Business Digest: Groups ask FTC to look at Facebook

A Washington-based privacy advocacy group and nine other organizations have filed a complaint against Facebook over the social network's latest privacy changes.

The Electronic Privacy Information Center said Thursday that it has asked the Federal Trade Commission to look into the changes Facebook made to its users' privacy settings and to force Facebook to restore its old safeguards. The changes, unveiled last week, include treating users' names, profile photo, friends list, gender and other data as publicly available information.

Among the groups joining in the complaint are the American Library Association, the Consumer Federation of America and the Center for Digital Democracy.

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Banks Don't Belong in the Student Loan Business

Since I arrived in Washington, I've been looking at every line item in the budget of the U.S. Department of Education with two questions in mind: Is this program helping students learn? And is it a good use of taxpayer money? In the case of the Federal Family Education Loan (FFEL) program, the answer to both questions is no.

Under the current FFEL program, banks make loans to students. While those students remain in school, the federal government pays the interest on their loans; otherwise the interest accrues. Once the borrowers leave school or graduate, the lending agency collects on the loans. But if the student defaults, my department pays back the loan—plus the interest owed. The FFEL program, in short, is a great deal for bankers but a terrible one for taxpayers.

Over the next decade, according to the Congressional Budget Office, the Education Department is slated to subsidize banks to the tune of $87 billion to enable them to make federal student loans. All of this money would be put to better use providing financial aid directly to millions of needy students who want a college education. The Education Department will be able to accommodate the new loans through an existing federal public-private partnership, Through that partnership, the federal government makes loans directly to students and uses companies that will provide better service to borrowers at a lower cost to taxpayers

Critics contend that the government is trying to nationalize a private industry and do away with competition. Our real aim is to simply stop using banks as the middle man for student loans.

The banking industry would continue to compete in the marketplace to finance mortgages, business start-ups, and other forms of credit. But we are intent on stopping subsidies to bankers who make student loans at no risk because they know the federal government will bail them out in case of default.

By working with private sector companies with expertise in the field, we are prepared to initiate all new student loans in the existing federal Direct Loan program. Right now, the Education Department already owns and services 80% of the student loans made last year. It owns such a high volume of loans chiefly because it had to take emergency action in 2008 to ensure students had access to loans when lending in the nation's credit markets was frozen.

Our experience handling the bulk of student loans makes me confident in our capability. This year alone, an additional 500 colleges and universities joined the Direct Loan program. Just last month, the department's independent inspector general's office issued a report documenting that the Education Department had taken the right management steps so that all loans can be serviced by the Direct Loan program.

In a recent survey by the National Association of Student Financial Aid Administrators, schools that have made the switch to direct lending overwhelmingly reported the conversion was easy and quick. That is just one reason why that association of financial aid experts, along with organizations representing the nation's largest public and private universities, community colleges and college students, support the department's Direct Loan proposal.

The private sector would continue to play an important role in servicing loans. Last summer, the department's Federal Student Aid Office awarded contracts to four companies to service federal student loans, following an intense competition among the best companies in the loan servicing business. These companies are paid more when borrowers are in good standing, and those that keep defaults down and provide the best customer service will be given the most work.

We are preparing to make the switch to direct loans as easy as possible for colleges and universities. We appreciate their feedback, and their ideas will help us transition smoothly from FFEL to direct loans once Congress has passed a bill authorizing the switch to 100% direct loans

As for the $87 billion we'll save from ending the troubled FFEL program, the administration seeks to use that money for important programs that will improve our economic future. We propose to substantially increase scholarships in the Pell Grant program and other financial aid for low-income students. We would start new programs to raise college graduation rates and strengthen our community colleges. We will expand our investment in early childhood education. Plus, $10 billion would be set aside to reduce the deficit.

Now is the time to allocate resources to students—not to banks—so they have access to college and other educational opportunities. We cannot in good conscience let $87 billion in subsidies go to banks when our students desperately need financial help to realize the dream of getting a college education.

