Hadannah Business

Living Outside the Box

Killing the American Dream by driving the “Angels out of America”

I got a call from a colleague last night who was sort of teasing me about living in a location that has all of a sudden become a leading edge city. Evansville, Indiana, as I have groused about for the eleven years that I have lived here has NO ANGEL INVESTMENT NETWORK and NO VENTURE CAPITAL FIRMS. It is not that we are so poor, it is just that we are cheap and short on ideas. People who grew up here routinely move to the coasts and achieve great successes but without the ability to form equity capital, their dreams do not happen here.

My friend had read an advance copy of the Wall Street Journal article “Angels out of America”, that was published today. I have pasted it below. What he was chiding me about was that the new Finance Reform Act has a provision that further reduces the pool of Angel Investors making entrepreneurial success even more difficult in this country. Specifically his congratulatory critique said is that “soon the whole country will be like Evansville”. It was not meant as a complement and it was not an endorsement of the bill before the Senate. Quite the opposite, he told me rather than elevate the fortunes of Midwestern conservative enclaves like Evansville that our President has finally shown his plan to bring the rest of the country down to the entrepreneurial level that we know as rock bottom. Brain drainers will no longer go to the coasts, now they will go to other countries.

I have been waiting since my senior year at UE to finally say that Evansville is leading edge. This time it was a race to the bottom. We are finally #1. It reminds me of a joke that I learned in high school.

Clap your hands (while stomping your feet)
Stomp your feet (while clapping your hands)
We’re Number 1 (while holding up an open palm)

Read it an weep guys. I never wanted to win this way.

From Todays Wall Street Journal “Angels out of America”

Senator Chris Dodd’s 1,400-page financial reform bill contains many economic land mines, and here’s one of the worst: Provisions that would make it harder for business start-ups to raise seed capital.

Currently, wealthy individuals who want to invest directly in a new business can do so with minimum interference from regulators. The law requires only that the investor be “accredited” by meeting thresholds for net worth ($1 million) or income ($250,000). Entrepreneurs depend on these “angel” investors, since many new businesses lack the collateral for bank loans and are too small to interest venture capitalists.

Amazon, Yahoo, Google and Facebook all benefited from angel investors, who typically target companies under five years old. According to a 2009 Kaufman Foundation study, such firms are less than 1% of all companies yet generate about 10% of new jobs. Between 1980 and 2005, companies less than five years old accounted for all net job growth in the U.S. In 2008, angels invested some $19 billion in more than 55,000 companies.

Mr. Dodd’s bill would change all this for the worse. Most preposterously, it would require that start-ups seeking angel investments file with the Securities and Exchange Commission and endure a 120-day review. Rare is the new company that doesn’t need immediate access to the capital it raises, and a four-month delay is the kind of rule popular in banana republics that create few new businesses.

The legislation also removes a federal pre-emption that prevents start-ups and investors from being subject to 50 different state regulators. The North American Securities Administrators Association, which represents state regulators, argues that federal pre-emption contributes to fraud. But angel investors don’t use broker-dealers and other middlemen linked to recent investment scandals. Nascent companies often seek financing from multiple investors in different states, and a state-by-state regulatory regime would mean higher compliance costs and more legal risks.

The Dodd bill also raises the net worth and income thresholds to $2.3 million and $450,000, respectively. The Angel Capital Association, a trade group, estimates that these provisions would disqualify about 77% of current accredited investors. Accreditation matters in luring other potential investors, such as venture capitalists who enter the picture once a company begins to mature.

We hear Senator Dodd is taking such complaints seriously, and we hope so. No one believes angel investors pose a systemic risk, so it’s hard to understand why these proposals are part of a bill aimed at preventing another financial collapse. The economy needs more private job creation, as Democrats who have to explain a 9.7% jobless rate should especially understand.

High Hopes for the Next City Workshop

Joe J. Wallace, Managing Director
Hadannah Business Solutions

At the heart of a 21st Century Global Economy are innovative young professionals, whose ambition and ideas are keys to the region’s economic growth and vitality.

On Tuesday April 13, 2010, Evansville will be hosting a workshop to discuss the attributes that a region needs to be attractive to educated young professionals. This is not the first time that such a discussion has been held but it is occurring at a time that this region seems prepared to act on whatever recommendations come out of this discussion. I was a brain drainer once for career and lifestyle reasons. I applaud the organizers of this event and hope that many positive actions come from the knowledge that this workshop will surely unearth.

