Yes, Virginia, there are still small banks.  They exist as certainly as credit unions, local economies, and the Huffington Post exist.

This is my response to a friend’s inquiry, via a social network site, asking where she should bank. I recommended that she bank locally, if possible, but to avoid at all costs, the big banks.  Well with mergers and acquisitions, it seems that finding a local bank near her small Pennsylvania borough may also be a bit of a challenge.  She replied that she wasn’t certain that small banks exist anymore.

According to a recent Zogby poll, however, 9% of U.S. adults have moved their monies from big banks in protest of tax dollars going to big banks.  Yes, these same banks that are still making billions but still refusing to lend to small business.

The The Move Your Money protest campaign was created by the Huffington Post, and is actually growing in scope.  They are even providing tools to help you locate local financial institutions for you.  I tried placing my friend’s zip code and a list of bank candidates appeared with bank names with the word “people”. and “County”, and “Valley”.  O.K. so maybe that doesn’t mean they’re not big, but it’s a start.

The site recommends a number of options for locating local banks.  They include checking out the sites listed below:

• Independent Community Bankers of America
• National Credit Union Administration
• CreditCardConnection.org
• FindABetterBank.com

Let the banks know that your hard-earned money is not going to be included in those million-dollar bonuses schemes.  Well, at least not the $500.00 dollars left in your account this month.

For now you know that, like Santa Claus, local banks “abound and give to your life its highest beauty and joy”.

In response to my friend’s recent PayPal phishing adventure (see previous post), I decided to garner additional protection by upgrading my PayPal account to include their security key offering. This feature provides additional authentication to the usual login ID and password process. The security key offering consist of a six-digit generated number via your cell phone or key device. The idea is that your account shouldn’t be easily compromised since a thief would need physical access to the key. Unfortunately, I think PayPal also provides alternate methods of bypassing the need for the key.

This all leaves me with questions regarding the value of my PayPal account. I can only think of two transactions out of about 50 this year that made PayPal the only purchasing option. Would my financial transactions be just as protected if I simply provided my bank or credit card information to online sellers? If your PayPal information is compromised, does it really matter that your official bank and credit card information is still a secret to the thief, who still has your money?

PayPal has a short Phishing Challenge test designed to educate their members. I passed the test with flying colors, but somehow I’m not reassured that I could really recognize a true PayPal email from a good fake one. I do have to admit, however, that PayPal appears to be trying hard to both educate consumers and fight fraud with their numerous security tools. Their use of Iconix email ID, for example, identifies legitimate registered vendor emails. I’m just not really sure of the value or the possibility of install plugins or any other client software on all the computers that I might use for online shopping.

My next step is to set up mobile alerts with my bank to ensure I have a better handle on payments from my account. This might turn out to be too annoying given my habitual use of my credit card to support a Starbucks addiction. It’s unfortunate that the response to safe online transactions is to inundate us with more online transactional information. We all know that there’s a saturation point where it will be just too much information to process or just too much energy needed to safely buy online.

There will always be someone out there who’s bent on using their skills to do harm at our expense. All we can do is give to keep challenging them. Who knows perhaps these honed skills will be used for good some day.

The convenience of safe online commerce is becoming more complex, but as is usually the case, the more you know about the online threats and the tools to combat them the more you’ll be equipped to protect your financial transactions.

A friend of mine received a frantic call from his wife after noticing a series of daily PayPal transactions totaling over $2200.00. Each transaction amount ranged between $90.00 and $95.00 and had been executed over a two week period. Each transaction was, of course, addressed to a different unknown recipient.

He quickly checked his PayPal account and confirmed that indeed the company had already put a freeze on his account. A call to their bank, however, was not as reassuring.

The bank requested that they had to physically appear at the bank and file an affidavit detailing the complaint. The bank also suggested that they close the account and reopen a new one as an additional measure of security.

Being a good friend, I recommended that he tell them that he was going to move his millions to a Swiss account. As an account holder your PayPal funds are guaranteed by your credit card or bank account. The seller can request a check or just transfer monies to their PayPal or bank account.

