Today's Quote:
"In every walk with nature, one receives far more than he seeks."
-- John Muir, naturalist and author
Feature Articles Quick Links
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Ask A Banker
Q: I have heard so many conflicting reports on the number of savings accounts
you can have at any one bank covered by FDIC. I know the maximum amount in
any one account is $250,000 but does that include a trust account with
multiple names and also having multiple accounts.
A: From
Kelley Sanders, Senior Deposit Officer
FDIC insurance coverage is based on the concept of
ownership rights and capacities. Deposits that a person or entity maintains
in different ownership rights and capacities at one bank are separately
insured up to the insurance limit. |
Deposits that a person or entity
maintains in the same ownership rights and capacities are added
together and insured up to the insurance limit. The FDIC's rules and regulations for deposit
insurance coverage describe the categories of ownership rights
and capacities that are eligible for separate insurance coverage.
FDIC refers to the categories of ownership rights and capacities
as "ownership categories." These ownership categories are:
- Single accounts
- Self-directed retirement accounts
- Joint accounts
- Revocable trust accounts
- Irrevocable trust accounts
- Employee benefit plan accounts
- Corporation, partnership and unincorporated association accounts
- Government accounts
Each of the ownership categories has specific requirements that must
be met to receive separate insurance coverage under that category. If an
account fails to meet the applicable requirements, the deposits will be
insured in another ownership category –usually the single accounts
category – and the deposits will be added together with any other funds
that the depositor has in that same ownership category.
As for trusts, the FDIC's insurance regulations distinguish
between two types of revocable trusts – informal trusts and formal
trusts.
Informal trusts, known as "payable on death" accounts, "in
trust for" accounts, or "totten trust" accounts, are
created when the account owner signs an agreement – usually part of the
bank's signature card – stating that the funds are payable to one
or more beneficiaries upon the owner's death. Formal trusts, also known as "living" or "family"
trusts, are written trusts created for estate planning purposes.
Please visit the FDIC web site at www.fdic.gov for more information or
to use the Electronic Deposit Insurance
Estimator (EDIE), an interactive tool allowing you to get a summary of
your FDIC coverage.
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Tulsa Entrepreneurial Spirit Award
May 15th is the deadline to submit your executive summary for the 2009 Tulsa
Entrepreneurial Spirit Award. We know that growth comes by supporting our local
entrepreneurs and the Mayor's Entrepreneurial Spirit Award sponsored by SpiritBank,
gives individuals opportunities to develop their business model, form contacts and
share their creativity and innovation.
As we look to the future, our entrepreneurs continue to pioneer the spirit and
economic drive in our city. So, what's your big idea Tulsa? Now is time to
unleash it!
For more information on the Mayor's Entrepreneurial Spirit Award visit
www.tulsaspiritaward.com.
Oklahoma
Small Business News
Checking in With Grocio – 2008 Tulsa Entrepreneurial Spirit Award Winner
By Gerald Buckly, Grocio.com
When you win something as substantial as the Spirit Award it's
apparent immediately the expectations just went up several notches. Not only
expectations from others but expectations of yourself. So, the past several
months have been all about hitting milestones:
- Earning the OCAST TBFP matching funds award;
- Signing up our 10,000th shopper; and
- Launching our beta site.
We're still small - one guy, an intern and several very talented
contractors.
Everything's not always roses, though. With the successes
there come failures and through those we've been learning
our lessons on how to improve. Lots of grocers see the potential
in what we're doing. Lots of them don't. The job becomes
one of keeping them in the loop and the good we're doing for
grocers and shoppers alike.
I'm still chasing that big round of funding. One of the things
I wish we had a better conduit for here in Tulsa is venture capital.
Whether that's angels or VC... I just wish the Silicon Valley
folks recognized what a terrific place Tulsa is for startups and
put some of their efforts into opening satellite offices here.
Their capital would sure go a lot further here than in expensive
places like Palo Alto or Manhattan. But, I keep
encountering, "Why don't you move out here?" to
which I've asked the same question of them. They... don't like
that so much.
For more information about Grocio, go to www.grocio.com.