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Business owners air loan complaints

HAGERSTOWN — They’re designed to help struggling small businesses stay open, refocus and get their cash flow back on track in the struggling economy.

But local business owners complained Monday night at City Hall that special loans for businesses through the U.S. Small Business Administration are slow to get approved.

Provided under the American Recovery and Reinvestment Act, the interest-free loans are for up to $35,000. They are intended for established, viable businesses that need short-term help with their debts.

But Al McGarity said he and six other people were turned down for the loans even though they met all the program’s qualifications.

McGarity, owner of Robbies Billiards and Game Room Outfitters in Williamsport, said the bank told him and the others that the Small Business Administration turned down their loan requests.

McGarity told Edward Knox, lender relations specialist for the SBA, that the bank claimed that the SBA did not give a reason for the loan rejections.

Knox said the SBA will give reasons for rejecting loans, including that the borrower was not a U.S. citizen or that the person had too much money on hand to qualify.

Knox said the fact that McGarity was told that the SBA did not give a reason for the loan rejections did not give him a “warm and fuzzy” feeling.

Banks are saying the loans are not lucrative enough for them because no upfront fees can be charged, according to Knox.

One woman in the audience of about 20 people wondered if President Obama knew about the drawbacks of the loan program.

Knox said he is sure Obama would flip a switch to correct the situation if he could.

“But there is only so much he can do. There is only so much Congress can do,” Knox said.

Brent Bailey of Interstate Communication Services, an information technology company, stood up during the meeting and walked to the front of the room.

Bailey told Knox to let him know if some kind of incentive is offered to banks to stimulate the flow of loans.

“Then I’m in,” Bailey said.

“Without it, it’s just talk,” said Bailey, who left the meeting.

“It sounds like our banks are stopping us at the door,” said another woman in the audience.

The City of Hagerstown hosted the meeting so people could share their experiences with the program and offer ways to improve it.

Knox offered possible solutions, like going back to a bank again after an initial loan rejection. The bank might have changed its mind about the loans, Knox said.

Business owners can let banks know they are not happy about their decision not to offer the loans, Knox said.

Business owners also can take their business to another bank, although there might be a waiting period with the new bank before a loan can be considered, Knox said

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North Dakota improves in business tax rankings

North Dakota ranks squarely in the middle of states in a study that compares how each state taxes business. The Tax Foundation review gives much better rankings to neighboring South Dakota and Montana.
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The Washington, D.C.-based organization, which produces an annual report on the business tax climates of states, ranked North Dakota 25th among the 50 states in its most recent survey, after four years of ratings in the low 30s. The foundation's rankings are considered important by legislators and economic development officials.

South Dakota, which has no individual or corporate income tax, was ranked first, while Montana was rated sixth among the 50 states, the survey said. Minnesota's business tax climate was ranked 43rd.

Cory Fong, North Dakota's tax commissioner, said the Legislature helped improve the state's standing by cutting individual income and corporate tax rates and reducing the number of corporate tax brackets from five to three. The Tax Foundation's ratings favor states that impose no income tax at all or that have only a single tax rate, instead of progressively higher rates on larger incomes.

North Dakota's tax system may never attain a top rating because tax collections are spread across income, sales and property, Fong said.

"Having a balanced tax structure is helping us immensely during these difficult times, and I think that is an overall strength that businesses are looking at," Fong said. "We've done a good job of demonstrating ... that having the right level of taxation across those tax types makes some sense."

The foundation's ratings included the 2009 Legislature's across-the-board reduction of state income tax rates, which lowered the top individual income tax rate from 5.54 percent to 4.86 percent, and the lowest rate from 2.1 percent to 1.84 percent of state taxable income.

It did not take into account the Legislature's corporate tax changes, which reduced North Dakota's number of corporate tax brackets from five to three, cut the top tax rate from 6.5 percent to 6.4 percent, and applied the top rate to income greater than $50,000. Previously, the maximum tax rate was assessed against corporate income greater than $30,000.