Communication with the PayPal representatives were a little more reassuring, but also a little accusatory. Apparently PayPal’s phishing resources had tried to contact my friend via email. Thinking the emails to be phishing attempts, my friend quickly deleted the messages. Eventually, PayPal took matters into their own hands and froze the account. Unfortunately, this wasn’t completed until after $2200.00 had been illegally transferred from his bank account.

PayPal is, of course, investigating the incident. We’re all hoping, of course, that my friend is going to be able to recover all of his lost monies. The concern is that PayPal will somehow try to avoid total responsibility. There shouldn’t be any question as to whether PayPal’s transactions are within the Purchase-to-Pay (P2P) regulations associated with the Truth-in-Lending Act (TILA). It seems clear to us that the security breach was within PayPal’s security zone.

A micro business was sent into a mild panic mode last week after receiving a cancellation letter from their bank.  They received notice that the bank was closing their account based on information from ChexSystems.  ChexSystems is a check and credit verification agency somewhat like Experian or Equifax, but they track deposit accounts not credit accounts.

Credit Constraints

Alarmed, the company immediately contacted their local banker who was also puzzled by the letter.  She checked the account, but could not find any notes or flags to warrant the note.  Their accountant was also perplexed because the credit history had been flawless.  “We’re a services company and the bulk of our expenses are payroll related.” explained one of the owners.  “We’ve never even asked for a formal loan or ever overdrawn our account.”  He went on to explain that they remain a micro business, because all of their financing is constrained by the size of their credit card and available cash. 

Hoarding Mentality

The Troubled Asset Relief Plan (TARP), has provided massive amounts of money to the largest financial companies in the country.  The bank in question is just one of the beneficiaries, but these financial companies have simultaneously reduced the availability of loans to small business.

These huge corporations are now reporting massive profits.  So much so that they are eager to pay back uncle Sam.

According to the Democratic Policy Committee (DPC), the FDIC reported that US loans fell by 210 Billion dollars.  This represents the largest drop since FDIC starting keeping track in 1984.  The DPC is charged with creating new policies and tracking related issues for the democratic party.

Status Quo or Bust

The owner explained that his company had never applied for any expansion loans, but now they are concerned that the the rug is being pulled out from under them without cause.

Without the credit to support expansion, small businesses cannot hire staff.  More and more they are forced to rely on contract workers who’s high pay will continue to erode their profits.  For micro businesses, it’s an endless cycle of frustration.

Access to credit to support expansion, and health care to support workers’ needs, remain the greatest barriers to job creation and subsequent growth for micro businesses.

As of now, this small business is hoping that some small clerical error is in play that will exonerate them.  So far, they have been unsuccessful in getting any meaningful information from ChexSystems.

One of the solutions to solving world poverty, may in fact be the same solution for solving the current economic state of those in need here in the United States. Perhaps poverty may be too strong a word to use for the majority of those in the US having economic  hardships, but there’s probably agreement that in both cases there’s a living situation that’s considered merely surviving. In either case, what is needed is a means of creating wealth, no matter how hardship its defined or where it is taking place.

The Need for Fish

In the US Poverty is defined in terms of a threshold that is based on an annual income.  Relative poverty is the condition of having fewer resources or less income than others within a society or country. Regardless of the definition, the common variable is that the statistical unit is in some form of economic hardship.

Give a Man a Fish

In Microfranching, Creating Wealth at the Bottom of the Pyramid, the authors’ (Fairbourne, Gibson, Dyer), argue that by simply giving or donating goods to those in need, stifles any incentives for the recipient to produce the goods and worse makes them dependent and eventually resentful of the providers of that good. For the world or the nation, it’s a solution that has not produced long lasting positive results.

Teach a Man to Fish

A single skill in today’s economy is no guarantee of a lifetime of success. The business world is not static. What is a marketable today is no guarantee of a of long term means of wealth.  There are numerous examples of industrial skills in the US, once thought of as lifetime careers that are extinct or no longer capable of supporting the worker.  While necessary, teaching a man to fish as the final solution does not guarantee long terms success.

