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I often focus my blog entries on American business topics. This is easy to do for several reasons, the first being that I am American and live in America where the majority of information I get deals directly with United States companies. My experience has also been primarily in dealing with American companies. However, it’s also important to note that the American economy has a major impact on economies the world over, many of whom are invested in us or rely on our product ion in some fashion. The crash precipitated by people on Wall Street had just as much impact on traders in the City or on the Nikkei.

What I found fascinating to read, however, was this article over at bizcovering.com about how UK entrepreneurship is in trouble because of this. Now, American entrepreneurship is also on the rocks, but consider for a second that before the crisis it was already more difficult to get money in the UK. I don’t mean to say this in an offensive manner, but UK lenders tend to be more conservative than American ones to begin with, not the least reason because of a culture that has promoted thrift as a major social virtue from time immemorial. Finding startup capital was already a struggle, let alone the capital to actually maintain a business through the first couple of years.

And it’s that first few years that seems to be the clincher. Several small businesses have been able to get startup capital, many before last October, but are now finding that they have their lines of credit cut short, have their debts called in early, or simply won’t be extended new loans to continue their business despite an initial plan to do exactly that when the first loans were approved. The liquidity exists to support these business, but the will to spend it has been cut abruptly short, exacerbating a pre-established tendency to not loan money.

I hope that with the bouncing of the US economy that UK bankers will start to lend again. In a world economy it’s important that new ideas come from everywhere. Part of that means that within nations everybody encourages smart investments and don’t get gun shy when it comes to lending money. The only way out is through.

There’s an old belief that the safest investment in the world is and always will be land. Everybody needs land for one thing or another, be it to build new homes, commerce centers, or to grow food. However, I think that too many people forget that in tough economic times, human necessities remain. Which is why people should be considering putting money not just into the land, but into the food that might be grown on it.

I’ve heard a lot of comparisons lately between the US economy and post World War I Germany. The fear of hyperinflation seems to be spreading. And I’ll admit that if we continue to borrow indiscriminately and if we somehow try to print more money, this could be a real concern. However, I also believe that those in charge of our economic policy can and have learned from the past (hence the return to provable Keynesian models rather than the kind of mindless pure free market nonsense that even Milton Freedman stepped back from before his death), and that the lessons for investors from this sort of comparison can be remarkably cogent.

Even in Weimar Germany, not everyone lost money. Some gained, by definition. The runaway inflation made it hard for everyone, but farmers actually started to do quite well. This is in large part because their commerce started from dirt and labor, both of which were abundant and cheap. From that point, their product remained the same regardless of what the mark was valued at, so they were able to sell without having to deal with the inevitable reduction in value that trading along multiple avenues entailed. If every person in line has to raise prices in order to make a profit, but the value of what they’re trading for is falling continually, then literally every lost second means higher prices to the next guy. For the farmer, they are never the next guy.

With the dollar on shaky ground right now, there’s something to be said for buying up food contracts. The odds are in favor of the dollar continuing to drop for a little while, so buying now will provide ample opportunity to make a profit on the venture. The risk is a currency collapse, but the direction of the economy for the past few months doesn’t seem to indicate to me that that’s a danger.  However, it’s worth considering an investment in grains, vegetables, and domestically produced foodstuffs.

Recently KPMG LLP, a tax, audit, and advisory firm did a survey of executives in a series of different industries. It’s fascinating to read some of the results as they seem to have a general upward trend. Now, I know there is still a pervading feeling of dread in regards to the economy, but there are times when one must admit that something is going well. From personal experience, I can say that when executives in the upper levels of the corporate infrastructure start predicting improvement, especially when it benefits them more for those encouraging faith in failure to reach an audience, then you can tell that there’s something behind it.

Let’s begin with the financial sector, which was undoubtedly hit hardest by the economic meltdown. As they were the major architects of it, I feel that this is somewhat karmic, but I digress. However, executives in the financial industry are actually predicting that revenue and profitability will improve in 2010. They recognize the importance of job growth, but I happen to agree that that’s not a sector in which we’ll see significant job growth any time soon. They’ll simply have to hope that jobs in other industries will help restore consumer confidence so people will come to them for loans. Feel free to take a look at it.