What Should You Do In A Recession? Start Your Own Business
By Shelley Cadamy, Francis Tuttle Technology Center, SpiritBank Strategic Partner
Read anything about "surviving this recession" lately? I, like
many of you, am overwhelmed with doom and gloom blogs, articles, and tweets on a
daily basis. However, for entrepreneurs, there are some serious opportunities that
come along with our current economic conditions. And, for those who do their
homework, use their resources wisely, and plan ahead, even start-ups can come
out ahead in a recession.
Starting a business in the midst of a recession seems a bit counterintuitive
to most people, but in reality, recessions are traditionally when many new
businesses are born. For some who get laid off, the prospect of starting a
business is sometimes less daunting than finding a job with companies who may
be reluctant to hire new employees. For others, losing a job presents them
with the opportunity to do something they've always wanted to do, but
haven't had the courage to leave their "day" job.
For still others, the opportunities presented by new markets
(staying in rather than going out to dinner, staycations
versus vacations, refurbishment instead of buying new) are what
drive them to create a new company.
Some well-known companies that began during a recession are the
Hyatt Corp (Eisenhower recession); LexisNexis, Fed Ex & Microsoft
(1990s oil crisis); and, MTV (early 80s recession).
The lack of capital for all companies that exists today presents an
extra challenge for today's entrepreneurs. However, Oklahoma
banks are still lending. They've tightened their lending
restrictions, and the days of "relationship" lending
appear to be long gone, but they are lending -- even to start-ups.
Before you seek financing, make sure you have your ducks in a row.
A traditional business plan is great when you're asking for money,
but I insist that my clients have a strategic plan and a formal
marketing plan as well. A traditional business plan tells people
where you want to be, but a strategic plan helps your company understand
how to get there, which is amazingly important in any economy, but
especially when resources are limited. A marketing plan helps a
company articulate its market, what its market wants or needs, how
the company can fulfill those wants and needs, and how to communicate
that message to its market. Without a marketing plan, you're
really just shooting in the dark. Of the hundreds of small businesses
I've dealt with, less than 1% had a formal marketing plan when
I began working with them. So, if your company creates one and sticks
to it, you'll be head and shoulders above most of your competition.
Oklahoma has some incredible resources for entrepreneurs, including
people to help articulate strategic plans, marketing strategies,
assistance with intellectual property, and anything else a growing
small business might require. Nearly every Technology Center in
Oklahoma has a Business & Entrepreneurial Services person
like me who does nothing but assist entrepreneurs. The Small
Business Development Centers are a tremendous resource for
entrepreneurs, as are Community Action Agencies and various
economic development organizations. Finally, i2E is one of the
best commercialization organizations in the country.
Before you set off on your own (as we independent Oklahomans
are prone to do) get some assistance from one of these organizations.
As unfortunate as our current economic situation is, it's actually
somewhat helpful in cleaning our economic house via a bit of Darwinian
capitalism. With our booming economy of the last few years,
mediocre companies were able to get by, but many of them won't
make it through the next year or so. Strong companies can stay
strong by knowing what they want their companies to be, understanding
their markets, retaining and training their great employees
(and scooping up great employees who are laid off by other companies),
and by articulating their plans to achieve their goals and sticking
with them. I'm looking forward to meeting the next great wave
of Oklahoma entrepreneurs. I hope you are, too.
For more information about Francis Tuttle Technology Center, go to http://www.francistuttle.com.
National
Small Business Resources
Recession Brings Hurdles and Opportunities for Small Businesses
If there are any silver linings to be found among the dark clouds of a
recession, one is that more than three quarters of entrepreneurs feel that
through the downturn has made them better business owners, according to the
recent American Express Open Small Business Monitor.
But business owners and managers are taking a variety of unusual steps
to endure the recession, the survey found.
American Express Open is an arm of the financial company that serves
business clients. According to its semiannual survey, about 40 percent of
business owners have an optimistic outlook on their near-term prospects,
the same number as did a year ago, while 40 percent also feel the current
economy has created opportunities for their business. However, while the
recession may provide opportunities for some, it also presents challenges.
Fewer business owners plan to make investments as a way to grow their
companies -- 42 percent this spring, compared with 53 percent a year ago.
Also, just 28 percent plan to hire workers this spring. "There
is no doubt the struggling U.S. economy has tested business owners'
resilience, but the entrepreneurial spirit remains strong and
innovative," Susan Sobbott, president of American Express
Open, said in a statement.