Teach a Man to Sell Fish

Business skills obtained through the experiences of starting a business are long lasting. The product or service may change, but the skills required to plan, market, operate, and manage a business don’t really go out of style. Yes, the tools and challenges may change but the fundamental skill sets are generally standard.

Teach a Man to Teach Fish Mongering

The microfranchising book argues that the use of micro commerce in the form of microfranchise solutions may be more suitable solution to solving world poverty by generating long term wealth. Microfranchising goes beyond simply starting a business. Like franchising, it’s about starting a business that’s worthy of being replicated. In it’s simplest form, it’s about an historically successful business model that includes a network of business owners as a means of expanding a business. What’s compelling about microfranchising is that it’s about making a better small business — not by making a better product.

A microfranchise business could arguably include any of a number of self-employed business models from network marketing to sole-proprietorships.  The micro in microfranchising refers to the relatively small investment required to start and operate the business.  The size of that investment is, of course, relative.  Generally, anything from a couple of hundred dollars to thousands depending on the type of business and your budget.

Probably one of the scariest, or perhaps gutsiest, financial decisions to make is to fire your boss.  Not because you’ve won the lottery, but because you’ve decided to go for it on your own.   If you were anything like me, being on your own didn’t mean you planned on being there alone in the first place.  Instead, your breakout plan started as a conspiracy with other would-be entrepreneurs.

Entrepreneurial Empathy

My older son, called me while stuck in traffic and after having a particularly bad day at work, to let me know that he was going to quit his job at the end of the week.  Of course he had no backup, but as a new husband, I guess he presumed his gainfully employed bride wouldn’t mind temporarily shouldering his part of their finances.   It wasn’t hard to persuade him to stay the course, he was just seeking empathy.  Six months later, he’s still gainfully employed, but still working on that exit strategy.

You need more than just being young and fed-up to succeed in business.  For salaried employees, a bad day, week, or month is probably the worse reason to quit your job, much less start a new business venture.   It took me a few years of planning and a mystical “sign”, in the form of a merger to convince me to go for it.

Who’s Got Your Entrepreneur Back?

Most entrepreneurs probably start vocalizing their plans way in advance of their departure from the salaried category.  Initially this vocalization might be merely an empathy sound bite.  Later it represents a cry for validation.  Finally it’s a cry to arms.  Your friends may even egg you on.  “Sure, go for it.” You’ll hear them say.  “We’ve got your back.”  What is meant, but unheard is, “But please don’t ask us for a loan, or anything.”   

Sans Job Security

I had plenty backers when I first started looking for validation.  It was amazing how quickly my friends faded from view, however, once I took the plunge.  Most of us worked in the same industry.  We all had the same opinion about our full time travel jobs and we all preached the same scripture about lack of recognition and rewards.  So why did they all, except one, take a step back, while my current partner and I plunged off the corporate ladder?  The plan was for our friends to join our marry band once we setup camp in the Sheriff’s forest.

What, me Worry?

Luckily, we landed safely and generally profitably, but we are disappointed with the amount of no confidence votes.  Today, I’m not sure if I’m sensing some minor misgivings from our would-be co-conspirators or are those shadows circling in wait for something sinister.

Learning The Income System

Self-employed business owners with income generating systems are less inclined to claim love of their jobs.  Initially they are investing a great deal of effort and time in their venture with little to no compensation. Their initial goal is to learn the system.  Income generating systems, however, can and do generate compensation during and after you’ve stopped working.  Perhaps when you stopped working is when the exhilaration kicks in.

Generating Passive Income

The idea is to build income-generating systems that compensate you in the long run.  These systems come in many forms but all leverage prior work.  The income generated is referred to my many names including “Passive Income”,  “Residual Income, “Elvis money”, and others.  The Elvis reference is due to Elvis Presley’s growing fortune after his death.  Elvis and now Michael Jackson’s fortunes will undoubtedly become more lucrative in death than they were when the entertainers were living.

Avoiding Get-Rich-Quick Scams

Luckily, you don’t have to be a dead entertainer to gain from income generating systems.  There are a number of successful businesses that are available today for the serious minded entrepreneur.  Unfortunately claims of instant success and rich online millionaires dominate the Internet.  Large numbers of overly eager entrepreneurs have been victimized by these online scams.  Most are easy to spot with the eyes or with the gut.  These scams always promise deals that are too good to be true.