Nationally, North Dakota has been one of the few states where the state government budget is in surplus. Dustin Gawrylow, director of the North Dakota Taxpayers' Association, an advocacy group based in Bismarck, said the state's rankings improvement should be credited to North Dakota's tax cuts and moves to raise taxes in other states with less robust revenue collections.

"Unlike a lot of states, we're not getting any worse," Gawrylow said.

Gawrylow said North Dakota's rankings when compared to South Dakota, Montana and No. 2-rated Wyoming are more worrisome. North Dakota economic development officials appear to put more emphasis on offering tax incentives to selected businesses than on having lower tax rates on all companies, he said.

"We've got to really look at how we can compete regionally," he said. "We need to look at how we can match Wyoming, South Dakota and Montana on those factors that companies are looking at when they come to North Dakota to look for where to place their factories, or their jobs."

The report analyzes a number of taxes that affect businesses, including income and sales taxes, unemployment insurance rates and property taxes.

On property taxes, which are the subject of frequent complaints by business and home owners alike, the report ranks North Dakota fifth among states, while giving less favorable scores to the state's corporate and individual income tax laws.

Fong said that is where he sees "some fundamental flaws" in how the report depicts North Dakota. "Perhaps the measurements they are focusing on don't necessarily coincide with what people in North Dakota are concerned about," he said. ...Read More ! ⇒

Business Twitter hub in progress

I confess I'm a Twitter user and not just to keep up with friends. I use Twitter for on-the-spot news, links to coupons and keeping track of business, food and fashion trends.

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I received a tweet from the Mississippi Hospitality and Restaurant Association drawing my attention to an article in The Wall Street Journal about how entrepreneurs use Twitter to get through a crisis.

The National Restaurant and the Mississippi Hospitality and Restaurant associations stress that Twitter is a powerful tool for small businesses, especially during any sort of customer-service or public-relations crisis. However, I see an opportunity for Hattiesburg businesses to use Twitter not only for crises but to use it as a public relations machine, as well as to keep up with business articles in the Hattiesburg American.

I'm thinking of starting our own Hattiesburg business Twitter to keep all businesses and customers up-to-date with sales, holiday closings, hiring fairs and special events. Send an e-mail my way if you want to take part or even if you have ideas on how to run it and work out the kinks.
Openings

# The Grill and Grocery, 121 E. Pine St., opened next to Go Young Fashions. The G&G is a combination convenience store and a grill/takeout eatery with a very interesting menu. The G&G is open Monday through Saturday. Details: 336-7986.

# Elements Salon is moving to Canebrake Country Club, 1 Cane Drive, and will reopen as Elements Salon and Spa at Canebrake. The salon, with full spa and massage, has a tentative opening date of Sept. 30.

# Topher's Rock 'n' Roll Grill will open in the old Ray Ray's Fried Chicken building, 5252 Old U.S. 11 in Hattiesburg. The family-oriented, fast food restaurant plans to open Oct. 1. Owned by the parent company that also owns The Bottling Company and Mugshots, the restaurant promises tasty burgers and vintage music memorabilia. Details: 336-7418 or visit www.tophersgrill.com.

# Gatti Town is slated to open this fall. It is located between Best Buy and Toys 'R Us.

# Qdoba Mexican Grill is expected to open Nov. 1 on Hardy Street between Applebee's and Wachovia Bank.

# Auto Barn is being built at the corner of Emerald Lane and Broadway Drive. No completion date was given.

# An independently-owned burger shop is being built in the former Popeye's on U.S. 49 location. No completion date was given.
Events

# The Kitchen Table will host Young Chefs with Julia at 4 p.m. Sept. 28. Participants will learn to cook pasta jambalaya, white chocolate bread pudding with white chocolate sauce. Cost: $35. Details: 261-2224.