"It is a positive sign that optimism, often a leading indicator for
business growth, is at levels comparable to last year, suggesting a
rebound in business owners' perspectives and their renewed focus
on finding the opportunities even in our battered economy," she
said.
To cope in this economy, 45 percent of business owners said they are
willing to barter for new products or services with customers or
suppliers, 48 percent have instituted hiring freezes, 30 percent are
no longer collecting a salary, 27 percent have a family member
working pro bono, 25 percent are renegotiating leases and supply
contracts, 16 percent have cut benefits and 18 percent are working
a second job.
The survey was based on a national sampling of 727 small-business
owners who manage companies with fewer than 100 employees.
It was conducted via phone from Feb. 24 to March 9, and is
next slated to be done again in the fall.
Read this article online.
Words of Advice From Small Business Owners on Start-ups
Thinking about starting your own business? Here's some advice from
people who have made the leap.
Even if you already know what you want to do, even if you have identified
your market, made up a detailed business plan, studied the Small Business
Administration Web site, pored over guidebooks, lined up the money -
well, some money - and figured your best job right now in this lousy
economy is one you create, you are probably overlooking something
important.
Odds are tough even in good times. More than 600,000 people
start their own business nationwide every year, according to
federal figures. But the odds of businesses lasting beyond five
years can be about the same as a coin flip.
You need any edge you can find.
In that spirit, here is financial advice from people who have recently
started their own businesses. Included are bits of wisdom they wish
they had known when they started out.
Take it slow, be ready for tight times.
Anne Heap left an advertising job to bake pretty cakes. She started
Pink Cake Box in 2005 in New Jersey, offering specialty cakes,
cupcakes and cookies baked in borrowed kitchen space in a restaurant
and, later, her mother's house. "The low overhead was big,
big, big," she said.
Only when her business started to grow in 2007 did she
really extend herself financially to open a shop in Denville,
N.J. Heap says the initial time building her business on a shoestring
set her up to be successful later. In baker-speak, she gave her
business ample time to rise.
Experts say that strategy is sound, especially since profits can
be slow to come. Robert Spiegel notes in "The Complete Guide
to Home Business" that newbies should be prepared to be
without a paycheck for six to 18 months.
"Patience is definitely a virtue," Heap said. "If
you start a business and you think you're going to be
profitable even in the next year, you're not being realistic.
There's so much involved in getting the business to where you
need it to be."
Make sure you have health insurance lined up.
Health insurance is the tail that wags the dog for many would-be business
owners, the big expense that discourages them from giving up the security
of a salary job.
Many entrepreneurs are fortunate to be married to someone with family
coverage, and those 65 and over may be eligible for Medicare. For many
others, the best option is COBRA (Consolidated Omnibus Budget
Reconciliation Act). Under COBRA, if you leave your old salary
job on good terms you could be eligible for up to 18 months
coverage under your former employer's group plan. The catch:
You pay your old share plus your employer's contribution.
This is what happened to Tim Herman of St. Paul, Minn., when he
started Small Business, which helps other businesses find the right
professional experts to help them grow. He went from paying $660 a month
to insure his family of four at his old job to $1,007 when he had to
pick up the whole cost.
"It was scary," he said. "How were we going to continue our
health coverage?"
Herman worked with an insurance agent to craft a new plan with a
higher deductible and a "health savings account" to get
the cost down to a more manageable $550 a month.
Another option is to shop around for health insurance price quotes.
One popular site, ehealthinsurance.com, allows you to search by zip
code.
Calculate how much money you will need, then add more.
You think you know how much money you will need for your business,
but you don't. Add some cushion in your finance plan to cover
what the Pentagon used to call "unknown unknowns" - maybe
that new laptop you'll need to handle all your financial programs,
or the legal service fee you never saw coming.
John Norris and his girlfriend decided a couple of years ago to
revive her old designer clothing label, "Jackie Loves John."
They had savings, they took out equity on their homes, and they were
granted an ample line of credit to pay for rental space in Troy, N.Y.,
machines, fabric and vendors.
And still they were stretched thin by X factors, even something as
basic as ordering fabric from France. They didn't count on extra,
unadvertised costs for shipping.
