But like lesser-paid Americans see on their payroll stub every week, Flacco was only the highest paid player in the NFL until taxes were figured in. Because Joe Flacco earns his living in Maryland and Drew Brees throws the pigskin in Louisiana, the title of highest “earning” player in the NFL remains with Brees.

Because Flacco plays for the Ravens in Baltimore, he pays a combined marginal income tax rate of 51.98 percent. That combined rate includes federal, state, and county income taxes claiming over half the quarterback’s salary before he ever sees it. That doesn’t include so called “jock taxes” when the Ravens play the Patriots in Foxboro, where Massachusetts levies state income taxes on earnings of visiting athletes.

Flacco may have the distinction of being the highest paid player in NFL history, but New Orleans Saints’ QB Drew Brees still earns more actual “income.” Brees’s contract is a five-year, $100-million deal that pays around $20 million per year. After applying the marginal combined tax rate of 49.4 percent to the Saints QB’s contract salary, he stands to make $470,000 more after-tax pay than the newly crowned “highest paid player.”

If Louisiana Gov. Bobby Jindal is successful in getting the state legislature to eliminate the state income tax, Brees will earn even more. There is little doubt that franchise players will think long and hard about where they choose to sign as tax rates continue to soar.

The purpose of this little tax tale is not to elicit sympathy for a man who will still make millions after taxes. But it does illustrate in a highly visible way what small business people face every day. From the outside they may look wealth,y but many of them face every day the decision whether staying where they are and doing what they do is really worth it.

Boneta hosted a birthday party for eight 10-year-old girls, but apparently without the required “events permit.” The county also took issue with her selling items such as birdhouses and yarn that she had not made herself. For this she was fined $5,000.

Outraged local farmers showed up at a zoning-board meeting a couple of months later with pitchforks in hand, but their show of support proved to be only symbolic. She ended up closing her shop anyway.

Brad Jones, part owner of Buckingham Slate, experienced the same government love for small business.  Buckingham Slate supplies the area with highly valued Arvonia slate and can trace its roots back to the Civil War. It also was recently smacked with a $4,000 fine by federal regulators.

Jone’s crime against society was an uncovered trash can. According to the Mine Safety and Health Administration’s official citation “the receptacle was full” and “could be smelled.” The code violation, said the agency, showed that “management engaged in aggravated conduct constituting more than ordinary negligence” by allowing this “condition to exist.”

Nathan Hammock and his family own a dairy farm in Museville. Due to drought, they decided to put an irrigation pond on their property. They finally got that pond after three years and $30,000 of red tape wrangling with the Army Corps of Engineers and the Environmental Protection Agency.

Former EPA official Al Armendariz said enforcers should “crucify” offenders to “make an example” of them, which would then make others “easy to manage.” It seems he was doing more than speaking off the cuff. In its first three years, the Obama administration imposed over 100 economically significant regulations as in those costing $100 million or more. The Heritage Foundation says that is four times as many as the Bush administration during a similar period.

While giving great speeches about support for small business, the president has overseen massive regulatory expansions: banking industry; vehicle mileage standards; Obamacare carbon emission limits on coal-fired power plants; energy-efficiency standards for home appliances; and dozens more.

According to the House Committee on Oversight and Government Reform, “The published regulatory burden for 2012 [alone] could exceed $105 billion. . . . Since January 1, the federal government has imposed $56.6 billion in compliance costs and more than 114 million annual paperwork burden hours.”

Brad Jones says that Buckingham Slate is overrun with federal and state agencies, and “each one of them wants something from us all the time that is costing us money.” Jones estimates that five of his 45 employees spend 20 percent of their time simply filling out paperwork.

No one argues that regulations are unnecessary. They help ensure safe food and breathable air. But at what point have regulations gone too far? “If you’re a small operator, they’re just putting you out of business,” says Jones. “It doesn’t matter that we can compete globally. . . . Sooner or later, that kind of regulation is going to shut you down.”

©2012 Off the Grid News

Traditional funding is loaded with strings and fine print.  After you slave over the loan application, regulatory issues seem to crop up at every turn.  The banks may have money from the federal government to lend, but they are not interested in lending it to you.  Instead, you’ll find more luck – and more funds – through the kindness of virtual strangers.

The Case For Crowdfunding

Crowdfunding is a concept made possible by the Internet.  Groups of like-minded individuals come together to support projects that align with their values, provide a service they like, or offer something interesting to the world.  In many cases, the funds raised from crowdfunding ventures don’t have to be paid back, offering small and independent business owners up-front capital without a hefty after-market price tag.

Crowdfunding also doesn’t require a traditional business plan.  While there is definitely value in developing a plan for your small business, not every business idea needs to be meticulously documented in the way that banks like.  You know what you want to do, and you know how much you need to do it.  If you can clearly express your concept to others, you already have the skills needed to be successful at getting crowdfunding.  This can be a major timesaver in your quest for the capital to launch your business idea or take your existing business to the next stage.