# Curves is offering a free 30-day diet program for Hattiesburg-area women Sept. 30 at Curves of Hattiesburg on the corner of Hardy Street and North 25th Avenue. Details: 450-2878 or visit www.curves.com. ...Read More ! ⇒

Social networking for business: What works and what doesn't

Social Media sites like Twitter, Facebook, Linkedin and YouTube are changing the way the world does business. I think this is in response to our desire to connect with others. Relationship Marketing is all about connecting with people first as human beings and then as customers later. For a real business relationship to work, both parties must receive value. If only one or neither does, that relationship won't continue for long.

It is the same with Social Networking. You have to provide value consistently for people to want to follow you (as in Twitter) or be your "friend" (as in Facebook). This value means something that helps them in their business or their personal lives.
Recent Articles

* Social networking for business: What works and what doesn't
* A setback is just a setup for a comeback
* Five steps to get more business
* Cheap (but effective) market research
* Advice for today -- from Benjamin Franklin
* Social media: You have to be there
* Social networking is about people, not technology
* Relationship marketing and the 'little things'
* Relationship farming and the 'WOW' factor
* Eliminate the asterisks in your marketing

Go to full archivesGo to full archives

So, what works in Social Media and Social Networking?

What to do in Social Networking -- Provide solid value first

Provide tips that are valuable to your followers. If you talk about a special that is with a third party --- where you have no benefit from your followers purchasing --- you gain points.

Retweet

This means you copy something that was said by one person and send it to your followers. You are helping in three ways here: 1) You help the person who sent the initial tweet and they will remember that, 2) You help your followers by providing value and 3) You help yourself two ways. First you strengthen the relationship with the person you are retweeting (don't you love these new words we come up with today?) and secondly you help yourself as others see you as a resource. Make sure it is value when you retweet otherwise it comes off as TweetSpam and that can only hurt you.

Link with URL shorteners

This sounds a bit technical but it's quite easy. If you have a really long name for a website (URL) it can eat up your 140 character limit fast. A better way is to use one of the free URL shorteners available. Bit.ly is good for generating statistics on how many are coming to the site. Tinyurl and snipurl have been around for years and are quite reliable.

Always points to more value on your blog or Web site

Let your Facebook postings, your tweets and Linkedin messages always point to your Blog or website (they can be the same) where your followers or friends will find more value on the subject. This is the methodology you want to deploy in your marketing today. Generate value on your Blog and point to it with your notices on all the various social networking sites.

What to avoid in Social Networking -- It's all about me

Ugh! How many times do we need to hear that the world doesn't keep spinning around YOU? We all want to hear about ourselves and how what you have to say will make our lives better. Make all your communications about how others will benefit from being involved with you. Frankly, we don't care that you're "standing in line to get a hamburger." What will help is if you found that hamburgers are available at half price today from 12:00 to 3:00 at 4th and Main and they are the best you've ever had. That information would be valuable. Make it about others and you will succeed.

Spam city

We hated spam on email (still do). We don't like it any more in the era of social networking. So stop it already! Yes, we know you have a "great way to make money on Twitter" on your site but frankly, we're tired of hearing it! Instead, promote serious ways people can solve problems in their business. You add to your credibility and avoid being seen as a spammer.

Too much "unfollowing" or "de-friending"

When you stop following someone (and there are times it is appropriate) make sure it is because of serious problems (like spamming --- see above). When we see someone has "unfollowed" us (more of those clever new words we get today), it can hurt. I remember one person who I admired and had purchased a lot of her materials. However, when she unsubscribed to my email I was hurt. Was I logical? Of course not. However, that person has already lost thousands of dollars as I spent the money with someone else --- and she doesn't even know it! Careful on what you do and who it can offend. Hear more about this story in my podcast at www.TerryBrock.com.

Social Networking is really very much like good ole networking has been since human beings started gathering in groups. Treat people with honesty and dignity. Relationship Marketing principles work today on these new media. Avoid the "hot new ways to increase traffic" that smack of hucksterism and chicanery.