Who are these sought after Young Professionals?

The term “young professional” might be argued to be a state of mind. At the risk of offending some, Angelou Economics defines young professionals as people between the ages of 25-44 who are “knowledge workers” and employed in a field that requires computers, science, or design skills at a high level. What this translates into is that “these people are problem finders and solvers”. They may be single or married, with or without children. The influence of this population also extends beyond itself. They are key to future population (and economic) growth through potential childbearing. The Evansville region is long overdue for both population growth and economic prosperity.

Young professionals are an important source of ingenuity and new idea generation. They are essential to fueling growth among technology and knowledge-based businesses in any region.
The competition for young professionals among cities is intense. The issue of young people and their attitudes toward the Evansville region must command the attention of the entire economic development and business infrastructure. Hopefully as a result of this workshop some entity will assume a leadership role in attracting and retaining young, educated professionals.

What makes these Rascals Tick?

Young professionals look for a place to live first, and then they find a job. As the median age in the U.S. increases, the percentage of total population that is 25-44 is shrinking. This demographic is at a premium, and they can afford to be picky when choosing where to live. Productive, educated workers are highly sought after, and as a result, have a wide variety of work options and locations from which to choose. When they are choosing a place to live they keep their eye on the career opportunities that are available in their candidate places. They are looking for mental challenges, upward career paths, and competitive compensation packages.
If Evansville wants young professionals, it has to have all of these things. The three legs of the stool to attract these people are an enjoyable job, a prosperous future, and a superlative lifestyle. If any one of these is missing, we will be crippled in our efforts to attract or even keep these people.
Quality of life means different things to many people. For many, it starts with good health, good job, and security for themselves and their families. For young professionals, though, it may involve much more. Most are looking for a community with a broad and diverse employment base that will allow them flexibility as they migrate from one career to the next. They want the opportunity to become engaged in civic life through service on community boards and volunteering with community groups. They demand a wide variety of recreational, artistic, and entertainment options. The other thing that they seek is large numbers of like minded individuals. People seek people for both friendship and dating. Young professionals are social and are attracted to places that have large populations of others like them.

Communities that lack the environment to support their young professionals are at a competitive disadvantage. A failure to secure access to human capital drove computer maker Gateway Inc. to relocate its headquarters from North Sioux City, South Dakota to San Diego, California. To grow requires the very best and brightest executives and engineers, and few wanted to call South Dakota home. “San Diego was an excellent move for us, because it’s ideal for attracting the kind of talent in the numbers that are required now for us at Gateway,” explained John Heubusch, Gateway’s vice president of public affairs.

Evansville has a history of arrested development and outward migration of both knowledge based and recently traditional businesses. Let’s take this opportunity to correct the issues that will be raised in the Next City workshop. It is not enough to have cheap houses and a river. Lifestyle is what matters most.

What’s a Parent or Grandparent to do?

I am directing this to my fellow baby boomers. If you love your children and your grandchildren and want to be around them, you should attend this event. Afterward you should become an activist in forcing local business and government to make this an attractive place for young professionals. We who are no longer young but who have retained the vitality of youth are the most equipped to force solutions to happen even if there is kicking and screaming involved by those most responsible for change.
This is the third time since the year 2000 that this step in the right direction has been taken. The SWOT analyses of 2001 & 2007 had substantially the same conclusions to counter the “brain drain”. I suspect that Tuesday’s meeting will yield similar results. I hope that something actually happens this time. First we need to do the easy things to close the gaps and then tackle the more difficult ones to set this region apart as a unique and desirable place for young professionals to live and prosper. Making the list will be easy compared to the hard work and diligence that will have to follow. Let’s make it happen.

The Wages of Invention and Innovation are Wealth

Joe J. Wallace, Managing Director, Hadannah Business Solutions

During a recent vacation on the island of Maui, I became interested in how the recession had affected the real estate industry in a market that is dominated by second homes and investment property. The numbers are similar to what is happening on the mainland. The quantity of sales are down dramatically, the average sale prices are lower by some 20%, and properties languish on the market for in some cases over a year. That being the case, I decided to drop in on an open house and speak with a local realtor.