How Crowdfunding Works

Crowdfunding works by putting your idea out in front of interested individuals, usually on websites devoted to funding new ideas.  Two of the leading crowdfunding sites are www.peerbackers.com and www.IndieGoGo.com.  Both sites are free to join and collect a percentage of funds raised to offset the costs of processing payments and hosting the project.

For each project you post up for funding, you will be responsible for creating a description page and reward items.  The description page looks much like a blog post – a relevant photo at the top and then several paragraphs about your proposed project below.  Rewards items are up to you based on funding levels.  A $5 donation might warrant a thank-you postcard, while a $100 donation might earn a coupon for a free dinner at a restaurant, free yoga class at the school, or free dog grooming at your store.  It is very flexible and up to each business owner to tailor their offerings.

What Projects Work Best for Crowdfunding

The projects that work best for crowdfunding are those with a specific aim.  It’s not enough to get on the sites and say, “My business needs money.”  That may be true, but it’s not a compelling or interesting story, and there’s no clear objective other than getting some cash.  Better success rates are achieved with clearly defined goals.

For example, Dun-Well Doughnuts of New York is looking to establish a storefront presence for their existing vegan doughnut-making business.  They are offering samples and coupons for the store when it opens.  The Breathing Room, a yoga studio, is losing the use of its current location and needs $10,000 to remodel a new space.  They are offering rewards of free classes and good karma.  Minku, a newly launched handmade leather manufacturer, needs $3,000 to attend a professional fashion event they’ve been selected for in Barcelona, a trip not in their current budget.  They’re offering leather merchandise and guest blogger spots on their web site.

As you can see, there are many different avenues to pursue.  The uniting factor for these businesses is that they are too small or too different for traditional lending, and they have a specific need.  With crowdfunding, it is possible to get the necessary funds without giving up ownership stakes in their business or dealing with banks.

Consider your own small or off the grid business.  While the federal government makes empty lending promises, could you be using crowdfunding to get results and funds for your company?

©2012 Off the Grid News

A large part of what’s going on is regulation.  Red tape, bureaucratic hurdles, passing the buck – call it whatever you like, the net result is no new dollars for small businesses who need loans.  Despite what the Obama Administration may say about wanting to light a fire under American entrepreneurs, they have systematically passed or influenced legislation and regulation that effectively cripples small business loan operations.

Big Brother Watching

One key area that has been impacted by the administration’s stance on the financial crisis is banking regulations.  It’s not even that new laws are in place here – it’s that existing laws are being enforced more strictly.  Regulators have also been repeatedly burned by big bank failures and public bankruptcies for pet financiers, so they are taking out their fear where they can do it most easily – regulating small business lending right out of existence.

Many small-town bankers would love to be making more loans, but they’ve got regulators breathing down their necks.  The same watchdogs that let Enron, Countrywide, Lehman Brothers, and Madoff happen are giving your local banker the third degree over small business loans that seem even the slightest bit risky.  This extra hassle makes it not worth the trouble to deal with anything less than big dollar loans, effectively shutting down local lending markets for installment and credit line accounts under $100,000.

Hello, Dodd-Frank

Dodd-Frank is massively unpopular in financial circles, which should be a concern given that all of the provisions of this complicated bill haven’t even come into effect yet.  The bill is complex and loaded with onerous new regulations and reporting requirements for financial industries.  There are mandates to use more approved minority contractors, mandates to hire certain types of personnel, mandates to monitor some industries more than others, mandates … well, you get the idea.

With all these new mandates, bankers are holding back on partnering with anyone new until everything gets sorted out.  Government-approved projects can sail through, but your application will probably get held up.  You’ll need to submit extra documentation and jump through additional disclosure hoops to get the same money.  For many businesses that need money now, the delays and paperwork requirements make it not worth the trouble.  It’s easier to seek out alternative financing than it is to deal with all the hassles of traditional lenders.

CARD This!

A final wrench in the gears for small business owners is the CARD Act.  While originally designed as a means to bring credit card issues under control after the binge years leading up to 2007/2008, this 2009 Obama Administration bill seems to have a bit of heartache for everyone.  Banks have a cap on their processing fees and credit card companies have caps on their interest ranks.  This means they’re making up the difference from customers like you.

One means of making up the difference is with additional fees, but another is by raising interest rates.  Certain government loan programs may still offer ridiculously low rates, but the average Joe has to deal with the additional costs passed on by banks thanks to the CARD Act.  This makes borrowing an expensive proposition that few small businesses want to take on as a burden, at least until the economy recovers.

It all adds up to promises of readily available capital from government mouthpieces but a nearly impossible scenario for any real business looking to borrow.  If you’re not denied by asking for a loan “too small” to worth a banker’s trouble, you’re hit with higher costs due to new regulations.  The application process is tedious, and regulators are demanding extra proof at every turn.  Frustrating and expensive, the process of getting a loan in this environment is often not worth it.  As a result, you can’t have your loan, and neither can any other small business that needs it.  No wonder our economy’s so great!