If it doesn't come from a genuine, real desire to help other humans beings, it should probably be avoided. This is true in Relationship Marketing, Social Networking and life.

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Can Twitter Rake in the Ads to Justify $1 Billion Valuation?

The question about Twitter used to be, "Is it a business?" Now, the question becomes "How big can it be?"

And the answer is: It better be big. CEO Evan Williams confirmed last week that the microblogging service had finalized its new funding, reported to be $100 million, giving Twitter -- which now has no monetization program in place -- a whopping $1 billion valuation. Prior investors Spark Capital, Benchmark Capital and Institutional Venture Partners doubled down, and late-stage investors T. Rowe Price and Insight Venture Partners joined up.

With the funding, Silicon Valley and the venture community are once again setting their sites on the marketing budgets of American business to support another free "cloud" web service, in this case 140-word bursts of text. Indeed, they're counting on the exponential growth of advertising revenue in a flat market for a company that -- while certainly useful to marketers -- has yet to earn its first dollar.

"I think they can build some kind of ad business, but the more relevant question is can they build an ad business worth a billion plus dollars," said Warren Lee, VC at Canaan Partners. "That would require tremendous volumes of impressions and reasonable conversions. Lots of execution will be needed. Not impossible but unlikely."

The cash infusion (on top of $55 million already raised and the estimated $25 million Twitter has left in the tank), puts the pressure on Twitter to earn its first $100 million within the next year or two, and sparked cries of "bubble!" from the cheap seats, but that was true of AOL, Netscape, Google and Facebook.

'No precedent'
Yet Twitter is quite different. "It's the first one that's not a destination -- it's a distributed service," said Seth Goldstein, CEO of SocialMedia and investor in early Twitter backer Union Square Ventures. "There is no precedent for how to monetize it. "

Like Facebook, businesses already use Twitter to communicate with their fans and don't need to pay Twitter a thing to build followers or communicate with them. "What we see is a move away from brands using broadcast media to more engagement media," said Zephrin Lasker, CEO of sales-lead exchange Pontiflex. "If you have engagement on a one-to-one basis, extremely scalable, that's valuable."

Valuable to marketers, but is it valuable to Twitter? With the money comes an expectation of corresponding revenue, and while verified accounts, corporate services and analytics are interesting, advertising is the business that scales. While co-founder Biz Stone said there are no plans to start an ad business this year, it seems inevitable Twitter will be going toe-to-toe with Facebook in the ad market.

"What is interesting from an advertising perspective is the same thing that is interesting about Facebook: It is one of the only platforms of scale that has two-way messaging potential," said Michael Lazerow, CEO of Buddy Media, which sells ads on Facebook widgets. "But are they a $50 mil or a $1 bil business?"

Twitter could turn on revenue immediately, but appears to be in no rush to do so. Observers have, for example, long wondered why Twitter didn't start running contextual or keyword ads next to tweets, like Google. Twitter could run the ads based on the content of tweets combined with what Twitter knows about the user from their profile and registration details.

Outside factors
The problem with that is that more and more users access Twitter from third-party apps like TweetDeck or Tweetie not owned by Twitter, and those services, too, need a business model and may also incorporate advertising.

Mr. Stone said that ads won't come before 2010 and Twitter's early-stage venture backers have told Ad Age the ad business, narrowly defined, isn't that interesting to them. On its site, Twitter touts marketing success stories from Pepsi, Jetblue and Dell, which consist of the brands using the service to connect with fans.

The cash could allow Twitter to make some acquisitions; perhaps one of the URL shorteners like Bit.ly, one or more of the Twitter applications, or one of the many, many firms now making dashboards to manage Twitter for corporate clients.

With a valuation of $1 billion, Twitter's investors believe one or more of the following outcomes are likely: an IPO or an acquisition at a healthy price. Already Twitter has reportedly turned down bids from Facebook, Google and Microsoft.

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