New Bill Could Revitalize Providence’s Small Businesses

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Small business owners know it’s important to fully understand state tax codes. But for Rhode Island businesses, taxes can be tougher than in any other states. This is due in large part to the complexities of its tax code structure. In fact, in an annual ranking of tax codes by the Tax Foundation, Rhode Island landed at 44th of 50 states for what the Tax Foundation refers to as states with, “overly complex, burdensome tax codes.”

Hope may be on the way, though. A new bill proposed by State Rep. Robert Nardolillo III could simplify the state’s tax code while also dropping sales tax from seven to three percent. Citing the state’s poor showing in many business-friendliness surveys, Nardolillo says his “Taking Care of Business” package could attract businesses and residents to the state. It could provide a much-needed boost to the state’s economy.

Attracting Business

Small businesses are vital to Rhode Island’s economy, with 90 percent of the state’s businesses employing 20 people or fewer. Yet without relief, some of those businesses may eventually choose to relocate to other areas of New England. It’s where sales tax is lower and local economies are stronger. This bill could keep Rhode Island’s cities competitive with other states as they strive to attract businesses that bring in jobs. The good news is, business development has already improved statewide, with big firms, including Johnson & Johnson, GE and Virgin Prime bringing jobs to the state within the next year.

Increase in Tourism

A reduced sales tax may encourage visitors. Nardodillo cites Rhode Island’s struggle to keep up with tourism in other New England states.  It’s the state with the highest sales tax in the region. Providence, for example, has always been a popular tourism destination, but the state knows that attracting more events like conferences and festivals can increase tourism even further. A decrease in sales tax could encourage visitors from surrounding states and beyond to plan a vacation to the city. It may also keep residents in the state during their own vacation rather than cross state lines.

New Residents

In addition to attracting new businesses that bring employees to the area, the bill could also have a direct impact on the state’s retirement population. As Nardodillo points out, Rhode Island’s estate tax serves as a deterrent to seniors. They relocate to states like Florida in their later years to preserve their assets. In fact, Rhode Island’s estate tax puts it on lists of worst states for retirement. Rhode Island’s 16 percent estate tax could drive seniors out of the state. Moreover, it deters seniors from choosing the state as a retirement option.

The bill is still under consideration, but in the meantime, businesses can get help with their sales tax questions from the State of Rhode Island Division of Taxation. The Small Business Administration also has several development centers in the Providence area designed to provide assistance to businesses that have 500 or fewer employees. By fully understanding sales tax laws in the state and finding ways to generate excitement about their products or services, small businesses can keep revenue flowing.

It’s now Easier — and Cheaper — to Buy or Sell a Colorado Small Business

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If you’ve been thinking about selling your Colorado business, or becoming a small business owner in the state, now may be the time to take advantage of the wide selection of businesses up for sale.

According to the 2017 Q1 Insight report by BizBuySell.com, more Colorado businesses are for sale now than in 2016. That’s an increase of 11 percent, and they’re cheaper than a year ago too (down 19 percent from 2016).

For example, in the surrounding Denver metropolitan area, these are metrics from the first quarter of 2017:

  • Businesses listed for sale: 496
  • Median asking price: $275,000
  • Median revenue: $500,000
  • Asking price to revenue average: .72
  • Median cash flow: $102,658

Why Small Business Sales are Increasing in Colorado & Nationwide

According to the year-end Insight Report from BizBuySell.com, 2016 was the healthiest year for business sales since they started recording this data in 2007. There were 7,842 businesses were sold last year. The 2017 Colorado business data shows 2017 is on track to outpace and beat 2016. In the first quarter of 2017, 2,368 small businesses were sold, which is an increase of 29 percent year over year.

But why is this happening?

BizBuySell attributes the growth in business sales to a healthy economy, strong business financials and access to financing. Demographically, the research suggests Baby Boomers are looking to exit small business ownership by capitalizing on the favorable market conditions. Younger buyers looking to purchase a small business are seeing healthy businesses with strong financials. Then are able to easily access the capital they need to purchase the business.

In addition, the data suggests the state of the small business sales industry is becoming more balanced in terms of fair market value. The median sale price for the first quarter of 2017 was $220,000 with the median asking price at $250,000. This means the average-sale-to-asking-price ratio is .92. It’s a very strong ratio that speaks to how both buyers and sellers are close to their assessment in what is fair market value for a United States small business.