On the other hand, the technology industry expects to lead the economic recovery. As somebody who considers himself a nerd (I owned a slide rule at one point and know how to use it), I’m actually delighted by their confidence. I feel that if we’re going to stay competitive, technology is where we need to concentrate. The potential for business solutions makes it an invaluable sector of the economy, streamlining and enhancing all other sectors. That they expect job growth within the industry as well is simply a bonus.

KPMG did a wide range of surveys that seemed to point inexorably in one direction: economic recovery. This despite the best efforts of politicians, the economy will continue to grow due to smart policies and the confidence of the public and business leaders.

One of the major problems that has suddenly come to the attention of the general public is that of valuation. I’m not saying that valuation is a bad thing in any respect, but rather that the values of properties and business have been thrust into the public spotlight and now more people are having to consider assets in terms that business people have been thinking in for quite some time.

The real issue, however, is that they’re picking up the same bad habits that so many business people already have, specifically that things like valuation are only to be done when absolutely necessary, usually when selling the company or asking for a loan. However, why on Earth wouldn’t you want to know the value of your company at other times?

Just to take one example, what if you, as the business owner, want to start preparing for a transfer of power, either to family members or some specific person/group? How can you do that accurately without knowing the value of the company? If something should happen to you, not knowing the current value of your company will increase the amount that it will cost both in terms of taxes and the legal fees involved in sorting out exactly who gets what and in what proportion.

The fact of the matter is, it’s important to occasionally value your company even if you aren’t asking for money or trying to sell it. The only way that you can understand how your business is growing is to have a general idea of where it is now as compared to before, and estimation might be enough for some circumstances, but having a solid foundation with which to work gives you the chance to plan a cohesive strategy for the future of your company. It also makes it easier for your company to live on past you.

They’ve been around for several years. Back in 2004 there was a minor craze for ebooks, before that in 2001, and even as far back as 1996 the concept has been floated as a new and exciting enterprise for the digital age. Each time the hype died back down shortly after as obstacles like an ironic public unwillingness to read books on their computers and lack of intuitive measures in e-readers made it infeasible as a format and insoluble as a business. Combine that with the lack of interest in publishing companies to produce high quality ebooks of popular novels, and you have a lot of hype that amounts to very little in terms of an actual industry.

Recently, an ebook distributor called LibreDigital got $15 million in venture capital for second round financing from several different firms. Considering the incredible difficulty in getting funding for business in the floundering world economy, especially from venture capitalists, this speaks volumes for the viability of this company. One must wonder exactly what it is about it that attracted a class of businessmen and women known for very careful investment to this particular company.

My guess would be that many of the hurdles that prevented the ebook fad from taking hold previously are being overcome by expanding technology. 2009 has seen the release of nine new ebook readers (compared to seven total from 2006-2008), seven of which were released between June and now. These portable devices allow for the storage of gigs of books and easy access to all of them, not to mention ease of reading. The advent of devices such as this which are also small and light enough to carry on an airplane (though not for long the way airlines are limiting luggage), mean that ebooks may actually become a profitable enterprise this time around.

There is an old saying in law enforcement: “Follow the money.” This also applies to business. Business trends are often set by what is invested in them, filtering up from the street only when money is infused into marketing and sales. In this case, the money is going into R&D and I suspect soon actual advertising. Either way, watch the ebook business over the rest of the year, especially during the holiday season, for a huge expansion.

Anyone who reads this blog knows that I respect the advance of technology in business. I respect efficiency and I respect cleverness. However, I value responsibility above all of these, and I feel that business has been moving further and further from that.

The newest perpetrator in irresponsible behavior is the New York Stock Exchange and they are doing so with their new facility in New Jersey dedicated to fast trading. For those who don’t know what that is, it’s a new way of using computers to perform potentially thousands of trades every second. However, by its very nature this will do nothing but further destabilize an already very unstable market with tiny trades that make trending absolutely impossible.

Fast trading lends itself well to older trading strategies that will become even easier now, specifically sculpting, which can be incredibly dangerous in an unstable market.

Sculpting is where traders buy and sell incredibly quickly, usually for a profit of only a few cents per share, gaining a quick buck while keeping shares of companies in a perpetual state of flux. This can make it difficult or impossible for legitimate traders to actually purchase or sell shares of a company, preventing the price from settling from one second to the next and unnaturally altering the value of the stock.