The house that attracted my attention is very similar in size and quality to my own home in rural Vanderburgh County. The price however is as the realtor put it “a steal at only $8 million dollars”. Now that is quite a difference in what such a house commands in my neighborhood. It must be that oceanfront thing and the perpetual great weather. I was intrigued. During the course of conversation, I learned that the home is owned by a dentist from Georgia who bought another home just across the bay so he could have a sunset view instead of the sunrise view that this home offers. The dentist’s total investment in the two homes now stands at a cool $20 million. I was beginning to think that I should have become a dentist instead of a CEO.

Dentistry is a profession that requires the highest levels of both education and dexterity, but $20M houses? I learned through the Bureau of Labor & Statistics that a general dentist in Georgia earns a median wage of $171,280 and that in Indiana that figure is $158,080. I don’t understand why we pay less in Indiana than Georgia but who am I to argue with statistics. I further learned that by specialization, a dentist can earn as much as $315,000. This will enable one to have an extremely good lifestyle but not to own $20M in Maui real estate outright. The numbers just don’t add up.

Invention and Innovation are the Keys to Wealth Creation

A further conversation yielded the knowledge that the owner of these homes is no ordinary dentist. He actually owns a portfolio of patents that he invented to improve the way that dental care is provided. What happened is that this gentleman while working as a dentist identified and developed ways to improve his dental practice. He furthermore took the initiative to design, build, test, patent and commercialize his inventions and innovations. So, what this dentist did is assumed the risk, made the investment, and ultimately reaped the rewards for his ideas and initiative. He transcended from dentistry to become an inventor, innovator, and a successful entrepreneur. He also created new knowledge that has been used to improve the lives of dentists and their patients the world over.

“Where a new invention promises to be useful, it ought to be tried”
Thomas Jefferson

One Person, One Region, One Nation

The free enterprise system has richly rewarded this dentists inventive efforts and he is now truly one of the super wealthy. That which works for individuals can also work for societies and nations. By creating new knowledge, forming risk capital, and unleashing the energy of inventors and entrepreneurs, the United States has become the leader in both Nobel Prizes and wealth creation. The world’s best and brightest, but more importantly the most ambitious have routinely flocked to our shores to pursue their business dreams. Some places are much more attractive and supportive of entrepreneurial spirits than others. Attractiveness is about lifestyle and amenities of place. Supportiveness however is about access to talent, tolerance for risk, the ability to form local investment capital, and having an atmosphere where being an entrepreneur or inventor is looked upon favorably. As this dentist has proven, one can go it alone, but a full support network and a culture of creative achievement are what will insure that more and more transformational people will succeed in the wealth creation that is most certainly the only sustainable way to provide continuous growth to the nation’s economy.

Want Entrepreneurs?? Show them Some Money

I have been doing everything within my power over the past 4 years to try to do something to put together some form of financing for local entrepreneurs. Evansville as I have previously discussed is the only city in America with over 100,000 people that has no venture capital, no angel network, and no significant revolving loan fund. People have questioned me many times with the cliché’ of “what comes first, the chicken or the egg”. I will go on record today, as saying the answer in this case is clearly THE EGG. To deny our budding entrepreneurs a thriving infrastructure that outside investment is a part of, is to deny them the option to pursue their entrepreneurial dreams in Evansville. By failing to assure that such opportunities are in place our business and political leaders have assured that our best and most ambitious young professionals with entrepreneurial dreams will either forget their dreams or leave town to pursue them. This failure costs Evansville a chance for the jobs and wealth that such people always seem to create where they live.

I have high hopes for the upcoming Next City seminar. I am anticipating that some of the lifestyle issues that attract young professionals will be identified and acted upon as a result of it. Of course, the young entrepreneurs will still need a private investment community to go with that lifestyle.

Economic Homicide: The Full Content Why are Banks Waging War on Small Business?

Why are Banks Waging War on Small Business?
How Old Banks with New Rules are Killing our Job Creation Engine

Joe J. Wallace, Managing Director
Hadannah Business Solutions

Small and medium sized businesses have long relied on banks as a source of working capital that they have used to fuel the prosperity that has had a profound positive impact on the economy of the free world. The United States, as the de-facto leader of the free world, has been the locale of choice for visionaries and entrepreneurs to pursue their ambitions. The worlds best and brightest have enriched our nation with their energy and intellect and we are all better off for it. The personal relationships between banks and small enterprise have played a large role in our country’s attractiveness as a place for entrepreneurs to prosper and live.