How You Can Take Advantage of the Positive Small Business Sales Market

Buying a Business:

Determine the best type of business to buy: You should evaluate your background, education, experience, and personal passions. Don’t forget to keep in mind how much time you want to spend at your business and where you want it to be located. Then research your chosen market and business type to see what’s available and the asking price.

 

Figure out the value of the business you want to buy: Do a thorough research into business history and financials, in addition to business assets. It may be wise to hire a professional appraiser to help you.

 

Review the legal status, location and permits for the business: Make sure the owner has the legal rights to sell the business. And carefully comb through any issues that might crop up before your business can be operational.

Selling Your Business:

Prepare far in advance: It can take a while to gather documents, financials and everything you need to determine the price of your business. Then you will have to wait for the right buyer.

 

Increase profits: While you’re preparing to sell your business, do additional marketing or anything you can do to increase profits and customers. This can add value to your business.

 

Realistically price your business: Use online tools to understand what other businesses similar to yours in your area are selling for. It can be best to have a professional do an evaluation to determine your business’ value.

Welcome to a New Silicon Beach: A Tech Boom Takes Over South Florida

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The Sunshine State is becoming another Silicon Beach.

The amount of Florida real estate leased by technology companies doubled between 2013 and 2015, according to a 2016 report by commercial real estate firm CBRE. Technology companies accounted for 848,000 feet of new office space. This is an 83 percent jump from the year before and more than double from two years prior.

Throughout South Florida, dozens of incubators and accelerators have appeared. The just-formed Palm Beach Technology Association is another testament to the growing technology scene. eMerge Americas, a conference founded by tech entrepreneur Manny Medina, hopes to turn Miami into a technology hub for the Americas. It could allow the area to draw from the brightest talent in both the U.S. and Latin America.

“When smaller cities play to their strengths while simultaneously working to shore up their deficiencies, they can attract talented entrepreneurs and provide them with the necessary tools to succeed,” Medina wrote in an opinion piece for CNBC. “Simply put, Miami is at an inflection point. A once-secondary player on the global technology scene, Miami is finding its niche as an indispensable player.”

The Miami-Fort Lauderdale metro area ranked as No. 2 for startup activity in the U.S., according to a 2016 report by the Kauffman Foundation. CompTia, a trade group for the technology industry, says technology jobs have increased steadily in the region throughout the decade.

“If you compare Florida and the Miami metropolitan area to the national findings, it does indicate Florida had a very strong year for tech sector employment growth,” Tim Herbert, senior vice president of research and market intelligence at CompTIA, told the Miami Herald. “If you drill down into specific areas, one of the primary growth drivers has been the IT services category.”

High Life. Low Taxes.

The reasons for the technology boom are multi-faceted. Low taxes and low cost of living is attracting both entrepreneurs and tech workers. The area has numerous universities that, owning to the lack of established technology firms, are more willing to work with startups.

Moreover, the variety of languages that residents speak include English, Spanish, Dutch, German, Italian and more. It is beneficial to companies with an eye toward global expansion. “One reason Miami continues to see such strong growth in its start-up community is because of its diverse population,” says Matt Haggman, Miami program director for the Knight Foundation.

The region is becoming more diverse as well. In addition to world-renowned beaches, there are developments like Art Basel Miami Beach and the Wynwood Design District. They show that Miami itself is reaching a new maturity appealing to tech workers at all stages of their lives.

Next Great Economic Engine

The burgeoning technology ecosystem is having an impact on small businesses across industries. Most of the tech firms are small businesses themselves. However they are also forging partnerships across industries, with new business, like tech training schools, sprouting up to serve them. They are attracting new workers, which is causing retailers and other small businesses to spring up to serve them.

So, in essence, it’s the beginning of a transformation like in Silicon Valley or Massachusetts. It is transforming an entire area, radiating out through many industries and small businesses.

“Technology is the next great economic engine [in the area],” Alan Murphy Jr., general manager of Pioneer Linens in West Palm Beach and chairman of Palm Beach Tech said on the organization’s web page. “Our company has been around for 100 years, and adopting technology into our business will be keeping us here for 100 more.”