Fire Your Boss

There is arguably no greater personal joy and trepidation than when you get to fire your boss.  Creating that self-employed business of your dreams can be an exhilarating experience.  Indeed most self-employed people are in love with what they do, few, however, appreciate the administrative details of running a business.  That lack of appreciation, however, can become the business’ undoing.

Back Office Doldrums

It’s probably not until you are confronted with the not-so-glamorous aspects of being self-employed, that you finally understand what your former boss was going through.  Additionally, the back office tasks are probably not the core of what you love doing in the first place.

Generating Income

Unless your physically and immediately being paid for a product, compensation may not occur for weeks and months.  Entrepreneurs need to understand and appreciate that not all businesses generate income while their working it.  Indeed, perhaps the best businesses are those that generate income after you’ve stopped working.  Many of the new self-employed will learn quickly that all they’ve done is created a new job for themselves that pays them much less but asks for more effort and time.

Business Orienteering is a directional concept using guidelines to help entrepreneurs find clarity about where they are going.  Orienteering is actually an outdoor navigation sport that I’m learning with my young son.  The sport uses maps, compass, markers and control points in fostering personal development.  The same orienteering concepts can easily be applied to the business world as well.

Orienteering is concerned with geographical navigation.  Business operations are also concerned with movement in the right direction.  As in the Orienteering sport, there are business obstacles and detours that have to be overcome. 

Orienteering demands that competitors constantly interpret information, usually from map to ground.  In business, competitors must constantly interpret marketing information as well as changes in the competitive landscape. 

Orienteering requires speed, agility and strength to compete successfully.  In business speed to market, agility in service and competitive strength are likewise critical qualities needed to succeed. 

Unlike orienteering, however, starting a business (home-based or otherwise), should not be viewed as a recreational sport.  A successful business requires a long-term commitment in time and resources.  Deciding to leave the “road most traveled” career path of working for someone else can be quite intimidating.  Understand, however, that this seemingly safe career path is nothing of the sort.  Downsizing, outsourcing, and new technologies can quickly muddy your path. 

The orienteering concept, however, is quite appropriate to the challenges of starting and operating a business.  There is nothing like the feel of having control over your life.  Unlike working the corporate job, your success will be based on your ability to plan and chart a direction.  This means developing new skills, attitudes, and new philosophies.

Identity theft happens every day to people from all walks of life. It is estimated that up to 9 million Americans have had someone use their personally identifying information like name, Social Security number, or credit card number, without their permission.

What can you do to combat this crime? Detecting that you have been a victim is just the first step toward ultimately restoring your identity. Not only should every consumer prepare for the unthinkable reality that identity theft is going to happen to them, but business should also be concerned that they are in compliance with a written Identity Theft Prevention as required by The Federal Trade Commission (FTC).

The FTC is mandating the compliancy program with the intent of ensuring that businesses have a means of detecting the IDT early warning signs or “Red Flags” in their daily operations. The FTC’s Red Flag Rules are meant to reduce the damage of an already stolen identity.

For consumers, the Federal Trade Commission provides a slue of tools on its website for helping you the consumer recover from being victimized by Identity Theft (IDT). Understand, however, that it’s not going to be a painless process. Expect to spend some time and resources in resolving IDT related issues with your creditors.

While customers cannot sue a company for being lax with their identity, consumers could issue a complaint with the FTC. The FTC could then bring its law enforcement action to bear on the business. This basically means that the FTC will petition the Department of Justice (DOJ) to seek monetary civil penalties for violations of the Red Flags Rule.

A business’ Red Flag Rule program must include:

• Policies and procedures for identifying “Red Flags” of identity theft.
• Programs must be designed to detect identified red flags.  For fake ID’s, for example, a business must have procedures to detect fake, forged, or altered identification.
• Programs must spell out actions to take when the red flags are detected
• Programs must address how periodic re-evaluation of the business’ policies and procedures.