©2012 Off the Grid News

Strategy #1: Tap into recessionary trends

Used vs. New

In a recession, people often seek out used goods instead of new ones. That’s why pawnshops and consignment stores thrive during a recession, and why consumers check out the used car lot instead of the dealership in town.

Traditional storefront owners can tap into this trend in several ways. Offering second-hand goods alongside your new items may drive in new, otherwise thrifty customers. For higher-priced items, such as yard equipment and electronics, consider offering rentals along with your sales.

Repair vs. Replace

Similarly, people are looking to repair and refresh their broken or outdated items instead of merely replacing them.

Tim Kinley, an auto mechanic near High Point, North Carolina, used the recession as a springboard to success. Tim lost his job in the automotive manufacturing industry a little over a year ago. Instead of looking for new work, Kinley decided to strike out on his own, running a car repair business from his backyard garage.

“I’m slammed here. I’ve gotten more work than I could ever imagine.” Kinley said. His customers are loyal, too. “They bring their cars back for oil changes, brake repairs, just about everything. I’m booked solid for at least two weeks at a time, but people would rather wait on me and pay less, than pay more money at the car dealership.”

Kinley has no full-time employees. Two of his mechanic friends from his former job come to help him in the afternoons when they leave work for a little extra cash. His wife handles the bookkeeping, marketing, and other business details.

Traditional homebuilders have noticed this trend also. Many contractors have found success in the recession by shifting their marketing efforts to remodeling projects in absence of the new construction projects. Promoting smaller projects, such as adding on porches and remodeling bathrooms has proven successful. Many builders are also offering their expertise by the hour, completing “handyman” projects for homeowners.

Travel vs. Staying Home

Instead of spending money on travel, vacation, and personal development, people are choosing to stay put at home…or at least closer to home. For many, webinars have replaced the more traditional business conventions and seminars. They are very popular right now in almost every industry because they do not require any additional travel expenses. Any type of online course or webinar you could offer to a specific niche could mean big profits.

Other ways you might cash in while people cocoon at home:

• Offer your products for sale online. Online shopping feels thrifty because it allows people to still buy what they need (or want) while saving on gas.

• E-books are becoming a popular form of entertainment for avid readers. The market for e-books is wide and growing…almost any topic or interest can be turned into an e-book. They are also surprisingly easy to create, sell, and share online with a high return on investment.

• People still need to eat and drink no matter how bad the economy. Instead of eating out, people are cooking at home more. Gourmet cooking has become very popular, and anything that caters to this niche is hot – home brewing kits, winemaking courses, cake decorating classes, how-to books and DVDs for making your own breads and cheeses…the list goes on and on.

• Working about the house has become a popular pastime as people stay home more and vacation less. Homeowners are busying themselves with home improvement projects and DIY projects…products and services that cater to this market are seeing some growth.

Affordable Luxury

Even in tough times, people still want their creature comforts. Rather than changing their spending habits and becoming thrifty, consumers are simply trading down to more affordable luxuries. Chocolate is one such affordable luxury that’s enjoying a bump in sales despite the recession. According to Time magazine, chocolate makers Hershey Corporation and Cadbury’s profits have risen steadily throughout the past two years.

How can you enjoy similar profit increases? Try changing your business model to offer stepped-down versions of full-blown luxury packages. Instead of offering the full-day spa package, offer a three-hour version at half the cost. At the beauty salon, give a complimentary paraffin treatment with a cut and color. Photographers, throw in a free bridal portrait for brides who book you for weddings. This strategy can work for almost any service-oriented business.

Strategy #2: Cut Costs… but cut the right ones

Cutting your costs can be a money saving strategy, but you must be sure that you cut the right ones. Trimming your manufacturing or administrative costs are probably your smartest bet. One study by Profit Impact of Marketing Strategy (PIMS), found that there are two areas where you should never cut costs:

1. Do not cut costs that are associated with your product quality. In other words, don’t cheapen your product to save money. Customers will notice, and sales will drop.
2. Do not cut your marketing costs. While it is a quick way to save cash, you’re likely to see your overall sales fall.

Strategy #3: Market more, not less

Marketing should never be considered an expense for your business. It’s an investment. Slashing your marketing efforts during a recession is like cutting off oxygen to a scuba diver – you simply won’t survive without it. An article in Adweek found that firms who choose to cut marketing costs typically see their sales fall by 20 to 30 percent in a two-year period. There’s nothing more dangerous than losing money in an already unstable economy.

Instead of cutting your marketing dollars, choose to spend them wisely. Use a mix of several different marketing techniques, and don’t put all your money in one area alone. Opt for marketing that allows you to build relationships with customers to encourage repeat business. In a tough economy, volume is important, and you want to keep your customers happy and coming back for more.

©2011 Off the Grid News