"There are so many things that sneak up on you," Norris
said. "A freight forwarding fee?"
Multiply that by a factor of dozens and you get a sense of
how costly a business can be. Herman suggests applying for more
financing than you think you will need because there's no guarantee
a loan officer will say "yes" when you come back a second time.
"Absolutely, if you're going to get a bank loan, always,
always, always ask for way more than you think you'll need," he
said.
Are you a person or a corporation?
Picking a legal structure for the new business is an early choice with
financial ramifications. Many solo entrepreneurs keep it simple and
choose a sole proprietorship. You still file a personal income tax
statement, though with extra paperwork. But there can be tax advantages
to incorporating, and the move can protect your personal assets if there
is a claim against the business. Many owners form S corporations or
limited liability companies, or LLCs.
Andrew Campbell of New Brunswick, N.J., went with sole proprietorship
when he started Ace Computer Services in 2007. It made sense since he
worked by himself after his full-time job. It was easier, he said, "but
I can switch over at any time."
Anne Landgraf took a different route. After more than two decades in the
composition business, Landgraf started Brooklyn BookWorks in her
living room near Ann Arbor, Mich. She works with university presses
and self publishers. She's a one-person business, but she wanted
the protection provided by an LLC.
"I did it more out of fear. It limits any litigation so that
your personal assets can't be gotten at," she said. "You
don't think of people making books as being kooky, but sometimes
they are."
Some experts suggest hiring a lawyer to draw up legal papers.
Landgraf saved money by going to a Web-based legal document
service, legalzoom.com, which advertises LLC fees from $149 to
$359.
Different structures work for different people. There are plenty of
places on the Web and in the library to read up on the pros and cons.
A complete rundown is included in the guide "Start Your Own
Business" by Rieva Lesonsky and the staff of Entrepreneur
Magazine.
Do what you love, love what you do.
Lastly, if you plan to start a business, make sure you do something
you're good at and wouldn't mind devoting a huge chunk of
your waking hours to. This isn't financial advice per se,
but your happiness at your work is directly related to its success.
Heap likes to bake. Landgraf likes books. Campbell likes technology,
and -- this is important too - he gets a buzz from being in business.
"I found the building of the business just as exciting as the
work itself," he said. "It's energizing."
Read this article online.
Compiled by Tim Ellsworth
The S&P 500 was up +1.7 percent last week (total return), its 5th
consecutive up-week, a feat last accomplished 1 ½ years ago. The stock
index has gained +26.9 percent since closing at a bear market low of 677
on 3/09/09. How optimistic stock buyers continue to be may be driven by
the abundance of 1st quarter earnings numbers that will be reported in the
coming weeks. Even though the collective earnings totals for the index
are expected to be 36% lower when compared to the actual results from
the 1st quarter of 2008, stock investors may look to the future,
focusing on the hope of better days to come (source: BTN Research,
USA Today).
President Barack Obama was encouraging Americans last week to take
advantage of the near record low mortgage interest rates by refinancing
their existing mortgages. Fannie Mae refinanced $77 billion of loans
in the month of March, nearly double what they processed in February.
The average 15-year fixed rate mortgage is only 4.49 percent today (source:
AP, Mortgage Bankers Association).
Individual taxes for calendar year 2008 were due last Wednesday.
The size of the US tax code, tax regulations and various IRS rulings
has expanded to more than 70,000 pages, an increase of +54 percent in just
the last 8 years (source: Cato Institute).
Notable Numbers for the Week:
- Doing Things Differently: 4 out of every 5 Americans
(79 percent) is either spending less money or is saving more money
than they were a year ago (source: AARP).
- Changes Made: Of 401(k) participants that have suffered
losses in the last year, 17 percent of this group are investing more aggressively and
14 percent are investing more conservatively today (source: Plan Advisor).
- Saving for a Rainy Day: The personal savings rate in the USA
reached 3.2 percent as of 12/31/08, a 7-year high. The personal savings rate
in China is greater than 20 percent (source: Department of Commerce, Fortune).
- Long One: If the current US recession that began at the end
of December 2007 extends into the next month (i.e., May 2009), its 17-month
duration would be the nation’s longest recession since the country suffered
through a 43-month downturn during the Great Depression of 1929-33 (source:
National Bureau of Economic Research).
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