These loans have typically been revolving credit lines that are renewable at defined times and have carried competitive interest rate charges that are a couple of percentage points higher than a traditional mortgage. Unfortunately, the partnership of prosperity that banks have forged with small business has been severely diminished by the events of recent years including, falling real estate prices, government bail-outs, and the new rules that have either been forced on banks or that big banks have exploited to increase their short term profits.

Importance of Small Business: The Kauffman Foundation in a recent publication titled “Where Will the Jobs Come From”, presents data supporting the fact that small business employs just over half of the entire American workforce. The study also concludes that excluding start-ups, in 2007 over two-thirds of all employment growth came from businesses that are less than five years old. It is safe to say that small businesses founded by entrepreneurs, as opposed to large companies or government are really the only mechanism through which the needed jobs will be added to our economy in a sustainable way. The last section of the Kauffman paper is simply titled “Entrepreneurs = Recovery”. It seems as though our very survival as a nation depends on stimulating and nurturing the entrepreneurial atmosphere that has lead us to become the de-facto leader of the free world.

A question worth asking in consideration of the importance of entrepreneurship and small business is, “Why are our financial institutions acting as though they have declared war on small business”? The following is a fairly detailed description of a classic military strategy to weaken and subjugate an enemy that bears much resemblance to what big banks are doing to small business today.

Scorched earth policy: A scorched earth policy is a military strategy which involves destroying anything that might be useful to the enemy while advancing through or withdrawing from an area. At one time this was simply the practice of burning crops to deny the enemy food sources, in modern times the term is not limited to food. It includes the destruction of infrastructure such as shelter, transportation, communications, and of course access to financing. Here are some recent headlines in business publications:

The SBA loan volume plunged 36% in 2009 as banks slammed their vaults shut to small businesses
Top banks cut small business lending by $8 billion
Want a loan for your business? Hit the plastic!
One of the most effective counter terrorism measures that the US has quietly taken has been to interrupt or eliminate funding sources to terrorist organizations such as Al Qaeda. An enemy that cannot eat cannot fight. Similarly, a business that cannot access cash, cannot survive.

When banks retreated into the safe, secure, and regulated new world of easy 3% margins on money that the bailout and expanded government borrowing provided, what followed for small business was nothing short of a scorched earth policy. The banking industry has instituted policies that essentially treat small businesses as enemy combatants. While the balance sheets of the banks were being propped up by taxes that came largely from small business, the small businesses and their owners were shut off from credit lines of working capital that ultimately has resulted in layoffs and shut-downs. Soon, a day of reckoning that the taxes collected from these small businesses won’t just decrease by 30% as our housing values have, they will disappear altogether. The vicious cycle is just beginning to unfold.
American small businesses have finally realized that they are being manipulated and attacked by the banking industry. Our government officials make many eloquent speeches on the value of small businesses. They seem to recognize the value and say the right words. When it comes to passing tangible legislation, they sit complacently on the sideline. Like Caesar at the Roman Coliseum, our government chooses winners and losers by a capricious thumbs-up or thumbs down signal, but real leadership in supporting entrepreneurship has not been forthcoming. America’s small businesses are angry and they have good reason to be.

Circle the City, Cut the Supply Lines, then Subjugate and Dominate:

Step one in the process is to cut off the traditional supply lines that small businesses use to fuel operations and growth. That source has traditionally been the Commercial Credit Line used to finance inventory, labor, and growth. The incidents of banks giving small businesses notice that their commercial credit lines will not be renewed are at staggering levels. There is hardly a week that goes by that I do not have a discussion with a business owner about a retracted credit line or one that will not be renewed. Estimates of the total amount of credit line reductions since early 2009 vary from $1.5 trillion to $2.0 trillion. That is 2 to 3 times the total size of the stimulus package that is rumored to have saved us from the brink of another great depression.

In a real example with a regional bank, a small business’s credit line was not renewed after many years of never missing a payment. There was approximately $50,000 on the line and the business had roughly $20,000 on deposit with the bank. On the day before payroll was to be paid, the bank confiscated the $20,000 and applied it to the $50,000 balance causing the entire payroll and the monthly expense checks to bounce. Of course the bank harvested nearly $1,000 in non-sufficient fund fees from the business. This action was not only usury, it was planned and callous. It was also completely legal.

