NFIB has Some Pull Afterall, Good for their Constituents

News - the IRS has raised the standard mileage rates, good for small businesses and their driving dependent business uses. This will allow them to deduct more for all auto-related expenses, and thus save some bucks on taxes. Thanks IRS.

Back story - the NFIB (National Federation of Independent Businesses), biggest lobbying arm of the small company world had a hand in it. No surprise, since this issue came up as the second highest concern of small business owners in the NFIB's most recent survey. Cost of health insurance continues to be the biggest concern of the surveyed companies.

Strike one for the little guy.

AB In"bev" Trouble, Craft Brewers Can Keep up Double Digit Growth

The brewing industry is under pressure from rising prices. Much of the increases are due to rising fuel costs, after all the finished product, made up of mostly water, is quite heavy. However, for craft beer makers, those with total production below 5 million barrels annually (AB produces 100 million annually in the US) the cost of ingredients have been going up as well. Well documented increases in barley malt, hops, and various other ingredients are driving up production costs. These cost increases are just hitting the stores now as price rises averaging a dollar per six pack. Will this increase drive consumers away, or at least stop the rapid growth? We think not for several reasons:

1 - Mainstream lager producers are under competition from all sides, including so called alco-pops, as consumers continue to pursue better tasting libations.
2 - The recent new beers from AB and Miller, are dubious (see linked ratings from Beer Advocate), not much better than their regular beers, and in most cases worse.
3 - The approach by Inbev to aquire AB will take most of management's focus off AB's attempt to diversify. Though this will go on, they will focus more on operations for now.

A bell weather for the craft industry, Sam Adams aka Boston Beer Company, keeps growing by double digits, as described by Jim Koch for the first quarter 2008,

Jim Koch, Chairman and Founder of the Company, commented, "We achieved 12% depletions growth in the first quarter over a very strong first quarter last year. We feel good about this growth and the continued overall positive craft beer category trends, even as our whole category has raised prices in the face of significant cost pressures. This was our ninth successive quarter of double digit depletions increases. While it is too early to predict if the price increases will affect the Company's or category growth, I believe that as the leading craft brewer, we should continue to benefit from the increasing support of retailers and wholesalers for craft beers, as they recognize the potential of this fast growing and profitable category. Even in tough economic conditions, beer drinkers are continuing to trade up to better beers. I believe that the quality of the Samuel Adams brand and our distinctive, full-flavored beers position us well to meet this growing drinker interest."

Long live the continuing growth of this vital small business segment.

Let Those Techies Stay

Among the insanity and inanity of the immigration problem and resulting debate in the US is the loss of good workers, and not just the folks who pick your lettuce. It's also the workers who helped the ignored folks in Louisiana reconstruct their houses and city after the hurricane. And most importantly it's the great minds we are educating at our Universities here and then send them off to other countries to compete with us.

As this recent Kauffman Foundation Study entitled "Intellectual Property, the immigration Backlog, and a Reverse Brain-Drain" displays in great detail (and you can access the whole report for free in pdf format via the link) it's a big problem. Strikingly, due to our restrictive immigration policies, we are missing out not simply good workers, but talented entrepreneurs, as the web summary notes:

"The earlier studies, “America’s New Immigrant Entrepreneurs” and “Entrepreneurship, Education and Immigration: America’s New Immigrant Entrepreneurs, Part II,” documented that one in four engineering and technology companies founded between 1995 and 2005 had an immigrant founder. Researchers found that these companies employed 450,000 workers and generated $52 billion in revenue in 2006. Indian immigrants founded more companies than the next four groups (from the United Kingdom, China, Taiwan and Japan) combined.

Furthermore, these companies’ founders tended to be highly educated in science, technology, math and engineering-related disciplines, with 96 percent holding bachelor’s degrees and 75 percent holding master’s or PhD degrees."

We cannot afford to lose this force of entrepreneurs, whom to a great extent we have educated and propelled ahead, and must change our policies to invite more to stay. The future of our economy, to the great benefit of the world economy, and our country depends on it.

Regional Growth Rates Differ, Take Heed

The Bureau of Economic Analysis recently reported state and regional growth statistics for 2007. No surprise that the Great Lakes region showed the slowest growth overall at 0.5%. Illinois, with the most diverse economy in the region grew at 1.5%, while Michigan lagged at negative -1.2%. Nationally growth advanced by 2.0%.

Lessons for small companies, if you sell in or to particular regions or states, you must prepare forecasts and plans for the particular economic trends in the areas where you make most of your sales. Accountants can assist you planning efforts, but you and your financial staff must do the hard work of forecasting. Accurate planning assists your relationships with lenders and other investors. I can help you adjust spending, and if you can't make your revenues you must be prepared to cut elsewhere.

On the flip side, locate the areas that are growing more and target these markets. Long term trends don't lie, and they may save your business if you plan for them.