Research Korner: Small Business Management

HUBZone

Historically Underutilized Business Zone   Executive Summary             The U.S. Small Business Administration has modified a program that gives small businesses in "economically distressed" areas--including Des Moines' entire central business district--preference for federal contracts. Changes to the Historically Underutilized Business Zone, or HUBZone, program include extending eligibility to foreign-owned small businesses, as well as agricultural cooperatives and Indian tribes.             Created in 1997, the program has more than 11,000 participating small businesses registered across the country. In Iowa, 48 companies are currently registered as qualified HUBZone companies, a number that SBA officials in Des Moines say should increase as more companies become aware of the program.             Previously, small businesses within a HUBZone had to be at least 51 percent U.S.-owned to qualify. With the new legislation, announced Jan. 27, small businesses that are owned by non-citizens can now qualify. Indian tribes and agricultural cooperatives will also be able to apply. Those changes will "create more jobs and economic growth in economically depressed areas for small businesses, and stimulate growth in the nation's economy," SBA Administrator said in a news release. Other changes loosen HUBZone qualification limits for rural areas, and grandfathers in businesses that would otherwise have been dropped because they're located in areas no longer considered economically distressed (2005).             The U.S. Small Business Administration's HUBZone program has beefed up its website (), allowing those who qualify to apply on line and track the status of their applications. The site also has easier-to-follow pop-up menus with an online guide.             For this paper, a plan will be made utilizing the HUBZone Des Moines in creating new businesses as well as jobs for the residents of the area. The goal, SWOT analysis, and other aspects of the project will be discussed in the contents of this paper.   Introduction             A growing interest in small business personnel management is shared by personnel specialists and members of the small business community, as demonstrated by a number of recent articles in professional publications, some of which--like this journal--have devoted entire issues to the topic. In part, this interest may stem from employee concern for "quality of work life" and increasing legal constraints and directives from various government agencies. However, a more significant impetus for this surge of interest may be a concern for the part that personnel practices may play in small business success or failure (1984). Startling statistics on small business failures have appeared regularly in the popular press. Surveys investigating the reasons for these failures have often placed personnel-related problems at or near the top of the list. A recent survey of small businesses in rural Texas, for example, found that personnel problems were by far the most frequently cited (44 percent of respondents). A 1970 survey conducted by Dun and Bradstreet similarly indicated that most of the business problems frequently cited by small business managers were personnel-related; furterhmore, 64 percent of these practitioners named personnel as the most serious business problem, when presented with an unranked list of eleven important business problems. Finally, a recent Roper Organization poll revealed that the most difficult problem for small busineses was "finding competent workers, then motivating them to perform. Similar to the federal Empowerment Zone program, the Small Business Administration has created HUBZones, which encircle some of the most economically distressed areas in Norfolk and Portsmouth. The zones are designed to give small businesses inside them a better chance to get government contracts from the Navy, the Department of Transportation, NASA and other agencies ( 1999).             For example, HUBZone businesses will receive a bidding preference. A HUBZone offer will be considered lower than the offer of a nonzone, midsize or large business, providing that the HUBZone business' offer is not more than 10 percent higher (1999). Who qualifies are those companies which must be located in an area designated as a ``historically underutilized business zone'' and be owned and controlled by one or more U.S. citizens. In addition, at least 35 percent of its employees must reside in a HUBZone. HUBZone company can bid as much as 10 percent above the lowest bidder for a federal contract and still get the contract. HUBZones are located in nearly 8,000 areas across the country.          Critics and some small-business owners are yelling foul over a proposed change by the Small Business Administration, which they say would hurt minority-owned businesses and virtually render obsolete a program that awards federal contracts to minority businesses.             Critics contend that could mean fewer contracts for minority business owners. Although minority-owned firms can qualify for other kinds of programs that provide business assistance, the program is the primary one that allows businesses to receive contracts earmarked specifically for minority-owned firms.             Critics of the regulation change contend the program, created in 1968, has been steadily eroded. In 1998, a white business owner's lawsuit alleging "reverse discrimination" spurred the program to relax its guidelines, allowing white business owners to qualify for the program if they can prove they face social and economic obstacles.             The SBA currently dictates that 2.5 percent of federal contract dollars should go to HUBZone companies, but there are no such goals for firms. Now that companies from both programs are eligible to compete for the same dollars, critics contend it's more likely the contracts will be awarded to HUBZone businesses.   