The second step is for banks that have retracted a commercial credit line to transfer the balance to a Credit Card in the businesses name with a credit limit of just over the amount that was on the commercial line. This takes a fixed rate loan with a 7% interest rate and converts it to a 20%+ variable rate loan. This triples the banks interest charges while denying access to additional cash for operation of the business. It also will increase the payments that the business must make – further weakening the prospects for prosperity. Just so you know, business credit cards are exempted from the supposed credit card protection reform laws that became effective in on February 22nd.

It is a little known fact that credit scores are reduced based on the ratio of available credit to utilized credit. The transfer of commercial balances to credit cards with no margin to borrow against reduces the credit score of a business which can cause a cascade of increases in interest rates and reduction of limits from other financing sources. CNN Business recently reported that, credit cards now represent the largest source of small business financing – 59 percent of small businesses now use credit cards. That number is up from 49 percent reported just five months ago. CNN went on to report that the loss or severe reduction of credit lines was probably the number one problem hurting small businesses in need of capital, and that lenders were doing it even when borrowers had never missed a payment.

Recognize that these first two assaults on small businesses have come without provocation, cut off the businesses supply lines, increased the burden of operation, and done so in a way that triples the banks revenue stream from the same account. Small businesses do not have a reasonable chance of predicting when an army of MBA’s in a banks war room will choose to launch a sneak attack. Small business owners are too busy creating jobs and wealth to spend time playing chess with an institution that is miles from home with predatory policies and a set of new rules to enforce.

Of course the final coup de grace (the blow that kills) is the banks insistence on the Personal Guarantee of the business owner. This is the move that enables the bank to confiscate personal property should the business fail. In some instances this series of classic military maneuvers has left business owners who never missed a payment, yet are unable to perform to the “NEW RULES”, destitute and homeless. Of course the entire workforce is laid off when this happens. The sick truth though is that many businesses that become the subject of such attacks were thriving under the “OLD RULES”. Perfectly good businesses with a history of playing by the rules are routinely forced into a death spiral through no action of their own.

When your deliberate actions cause another person to die, it is called first degree murder. When a financial institution’s deliberate actions cause a business to cease to exist it is called a change of policy. To the business owners and their employees it is more like willful homicide.

Defense Strategies:

When banking institutions with the strength of free government financing reduce relationship banking to a war game it is time for small businesses to learn to play the game and to make counter moves to protect themselves and to improve their prospects for a positive outcome. Game theory in its simplest form is usually represented by a matrix which shows the players, strategies, and payoffs. The first rule of any game is that when the opponent changes the rules in the middle of the game, or cheats, then one has but three choices. One may continue to play and be guaranteed of losing, cheat like the opponent did equalizing the odds, or simply quit. Game theory is a good metaphor for how a small business should react when a bank changes the rules in the middle of the game. Let’s be very open with the fact that this is precisely what has happened to small business in America over the last few years. In fairness to the banking industry many of their actions were responses to the “New Rules” that were thrust upon them by government regulators.

What is the best first move to make when a credit line in slashed or an interest rate is jacked? A proportional aggressive response is the most preferred move. This could take the form of a letter to the bank explaining that the action is not acceptable accompanied by suspending payments until an acceptable resolution is met. It could also include a cash flow statement with a clear explanation as to how the banks actions were unprovoked and put the company’s survival in jeopardy. A business owner can expect many phone calls from collection call centers when payments are suspended. One should be prepared for condescending language and a carefully crafted script from a boiler room in Bangalore, to attack ones integrity in an attempt to collect a debt that was created by changing the rules in the middle of the game. Make no mistake though, the banks do not want the businesses that they have loaned money to defaulting, and when faced with that prospect they frequently change their behavior.

I am getting reports from the field that after several of months with no payments coupled with the prospect of regulations that require a loan to be placed in the non-performing category that banks and credit card issuers are much more receptive to going back to the old rules. After all, they do not have the inclination or the desire to run any business other than a bank.