The new NYSE hub will contribute to the instability that this kind of trading brings to the market. It has the potential to take an already shaky market still trying to get back on its feet after the crisis less than a year ago and further shudder it to pieces the same way that program trading contributed to the ’87 crash by mindlessly selling at the wrong times, exacerbating the problem. In this case, the problem is quick-money traders looking to manipulate the market in tiny ways that add up very quickly, and a fast trading hub in New Jersey will do nothing but make it possible for this irresponsible behavior to continue.

During economic crises, it’s tempting to grasp at any line one is thrown. This is especially true of business owners and prospective business owners who might not find banks and traditional finance options very tractable in regards to their specific business. Please see my blog entry on banks, Big Banks Ignore Bailout Promises for more of my opinions on that. However, as a result they tend to fall for the same things any other consumer does on a regular basis: clever marketing and a sales pitch. I refer here to so-called “angel investors.”

I do consider myself a bit of a moderate, perhaps even a peacekeeper, so I’ll hedge myself by saying that not all angel investors are this way. However, there are enough that take advantage of the visceral reaction that people have to the word “angel” to make it seem as if they are somehow doing a company a favor by investing in them, meanwhile requiring that monetary goals be met that tend to lead to negative amortization. It’s really no different than the sub-prime lending practices that seem to have been at the root of the global economic crisis to begin with, only instead of making home foreclosure an inevitability, this makes business closure, sale, or takeover a likelihood.

The trick to avoiding getting involved with one of these criminals is first to not panic. The moment you begin to believe that your business is going under is about the same time that any loan shark (another loaded word that more accurately describes some of these rogues) can come in and offer you terms that  will still leave you ruined in the end. The next step is to carefully consider all aspects of any potential loan, be it from a bank, venture capitalist, or angel investor. Have your lawyer and financial advisor look over the paperwork before you sign. Most importantly, do some research on your angel, make sure they are who they say they are and talk to some of the other people they’ve invested with. If most of the businesses they’ve invested in are no longer around, there’s a good chance they pulled their support when it was crucial or took over the company and sold it off as part of the deal.

Not everyone who is willing to loan you capital is your friend. It’s easy to believe that the way things are now, but it’s desperation that so many people like this feed on. Fortunately, you’re too smart to fall for that, and will be sure that the angel who comes to the aid of your company is not really a demon looking for a 20x-30x return on their investment in five years or control of the company.

LLCs (Limited Liability Companies) are a relatively new form of business structure created by state statutes, but one that is gaining quick popularity. There are a lot of real advantages to registering your business as an LLC, mostly evident in flexibility. There are drawbacks, too, but for many eligible companies, this is a sound way to go.

Before we continue, I want to point out that the “C” in LLC is for “company,” not “corporation.” In fact, LLCs are specifically unincorporated associations, which give them a greater ability to alter their structure as needed for the good of their business.

The primary advantages to having an LLC are in terms of taxation. You can register the company with the IRS as a sole proprietor, partnership, S corporation, or C corporation, (Check-the-box taxation) always assuming that it would otherwise fit the criteria for such. That being the case, so long as it’s not registered as a C corporation, you have the availability of pass-through taxation, which basically means you don’t have to worry about being double taxed on the same income.  Owners are called “members” and are taxed at the member level with this type of structure.

Even more importantly, however, is that members are protected from liability for acts and debts of the LLC. This means that if another member makes poor financial decisions that cause the LLC issues, you won’t necessarily be held responsible. In most states LLCs are considered separate legal entities from the individual members, leaving more direct responsibilities with individual partners in the company and alleviating a lot of the “rise together, fall together” mentality that has been so prevalent in the business world since the conception of business partners.

There are, of course, some disadvantages. For one, the structure is still reasonably new, so investors are less likely to back a system that they are unfamiliar with. Even worse, some will require that members agree to be personally liable for debt accumulated by the company, which of course misses part of the point of an LLC. Some people are unfamiliar with a company that doesn’t have to have officers like a corporation, and taxation jurisdictions outside of the US may tax the LLC as a corporation regardless if you’re operating there.

That being said, most of the disadvantages associated with LLCs are based in their unfamiliarity. That will be cleared up in time, but the potential advantages far outweigh those, as well as the advantages of being at the front of this.