Goal             The challenges facing small businesses in DesMoines are well known, as, unfortunately, are their failure rates. But a vital federal program for the last couple of years has given these businesses in distressed areas a much better chance to succeed through federal contracting preferences. This program, however, called the Historically Underutilized Business Zone, or HUBZone, is only useful if business owners know it's there and how to use it. The goal of this project is to therefore create a new business in the form of a theme park in the area of Des Moines so as to generate more jobs for people in this underutilized area. Even though trade and financial linkages among countries may propagate and amplify economic disturbances internationally, they can help to dampen economic fluctuations when activity is unsynchronized. Economies in strong cyclical positions tend to stimulate activity in other economies in which demand is weaker, partly through movements in trade balances. This stabilizing role of trade flows is reinforced through divergences in financial conditions and changes in exchange rates. There is, in theory, a natural relationship between exchange rate movements and international divergences in activity, with the currencies of countries operating at relatively high levels of utilization, such as the United States recently, tending to appreciate as a result of favorable interest rate differentials vis-a-vis other currencies and also stronger profit performance vis-avis countries in weaker cyclical positions. In this project, the HUBZones program, which is run by the U.S. Small Business Administration, will give this small business a competitive edge in bidding on federal contracts. But the firm must be willing to hire at least 35 percent of its employees from the zone.   SWOT Analysis             To formulate an effective strategy, senior management must take into account the distinctive competencies of the organizations, and they must scan the environment. They must determine what competitors are doing, or planning to do, and take that into account. They must critically examine other factors that could have either positive or negative effects. This is sometimes referred to as the SWOT approach and in the succeeding paragraphs will be applied to the situation in the planned theme park in Des Moines. The new theme park knows its strengths - a hybrid of thrills and animals, fun and education - and sells them well. In contrast to other theme parks such as Disneyland, Disney is all about fantasy, cartoons, and castles. This new theme park is real. It has real animals, real fish.   Strengths: Ø  There are enough financial resources that are allocated for the operation of the park Ø  The government is prepared to provide support for half of the funding of the theme park’s development cost Ø  Appealing to the all age groups   Weaknesses: Ø  The theme park has to come up with more diverse attractions to lure visitors Ø  High prices may push potential visitors to competitors with affordable prices   Opportunities: Ø  Provide packages to increase visitors Ø  Growing market trend Ø  New competitors continually enter the market   Threats: Ø  The threat of not appealing to target market at all therefore generating a loss as opposed to profit Ø  Entry of new theme parks Ø  Vulnerability of the tourism cycle   Upon close examination of this industry, the researcher has assessed using Porter’s five forces model that firstly the competition in the specific industry is very strong as there are several numbers of rivals that can compete on one location as theme parks are a commodity and typically, there is also low switching cost upon opting for another theme park over another. In addition, these rivals may also introduce new items in their list of attractions or introduce a totally different attraction. It must also be noted that industry rivals can compete on price.             In terms of the threat for potential new entrants, the researcher has assessed that it is rather weak as it is very difficult to establish a chain which will serve as many international locations. Also, the cost of entry is very expensive especially is planning to expand globally. It must also be noted that it is also difficult to beat the brand name value of many theme parks such as Disneyland as it has been established and well-known for decades already.             Next, as for the bargaining power of buyers, the researcher has assessed that in the industry, it is very strong. As noted earlier, it is a relative commodity. Basically there are a lot of other theme parks to choose from because the market structure is competition. Moreover, the consumers or buyers usually have no incentive to be loyal. So what if they choose another theme park? Furthermore, switching cost or opting for another theme park is relatively low.             After that, the researcher has assessed that the bargaining power of suppliers is weak. Their suppliers are providing commodities with a market structure of strong competition as well; hence, there are still many suppliers to choose from. In addition, this competition among suppliers may facilitate driving down prices as well.   GANTT CHART The Gantt chart below will show possibilities as to when the task process for the research will be completed. It is a useful tool for planning and scheduling projects. It assesses how long a project should take, determine the resources needed and lay out the order in which the task need to be carried out. In the Gantt chart presented, it shows that the researcher will have to meet every specific task with the purpose of completing the research study in line with the proposal study involved. Gantt charts are useful when the project under way. It helps in monitoring its progress and immediately sees what should have been achieve at a point in time, and can therefore take remedial actions to bring the project back on course.       RISKS This paper has strongly recognized the importance of understanding strategic marketing planning for the benefits that it gives to the successful planning of marketing activities. There are also risks that during the course of the implementation are to be faced. First, understanding competitors will facilitate the firm’s management to understand their competitive advantage and disadvantages in relation to their competitors. Second, understanding competitors will also generate understanding of the past, present and future strategies of the firm. Third, it offers the firm an informed basis to develop strategies in order to gain or maintain competitive advantage against their competitors in the future. Lastly, understanding competitors will also facilitate the firm in forecasting or predicting the financial returns that they made from future investments.

