businesses and we have pledged our support for businesses who successfully bid on these transportation projects. Now is the time to secure your working capital with Capstone.  Take advantage of this unprecedented opportunity with the MTA and bid with confidence!  

Get In the Game!

19:00 06 March in Blog
Last week, we wrote a funding support letter for one of Capstone Capital Group, LLC’s clients who submitted a bid on an opportunity with the Port Authority of New York & New Jersey (“Port Authority”).  The company submitted their bid along with a letter of funding support to prove to that they had sufficient access to capital to complete the work.  The company unfortunately lost the bid to another firm who submitted a bid at 50% of the company’s bid.  As a public institution, the Port Authority has to take the lowest bid, but it is not practical for one union contractor to under bid another by such a large margin.  The client was not disappointed by losing the bid because the company bid the work at their best price and at a gross margin that would ensure the survival of his company, which is a fair way to conduct business.
The client is “in the game” because they have a construction factoring facility with Capstone.  The owner is positive about the company’s future because he knows he has the skills to provide customers with the best construction services available in the market along with funding to grow the business.  The client was also aware that this is one of many bids the company will be participating in. 
There is no point in taking low margin work that will hurt your company in the long run.  Many contractors submit low margin bids during slow periods to keep cash flowing and to keep employees on jobs.  The end results are:
·        increased accounts payable
·        liens on jobs
·        an overall loss of reputation 
This happens time and time again. 
At Capstone, we have a policy:
If the gross margin on a job is too small, the related accounts receivable will not be factored. 
Why does Capstone do this?  It is only a matter of time before the owner of the project puts their foot down and stops paying due to the use of substandard materials or workmanship.  There is no opportunity for the client to come out of the job stronger than they went into it without sufficient profit.  Accordingly, if the client cannot make money Capstone will not want to participate in a transaction that will result in a loss of capital even if we get paid in full.  It is not good business for the client or for Capstone!
We have observed that many disadvantaged business enterprises (DBE, MBE, WBE, etc) flounder following the receipt of their designation from the respective state or federal agency.  There is an expectation that work will come rolling in once the designation is granted. 
Without funding support from a working capital facility, an Invoice factoring facility or a company like Capstone, who understands their business model, disadvantaged business enterprises have limited options.  These entities are NOT in the game and are missing opportunities everyday. 
Get in the game! Find a Business funding solutions that will support your growth and bid on opportunities within your skill set.  Opportunities will be won and lost however you’ll always be able to deliver the highest level of service or product possible.  The frustration will be replaced by exhilaration due to company growth.
Take that first step and Get in the Game!

Look Out Below!

13:47 31 January in Blog

Is your head spinning? 

Depending on what you are reading, the economy is now declining after retail sales have been calculated for the holiday season.  Durable goods orders are down, new housing starts have slowed and car sales are expected to plummet.  Emerging markets are taking a hit because the Federal Reserve (Fed) is pulling back on quantitative easing.  Banks cannot lend any longer for leveraged buyouts.  Banks are limiting their exposure to any business that they feel will require more than normal due diligence whether they require loans or simply deposit accounts.  It looks like the world is ending in the macro economy.
All of these events could affect your business if you let them.  We have learned that opportunity is always out there in the micro economy.  You may remember from your freshman year of college the difference between microeconomics and macroeconomics.  At Capstone Capital Group, LLC, we are focused on the microeconomics of your local economy and sniffing out opportunities there.  These opportunities are created by regional differences and influences throughout the United States.
The quantity of substantial infrastructure projects currently planned in every part of the country is unprecedented.  How much of this work are you going after?  Never before has so much emphasis been placed on set aside work for disadvantaged business enterprises (DBE) including minority owned (MBE), women owned (WBE) and veteran owned (VOB)businesses.  How much of this work can your company bid on?  Don’t get caught up in all of the political double speak that takes up so much of the news.  Focus in on your micro market, your sphere of influence and Grow Your Business.
For the last five years each Business Cycle began with much promise early on in the year and by the end of April the promise had evaporated.  Yet the stock market and housing market continued to grow due to the Fed’s Quantitative Easing.  Now that the Fed is reducing its bond-buying program, everyone fears the economy will retract. 
For those in the Construction Industry, once the funds are committed to an infrastructure project, the project will continue until it is finished regardless of economic conditions.  The same does not apply to the private sector.  It’s time to sharpen your pencils and let the noise play in the back ground while you bid on the work that is out there.  Be aggressive and grow your business.  Capstone Capital Group, LLC is here to help you with Contract Funding to support the bids you will win this year while you defy the economists who are predicting “doom and gloom” for the macro economy.

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