Who is footing the bill for minimum wage hike in New York?

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New minimum wages were implemented across New York State at the turn of the new year. It’s part of the nationwide $15 minimum wage movement. In New York, wages are staged to increase to a minimum of $15. This is across all industries on an indexed schedule over four years. While an estimated 2.3 million New Yorkers will benefit from the new legislation, many small businesses are already feeling the effects and struggling to rebalance costs in the first year of the plan.

Small businesses in New York City, for example, are grappling with an increase to a minimum wage of $10.50 if they have fewer than 10 employees, or $11 if they have more. And those figures will jump to $12 and $13 respectively in 2018. Across the state, there are 18 minimum wage levels set for different workers in different regions.

A minimum wage increase leads to more expenses than just having to pay higher wages. Employers will have to pay higher payroll taxes. Also, they will potentially have to put more money into 401k matches or other benefit plans.

Some business owners reason that higher wages will lead to an increase in disposable income to spend at local establishments. Thus, potentially stimulating small business margins. Others argue that higher wages might force businesses to lay off staff. It will hamper their ability to turn a profit. Increased costs associated with higher wages may also push up prices or lead several businesses to find other ways to reallocate the costs to consumers.

Restaurants in NYC

The restaurant industry in New York city is particularly hard hit by the wage hikes. They’re subject to the highest increases. They’re also most susceptible to those who pay workers off the books and can undercut the competition — as well as price-sensitive consumers.

Many restaurant owners have added surcharges to balance these dynamics. For example, if someone is used to getting a chicken entrée for $12 and suddenly that increases to $14, they may trade down and order a cheaper sandwich instead or skip the beverage order. The bill will end up costing the same for the consumer, but the restaurant owner will still have to manage higher costs. In turn, that might lead to staff layoffs or even force certain establishments to close.

Ultimately, it’s too soon to tell whether the increase in minimum wages will have a net positive or net negative effect on the economy, or on the financial stability of workers and small businesses alike.

How to Deal

For now, small businesses can consider a few practical steps to prepare for the ongoing effects of the minimum wage increase:

  • Cut back on your hours of operation or set overtime limits for your employees to reduce the wages you’re paying.
  • You may need to reduce staff or find ways to automate certain parts of your operations.
  • Look for ways to reduce any unnecessary costs. Make sure any investments you make are in areas with the greatest potential to generate a positive ROI.
  • Keep a close eye on the competition to determine optimal pricing. If everyone around you is raising their prices and you’re struggling financially, you might have to raise yours too.
  • Try to find new revenue streams or ways to expand your business that won’t require more staff. On the flip side, discontinue any services or products that aren’t generating enough return.

Illinois and Internet Privacy Bills: What Businesses Need to Know

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Companies are pushing for more customer data.  This information serves for making decisions on product development, crafting marketing campaigns, and deciding the overall direction of operations moving forward.

For customers, though, the popularity of data collection has brought concerns. A report from the TRUSTe/National Cyber Security Alliance (NCSA) reveals that 68 percent of customers are concerned about how their personal information is being used. Meanwhile only 57 percent say they’re concerned about losing their principal income. Perhaps acknowledging these concerns, legislators in Illinois are taking action to keep customers safe.

Right to Know

Among the bills working their way through the Illinois legislature is the Right to Know Act, which passed in the Illinois Senate Judiciary Committee recently. If approved across the board, the bill will require apps and websites to notify Illinois consumers of the information they’re collecting. If they sell or give the information to third parties, businesses will also have to disclose the names of those third parties to customers.

The act only provides a broad definition of the type of information it covers. Mostly it relates to personal data like names, addresses, birth dates, race, and gender. The law would not only apply to Illinois businesses. It also applies to any company that collects data on Illinois customers. These companies could be responsible for disclosing data collection efforts to the state’s residents.

What It Means

If you do business with Illinois customers, it’s important to follow the path of this bill. The good news is, if it’s passed, businesses will not have to proactively disclose data collection activities. A customer would have to request the information following a transaction with a business. Once requested, businesses would have up to 30 days to provide it. This means that companies should be ready to disclose their data collection practices quickly. If businesses aren’t already tracking the information they collect and what they do with that data, they will likely need to begin creating that paper trail once the bill is in place.