So consider that your business might benefit from being an LLC. Not all companies will work best with this structure, however don’t be afraid of it because of unfamiliarity. It might be what you need to run the best, most efficient company that you can.

Affiliate programs are not a new idea. They’ve gained a form of rebirth lately due to the ease with which the internet lends itself to their use, but in the end the idea of rewarding somebody for bringing business to you is as old as business itself. I can easily imagine merchants in ancient Egypt or Greece paying others to support their businesses. It’s neither revolutionary nor particularly risky in most cases as all you have to do is run your business and hope people follow it to your Seller.

While there is money to be made in affiliate marketing, keep in mind that there are pitfalls that you have to watch out for as well. It’s easy to get involved in the excitement of a new business, invest yourself and your time into it, and see small or no returns on your efforts, so pay careful attention to what you’re looking at and how you approach it.

First of all, any article, blog entry, or casual mention of “affiliate marketing” will probably get several comments inviting the author to join their program, that many of them are scams or sound too good to be true, but this one is different and worth trying for a small investment. Let me say now, I’m not interested in joining your affiliate, so please keep any comments to a discussion of the article.

That being said, they are right that a lot of affiliate programs sound too good to be true. They promise quick returns for minimal effort, simply putting a banner ad on your website or posting it on a social networking place. These will often be accompanied by testimonials that prove that with hardly any work you can make remarkable amounts of money. Even if this is true of some people, the odds are heavily against you, and the more a company tries to assure you of the safety of their investment, the less trustworthy they likely are.

It’s also worth noting that affiliate programs are a form of work. You are working for another company to advertise their product, service, website, etc. If you get a job in an office, do you pay your employer for the privilege of working there? Then why should you pay for the honor of being an affiliate to another company? If they’re asking you for an investment of your capital in order to work for them, consider that perhaps they’re not making enough on the click-throughs to otherwise make a profit, so why would you?

The truth is no matter what you become an affiliate for, it’s going to involve hard work like any business. It’s a marketing technique like any other, and the company you’re working for will expect you to spread the word about their company by any effective means. It may be traditional methods like email marketing, SEO, or even display marketing. It might be in the form of reviews or clever blog entries. But the point is that there is no easy money to be had, and it will require effort on your part.

Unlike other men of my ilk, businessmen from an earlier time, I’m not usually afraid of regulation. The issue, I suppose, is that I’ve worked with businessmen before, and am fully aware of the tricks, loopholes, and workarounds that people who have been entrenched in the corporate world for long enough will employ to raise profits, often at the expense of employees, consumers, and even share holders. My experience has taught me to be weary of human nature and those who repeat over and over that they should be trusted. I heard the analogy once that compared a perfectly unregulated market to perfectly unregulated streets. We’re all good drivers, right? So why do we need traffic lights and speed limits?

However, even I have to admit that there are times when things go much too far. I’m referring here to China.

Now, while I’m grateful to the giant communist nation for providing the United States with loan after loan for years now, I find it hard to assimilate the concept of financial growth with a heavily state-regulated market. I think one of the most obvious examples of this is the recent one-year hiatus on IPOs imposed by China that ended earlier this month.

I think it’s incredibly wise to allow more IPOs as it’s a valuable tool to improve capital allocation and promote individual business within a country in which the majority of its citizenry lives below the poverty line. However, the overly cautious way by which the state approves IPOs continues to choke their potential to grow and hurts the ability of business owners to develop new products and improve services throughout the country.

Part of the problem is that most IPOs are granted to State-Operated Enterprises (SOEs), who are also often given more capital from the Chinese government in order to keep them both afloat and ahead of the game. Couple that with a tendency of the Chinese government to take steps to ensure an unerringly stable market based on manipulation of capital, and you have general low performance for purely private enterprises and a market with strength based on the ability of the government to keep it from fluctuating.

While it is a good thing that IPOs are once again being allowed in China, they are so heavily regulated that even after a year with none, we are unlikely to see a lot of IPOs in 2009, and the ones we do see are likely to be owned at least in part by the Chinese government and given a manufactured leg up which makes it impossible to gauge their real worth. When people ask me about regulation, “But where does it end?” my answer can now be to point to China and say, “Before it starts to look like that.”