Do you remember what your parents taught you about bullies? The only way to counter a bully is to hit the bully right back. Like Pavlov’s dog, banks that jack rates and cut limits while continuing to be paid to do so, will continue to jack rates, cut limits, and attempt to access personal property until they are met with a resounding NO. In times like these, small businesses need to draw a line in the sand, and position themselves at strategic points that leverage their strengths.
Big banks started a war on small business in America. As mentioned previously there are only three choices when the rules are changed in the middle of the game. Lose, quit, or break some rules too. If a couple of million small businesses realize this and act according, I suspect that the Old Rules will be re-established. Banks need small business just as much as small business needs banks. The American dream cannot be attained without both. When the banking industry along with our government get their heads out of the sand and realize this, the unemployment rate and the default rates may just reverse the death spiral that started when the New Rules were enacted.

DEEM Wiesel

DEEM Wiesel (to the tune of Dream Weaver)
J. Wallace

I’ve just closed my eyes again

Climbed aboard the DEEM Wiesel’s train
Nancy take away my worries of today
And leave tomorrow behind

(chorus)
Ooh DEEM Wiesel
I believe you are looking for a fight
Ooh DEEM Wiesel
I believe we can make you do what’s right

Make me high with your lies
Maybe on your free plane
Trick the people with fantasy
Give tomorrow, today’s pain

(chorus again)

Though the vote may be coming soon
There still may be some time
Fly me away, don’t make act like a loon
And meet me on the other side

Bi-Polar Governance

Bi-Polar Governance
Joe J. Wallace

Tonight, the City Council of Evansville will vote on whether or not to adopt an amendment to the existing smoking ordinance that has been proposed by Dr. H. Dan Adams. There are eight democrats and a single republican that make up the City Council. In spite of that there seems to be areas of disagreement nearly equally with respect to this resolution. I predict either a 5-4 or a 6-3 vote and at this point I don’t really have a feel for which way it will go.
When in doubt, it is usually my first instinct to grab a book or seek out the counsel of someone who can help to erase my doubt. In nearly every situation, the first step is to remove emotion from the thought process and to construct a logic table in hopes to reach a rational common sense solution that can be implemented. In so much as that this amendment is a public health issue and that the nation is pondering the nationalization of health care, I set out to construct a logic table to address the doubts that our Council members may have. Here is my logic table.

Health Care Bill Support

Smoking Ban Support    YES                                                         NO

YES                         Logical and Democratic                   Logical Republican

NO                         Inconsistent and Illogical                Logical and Libertarian

It is widely known that the Democratic position with respect to the Health Care Bill is that it should be passed. Assuming the financial responsibility for both redistribution and delivery of healthcare would lead to the simple conclusion that laws that improve public health should also be supported. A yes/yes position pair is one where the Democratic ideology is supported by the votes and is logical.

The Republicans while not favoring the present Health Care bill do favor enacting laws that improve the public health. A no/yes position pair is one where the Republican ideology is supported by the votes and is logical.

Libertarian ideology is supported by a policy that essentially says that we are not responsible for public health and we will not impose anti-smoking laws on businesses. Thus a no/no position is also consistent with the ideology of Libertarians.

That leads to the conundrum presented by a supporter of the Health Care bill that does not support the amendment to the smoking ordinance. This combination defies all logic and can only occur when one is voting along party lines nationally and along conflicted emotional lines locally. This position basically says that “we support your right to create a public health hazard AND we commit to tax others to pay for the damage that you do”. This is not a logical combination. How can one support the Health Care bill and not support the amendment to the smoking ban? I can rationalize either position on each but not both inside the same mind. It seems a bit like what one might call Bi-Polar Governance to me.

Anyway, the logical conclusion for both Democrats and Republicans on the amendment to the smoking order leads to the same conclusion. All nine members of our City Council are in one of the major parties and all seem logical to me. I therefore anticipate that tonight after the pondering is over and the votes are casted, the Dr. Adams’ amendment will pass by a 9 – 0 vote. It is the only logical conclusion, unless of course we have some Libertarians in our midst. That would not be a terrible thing either, but it would be nice to know.

Evansville: Pass a Smoking Ban Now or Have One Forced on Us Soon

Joe J. Wallace
March 10, 2010

In a very few years Evansville will be non-smoking. The only question is whether our City Council will embrace the initiative and leadership of Dr. H. Dan Adams, or postpone the inevitable one more time. Will we be dragged kicking and screaming into the 21st century by a higher authority? Healthcare cost control demands this and it will happen. Either way the outcome is the same. The only variable is time. Are we leaders or are we followers? It is time for us to choose, and it is probably our last opportunity for self determination and the dignity that comes from doing what is right before the right thing is imposed upon us by external authority.