If the Illinois bill goes through, it could serve as a model for other states. These are states considering setting local privacy restrictions in light of the possible federal regulation rollback. For businesses that serve multiple states, this could create additional work. Companies will be required to set separate policies for data collection and tracking based on where customers live. The current federal rule requires internet providers to ask permission before collecting data on the online habits of their customers.

Opponents are concerned that the bill could stifle the state’s booming data analytics industry, especially in Chicago. However, many businesses will likely only need to ensure they’re tracking their information collection and usage efforts to prepare for a possible disclosure request. For businesses collecting and using information meeting customer approval, the bill may have few negative repercussions.

Laurent Vrignaud

French Surfer Hops Off the Board and Into a Restaurant

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Laurent Vrignaud came to the U.S. from France for the first time in 1984 – at age 18 – to surf. “My dad had a job in Silicon Valley, and asked my brother and I to come visit him,” he says. “I was passionate about the ocean at the time.”

He ended up staying 33 years. He learned English, became an entrepreneur, started a family, and built a successful business employing dozens. Now Vrignaud is on to his next phase, a life-long dream as French bistro owner.

Early on, Vrignaud started working at a surf shop during the day and as a waiter at night. Moreover, he learned English and became a citizen by age 25. Living the surf-centric life led friends to ask what he’d do when he grew up. Even then he said he wanted to open a French café.

One day a young guy drove up to the surf shop in a Porsche 911. “I asked, ‘What does this guy do?'” Vrignaud said. The man was an independent sales rep selling windsurfing equipment on commission.” Vrignaud decided right then to become an independent sales rep.

Some companies took a chance on him. However he only made money if he sold, so he started knocking on doors up and down the state. “It was wonderful,” Vrignaud said of working in the mornings and surfing in the afternoons. In 1989, he tagged along with friends heading to an outdoor sports industry show in Las Vegas.

Snowboarding was new and a small Vermont company, Burton, was already a name. Vrignaud met founder Jake Burton, who was learning French and suggested a cup of coffee for a chance to practice. Burton asked Vrignaud what he did.

“I was like, do you have sales reps?” Vrignaud said. “He said, ‘No, I don’t have any.’ I said, ‘It’s very simple. I go knock on doors. If I sell, you pay me a commission.'” By the next day, Vrignaud had signed Burton for Northern California territory.

Business grew; he started hiring people. Burton asked him to take on additional territory. By 2007, when his daughter was five, Vrignaud had 40 employees.

Still, the action sports business began to slow. In 2009, he gave his clients and employees a one-year warning and left the business in 2010, on his daughter’s birthday. He traveled with his family, rediscovered long-distance running, and began to train seriously. In 2013, he ran the Boston Marathon, finished, and was in a restaurant when the bombing took place. The year before, both his wife and daughter were at the finish line.

“I realized, all of a sudden everything can be taken away,” Vrignaud said. Shaken, he called his wife and said he would open that café, because “if I don’t do it, I might not ever.”

His brother, a 35-year restaurant veteran, warned him against it. But  Laurent Vrignaud was determined to create an experience like the cafés of his original home in the Montmartre section of Paris, where Picasso, Monet, Dali, and Toulouse-Lautrec once had studios. He had collected chairs, tables, metal signs, and other decorations for decades and put them to use.

But the business was hard. “You have to be physically strong and mentally strong to enter the food business,” Vrignaud said. “If not, you’ll be taken out.”

He brought chefs from France to help make the restaurant authentic and true to what his grandparents would have sold in their Parisian store. Starting with a large Newport Beach location open from 6AM to 9PM, he welcomed people to stay as long as they wanted, whether they spent $20 on a meal or $2 for coffee.

“Here I force people to slow down,” Vrignaud said. Some dishes aren’t available to take out because they won’t travel well.

Laurent Vrignaud handles such difficulties with humor and has developed a loyal following, which led to a second location in Laguna Beach about a year ago. He calls the undertaking “a combination of a French heart with an American mind.”

“A guy like me with zero experience can reinvent himself,” Vrignaud said. “You can be anything you want to be, any time. It only requires one thing: hard work.”

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