HUBZone

Historically Underutilized Business Zone Executive Summary The U.S. Small Business Administration has modified a prog...

An Econometric Model on the Contribution of Micro-finance Institutions to Poverty Reduction

Contribution of Micro-finance Institutions to Poverty  Micro-finance Institutions are viewed as a means to end poverty in many developing nations.  Microfinance is the provision of a broad range of financial services such as <ul type="disc" style="margin-bottom: 0in"> 	<li class="MsoNormal" style="line-height: 200%"> 	 	deposits</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	loans</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	payment services</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	money transfers</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	insurance to poor and low-income households and their microenterprises</li> </ul> The three types of sources for micro-finance are: <ul type="disc" style="margin-bottom: 0in"> 	<li class="MsoNormal" style="line-height: 200%"> 	 	formal institutions - i.e. rural banks and cooperatives</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	semiformal institutions - i.e. nongovernment organizations</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	informal sources - i.e. money lenders and shopkeepers</li> </ul> Institutional microfinance includes microfinance services provided by both formal and semiformal institutions. Microfinance institutions are institutions whose major business is the provision of microfinance services. About 90% of the 180 million poor households in the region still lack access to institutional financial services. (ADB) Most formal financial institutions deny the poor financial services because of <ul type="disc" style="margin-bottom: 0in"> 	<li class="MsoNormal" style="line-height: 200%"> 	 	perceived high risks</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	high costs involved in small transactions</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	the poor's inability to provide marketable collateral for loans</li> </ul> ADB, through its Microfinance Development Strategy, aims to ensure permanent access to institutional financial services for the region's poor people and their small businesses.  To achieve this objective, ADB will focus on <ul type="disc" style="margin-bottom: 0in"> 	<li class="MsoNormal" style="line-height: 200%"> 	 	creating a microfinance-friendly policy environment</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	developing financial infrastructure</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	building viable retail institutions</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	supporting pro-poor innovations</li> 	<li class="MsoNormal" style="line-height: 200%"> 	 	supporting social intermediation</li> </ul> Providing the poor with improved facilities to save and to have better access to credit and insurance helps them manage risk, build assets, increase income, and enjoy a better life.  (ADB) The majorities of poor people live in rural areas and have very little opportunity.  Microfinance helps these people who have no collateral.  The economic environments provide business opportunities.  In Nepal for instance, most Nepalese micro entrepreneurs are economically isolated, which means that their market is often local, small and does not offer any demand growth prospects.  Commercial banks and other financial institutions normally do not like to go in that area because of the geographical constraints, underdeveloped infrastructures and other physical constraints. (Sapkota) However, these rural areas have a substantial demand for micro-credit.  If rural people are not brought into the mainstream for economic and social change, there will be no change in rural development.  (Sapkota) Asian Development Bank’s Vision is a region free of poverty.  