I have had the privilege of knowing and working with nearly every member of the City Council. These people are my neighbors and friends. They will remain my friends without regard to the way they vote. They are a hard working body of people who truly want what is best for Evansville. As individuals, they all know that smoking and second hand smoke increase the probability of health problems. They all know that so far as public health is concerned, voting “aye” on this resolution is the right thing to do.

There are a few constituents of the Council who assert that they have a right to smoke or allow smoking in businesses that are open to the public. I have poured over the Bill of Rights many times and have not been able to find any reference to rights with regard to exposing the public to tobacco or other toxic substances. What it all comes down to is choice. Does public health supersede the individual freedom of businesses who serve the public? As much as the City Council represents their constituents, they are also the stewards of the City of Evansville and have a DUTY to do what is in the best interest of the City.

Adopting this resolution will save us all money. According to a 2009 study titled, “Paying the Price: How Health Insurance Premiums Are Eating up Middle-Class Incomes”, by the Commonwealth Fund, Indiana has the 4th most expensive health insurance in the nation. Only Minnesota, Massachusetts, and New Hampshire exceed our rates. When I moved to Indiana from California, only one of my expenses increased dramatically. My family’s health insurance premium doubled. I am certain that part of that increase was due to the fact that three times as many Hoosiers smoked than did Californians.

The average health insurance premium here is roughly 35% of the average wage. Since most people receive health insurance as a benefit of employment, this becomes a cost to businesses. Adoption of this resolution makes us a more attractive place to do business. Places with smoking bans have more productive workers, less sick time, and lower costs of doing business. When local leaders are trying to attract a much needed business to bring jobs to Evansville, they are handicapped by the fact that we are one of the only cities in America over 100,000 that does not have a smoking ban. Recognizing this, the IEDC, Indiana’s economic development agency, in its 2006 plan for acceleration of economic growth, adopted a policy that encourages cities and towns to pass local smoke free workplace laws as a means of promoting job growth.
We say we are a “great place to raise kids” yet we do not restrict public smoking. It is difficult to have that cake and eat it too.

Finally there is a growing potential for lawsuits for “failure to act” by acquiescing to a de-facto policy of deliberate indifference. Failure to act when having both power and authority to adopt resolutions that fulfill the common law duty to provide for a safe workplace, are increasingly being used as grounds for filing lawsuits against municipalities. Looking the other way when it comes to public smoking is no longer an option for cities and towns. Somewhere in Evansville, someone has a job in a place where smoking is permitted. When that person contacts a smoke related health problem, both their employer and the City will be subject to a lawsuit. Passing this resolution will protect the City from such a lawsuit.

This resolution will improve public health, enhance our attractiveness as a place to do business, help our leaders attract jobs, save each and every one of us money, protect the City of Evansville from legal liability, and spare us the embarrassment of having a similar policy forced onto us in the near future. As Mr. Spock paraphrased Caiaphas, “the needs of the many outweigh the wants and desires of the few”. As stewards of the City of Evansville, it is the Council’s DUTY to serve the needs of the many as opposed to the desires of a few business owners. I encourage the members of our City Council to do that DUTY and adopt this resolution.

If Louisville, Lexington, the State of North Carolina, and even France can muster the courage to lift a piece of their own palls and ban smoking, why can’t Evansville. It is our turn to do the right thing. “Live long and prosper”, my friends.

Being There When It Counts with Rick Itzkowich

This is from my fellow National Networker Author Rick Itzkowich. It is so good that I wanted to post it.

Business writer and author of Change or Die, Alan Deutchman, writes in his article, Three Keys to Change (you can read it here), that even in “do or die” situations, fewer than 10% of the people facing them will make the necessary changes to survive.

I’ve been in the personal growth industry for over 25 years. I’ve worked with thousands of individuals during my career. And by far, change is one of the most difficult things for people to embrace. Big or small, it doesn’t matter. People in general object to change.

Because our world is rapidly changing, people’s opposition to change creates problems. The speed of change has increased exponentially, and there seems to be no signs of slowing down in sight. So our capacity to change – and to do so quickly — is of paramount importance in today’s business environment.

I’m convinced that people and organizations must reinvent themselves in order to thrive, let alone survive. What this means is that EVERYTHING should be up for discussion. There are no “sacred cows.” The world is a different place with different realities — ones that didn’t even exist a few years ago. Whining, litigating, fighting or ignoring these realities won’t help. We need to embrace this paradigm as opposed to resisting it.

Fact: the Internet has changed the way we do business. Fact: technology is making entire industries obsolete in a matter of months. Fact: how we shop, date, communicate, interact with our kids, etc. is incredibly different today than 10 years ago.

“When the facts change, I change my mind. What do you do, sir?”
John Maynard Keynes, British Economist

The past two years have been extremely challenging for our company. We knew we were vulnerable because many of our clients were in the finance, mortgage and real estate industries. We knew we needed to change some of our practices and diversify. And yet we didn’t. And so, we paid the price.

Although I must say, as a result of this, we have finally started doing things differently — more than we ever have before. We are pursuing opportunities we have both ignored and ridiculed in the past. These circumstances of change are both very exciting and very unsettling at the same time. People who have known us over our 18 years in business are wondering if we lost our minds. And to a certain degree we have. Fact: times have changed, and we have changed our minds.

How about you? Are you embracing, fighting or ignoring change?

New Garbage Banking Fee

Joe J. Wallace, Managing Director
Hadannah Business Solutions

Just when I thought that garbage fees had gotten to the point that there could be nothing else invented, the banking industry has given us THE ADVERSE MARKET FEE. Has anyone ever heard of an adverse market fee? The Wall Street Journal reports today in a front page story that refinancing now carries an ADVERSE MARKET FEE of $1,000 on all refinancing of residential property. It was one thing when there were a total of $500 for ten different garbage fees for everything from signing of documents to filing it in a cabinet, but an ADVERSE MARKET FEE is just saying drop dead to customers.

Banks that don’t lend money go out of business yet they continue to invent offensive ways to fee their customer base to death. Listen to Nancy Reagan’s advice in the war on drugs, JUST SAY NO. Do not borrow in a market that is so adverse that they charge customers for an adverse market that the banks made adverse. Ignore this fee. Just don’t accept it. Do not refinance anything that charges such a usury and meaningless fee to fatten the front end of the transaction before they sell the loan to the bankrupt Fannie and Freddie.

Banks are failing because they have forgotten how to be banks. The first rule of doing business in a crisis it to strengthen your core. For banks that is loaning money. They second rule is to embrace your existing customer base. Banks are doing neither.

Economic Homicide: Part 2

Part 2: The Scorched Earth Policy

Joe J. Wallace, Managing Director
Hadannah Business Solutions

A scorched earth policy is a military strategy which involves destroying anything that might be useful to the enemy while advancing through or withdrawing from an area. At one time this was simply the practice of burning crops to deny the enemy food sources, in modern times the term is not limited to food. It includes the destruction of infrastructure such as shelter, transportation, communications, and of course access to financing. Here are some recent headlines in business publications:

The SBA loan volume plunged 36% in 2009 as banks slammed their vaults shut to small businesses

Top banks cut small business lending by $8 billion

Want a loan for your business? Hit the plastic!

One of the most effective counter terrorism measures that the US has quietly taken has been to interrupt or eliminate funding sources to terrorist organizations such as Al Qaeda. An enemy that cannot eat cannot fight.  Similarly, a business that cannot access cash, cannot survive.

When banks retreated into the safe, secure, and regulated new world of easy 3% margins on money that the bailout and expanded government borrowing provided, what followed for small business was nothing short of a scorched earth policy.  The banking industry has instituted policies that essentially treat small businesses as enemy combatants. While the balance sheets of the banks were being propped up by taxes that came largely from small business, the small businesses and their owners were shut off from credit lines of working capital that ultimately has resulted in layoffs and shut-downs. Soon, a day of reckoning that the taxes collected from these small businesses won’t just decrease by 30% as our housing values have, they will disappear altogether.  The vicious cycle is just beginning to unfold.

American small businesses have finally realized that they are being manipulated and attacked by the banking industry. Our government officials make many eloquent speeches on the value of small businesses. They seem to recognize the value and say the right words. When it comes to passing tangible legislation, they sit complacently on the sideline.  Like Caesar at the Roman Coliseum, our government chooses winners and losers by a capricious thumbs-up or thumbs down signal, but real leadership in supporting entrepreneurship has not been forthcoming.  America’s small businesses are angry and they have good reason to be.

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