They know and acknowledge that expanding access to financial services is critical for eliminating poverty and for realizing the Millennium Development Goals.  Recent estimates by the Consultative Group to Assist the Poor (CGAP) indicate that microfinance institutions in Asia have about 41 million loan accounts and 98 million deposit accounts.  (ADB)  The microfinance industry has been evolving over the last 3 decades.  In the early part of the 1980’s, the industry was dominated by nongovernment organizations (NGOs) that created various programs which attempted to address the failure of markets and governments to provide financial services for the poor which relied heavily on external grant funding. (ADB)  ADB’s first microfinance project supported the NGO microfinance institutions in the Philippines.  Some of these programs became flagship operations.  One such operation is the Grameen Bank in Bangladesh.  BRAC’s impressive results generated a lot of interest in microfinance in the broader development community.  (ADB) ADB has supported microfinance for many years. From 1988 to 1999, ADB approved 14 microfinance projects totaling $260.10 million, 13 projects with microfinance components valued at about $106.79 million, and 45 technical assistance projects for about $24.42 million. Recognizing that the industry landscape has changed over the years, ADB began to formulate a microfinance development strategy in 1999 that was approved in May 2000. (ADB) After the strategy was adopted, ADB's assistance shifted from providing support for narrowly defined microcredit projects to building financial systems for the poor. From 2000 to 2004, 10 microfinance loan projects totaling $350.80 million and 16 projects with microfinance components of about $131.02 million were approved. ADB also provided financial assistance to 7 governments to prepare microfinance projects and for 21 advisory technical assistance projects for capacity building at various levels in 12 countries.  (ADB) Another significant change is that microfinance services are no longer considered a niche market activity that should be confined largely to the development community and carried out solely by specialized microfinance institutions. Today, it is believed that if microfinance is to achieve its full potential, it must be fully integrated into a developing country's financial system with access to vast amounts of human, physical, and financial resources and management know-how. (ADB) According to a study by ADB, a paradigm shift toward market-based approaches to poverty reduction is also taking place. In the larger business world, a growing number of established companies including some multinational corporations have achieved impressive results in reaching the poor in innovative ways with their products and services. This reaffirms the feasibility of large-scale commercial microfinance and strengthens private sector interest. (ADB) References: Asian Development Bank.  Microfinance:  Financial Services for the Poor.  12 November, 2009.  Retrieved 22 June, 2011 from http://www.adb.org/microfinance/default.asp Asian Development Bank.  Special Theme: The Changing Face of the Microfinance Industry.  Building Financial Systems for the Poor.  ADB Report 2004.  Retrieved 22 June, 2011 from http://www.adb.org/Documents/Reports/Annual_Report/2004/special-theme.pdf Sapkota, Shanti.  Micro Finance Institutions and It’s Role in Alleviating Rural Poverty in Nepal:  A Socio-economic Analysis.  South Asian Network of Economic Research Institutes (SANEI) Pakistan Institute of Development Economics.  July 2008.  Pp 1-56.  Retrieved 22 June, 2011 from http://www.saneinetwork.net/research/sanei9/Study%2012/Abstract.pdf

An Econometric Model on the Contribution of Micro-finance Institutions to Poverty Reduction

Contribution of Micro-finance Institutions to Poverty Micro-finance Institutions are viewed as a means to end poverty in many develo...

Thesis Chapter 3 on Insurance for Small Business - A Survey of Options

Chapter 3 Methodology   Method of Research to be used                This study will utilize a survey on the insurance company profiles and their offered insurance plans, and a case study of selected companies and their current insurance plans. The insurance plans will be divided into basic insurance plans, including liability insurance, health insurance, business continuation insurance and workers’ insurance policies; and other insurance plans, including  e-commerce protection and terrorism insurance.                The companies will be asked to describe and delineate the scopes of all their insurance plans and packages, specifically those with multiple coverages like Business Owner’s Policy and Umbrella insurance.  This study will use the descriptive approach.  This descriptive type of research will utilize questionnaires in the study. To illustrate the descriptive type of research, the researcher will be guided by Calmorin when he stated: “Descriptive method of research is to gather information about the present existing condition.  The purpose of employing this method is to describe the nature of a situation as it exists at the time of the study and to explore the cause/s of a particular phenomena.”   Sampling techniques                Insurance companies catering to small businesses and with existing products relating to the protection of small businesses will be included in the survey. A list of all legitimate insurance companies in the USA will be made using resources such as the on-line directories, insurance advertisements and government-provided lists of registered insurance providers in the different states. The researcher will contact these insurance companies via mail, fax or telephone prior to the survey to assess their willingness to participate. The researcher will provide the insurance companies who will agree to be a part of the survey with the necessary legal documents that comprise strict guidelines on the usage of the information, confidential or otherwise, disclosed by the companies. The researcher will use a combination of cluster and random sampling.  First, the researcher will cluster the 51 different states in the USA. From each cluster, the researcher will randomly pick a minimum of 10 and a maximum of 50 insurance companies. The companies will be notified by mail or e-mail and will be asked to answer a researcher-made survey questionnaire. Respondents will be qualified insurance personnel predetermined by each company, particularly those that have been handling policies for small businesses for a significant number of years.                A case study will be conducted on several companies. The sample size for the case study depending mainly on their performance in the questionnaire survey and on their company profiles. The researcher’s criteria for the selection of insurance companies to be included in the case study include: significance of available policies and services to the needs of small businesses; accessibility; business track record and financial stability (according to the submitted profile); and extensiveness of insurance coverage. Instruments to be used                The questionnaire survey will center on the different types of insurance offered by the company, their estimated premium prices and their specific coverage details for small businesses. The insurance company will also be asked to submit a detailed company profile that contains the company’s address and contact details and will reflect the company’s track record.                In the questionnaires, attention will be given on the similarities between the insurance coverage offered by different companies, and more importantly, on the policies that stand out as unique to a particular insurance provider.                Validation of the Instrument                For validation purposes, the researcher will initially submit a survey questionnaire and after approval, the survey will be given initially to 10 randomly picked insurance companies from a previously obtained list. After this, the survey questionnaire will be answered, the researcher will ask the respondents for any suggestions or any necessary corrections to ensure further improvement and validity of the instrument.  The researcher will again examine the content of the survey questionnaire to find out the reliability of the instrument.    Administration of the Instrument                The revised instrument will then be administered to the respondents of the study which will be chosen through a combination of cluster and random sampling.  The researcher will exclude the ten respondents who will be initially used for the validation of the instrument.  The researcher will also tally and tabulate all the relevant data in the survey questionnaire.   Data Analysis                The researcher will classify and tabulate the insurance companies that responded to the survey according to the number of years in the industry, the number of basic and other policies offered to small businesses, premium prices, their policies pertaining to the needs of small businesses.   Statistical Treatment of Data                When all the survey questionnaire will have been collected, the researcher will use statistics to analyze all the data. 1. Percentage distribution – to determine the magnitude of the responses to the questionnaire.           n % = -------- x 100  ;              n – number of responses           N                                 N – total number of respondents   2.            Weighted Mean          f1x1 + f2x2  + f3x3 + f4x4  + f5x5 x = ---------------------------------------------  ;                                xt where:   f – weight given to each response                                x – number of responses                                           xt – total number of responses     REFERENCE: Calmorin, Laurentina P. & Calmorin, Melchor (1995). Methods of Research and             Thesis Writing 1st ed. Manila: Rex Bookstore.

Thesis Chapter 3 on Insurance for Small Business - A Survey of Options

Chapter 3 Methodology Method of Research to be used This study will utilize a survey on the insurance company profiles ...

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