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- A federal health-insurance mandate requiring all employers to purchase health insurance for employees would result in the loss of about one million jobs from small businesses between 2009 and 2013, a new study finds. [NFIB]

- The bailout bonanza doesn’t appear to be encouraging the banks to lend more. A WSJ analysis of 13 big beneficiaries of federal bailout funds finds that lending in the fourth quarter of 2008 actually decreased at 10 of them — after they received their bundles. [WSJ]

- Nonprofit microfinance institutions continue to lend money to entrepreneurs in need, even as banks shun them. [US Banker]

- Need advice on how to manage your business in the downturn? The Small Business Administration just launched some new free online courses to help business owners adapt in the recession. [SBA]

- You might be tempted to take up any investor’s offer to give you money in today’s economic climate. But beware: You could find yourself with unsavory strings attached. [NYT]

- There are many steps to getting a business up and running. Check out this step-by-step “Guide to Self Employment.” [BusinessWeek]

- How a mouth-watering (or stomach-churning?) recipe – the Bacon Explosion – and Web 2.0 brought quick fame to two Kansas City barbecue experts. [US News]

Any other important or interesting small-business news we missed this week?

Today is the last day to nominate a small business or nonprofit for Top Small Workplaces 2009 – a project that recognizes small employers with exemplary workplace environments.

You can fill out the online nomination form here.

The project is a collaboration between The Wall Street Journal and Winning Workplaces, an Evanston, Ill., nonprofit that helps small and mid-sized companies improve their people practices. The winners will be featured in a Journal Report on Small Business on Sept. 28.

Let us know the best small employers to work for!

Yesterday, the House approved its version of the economic stimulus package, estimated to cost $819 billion. The next step is the Senate. The bill includes breaks for struggling businesses. But is there enough for America’s millions of struggling small businesses?

According to this WSJ story, the highlight for many businesses is a set of provisions that would allow companies to get cash refunds from the federal government to offset current losses, as well as for tax credits they can’t use because they aren’t making enough money. Companies could file for a refund, using current losses to offset tax on past profits.

Other breaks are offered to help local governments raise money and, in some cases, for companies that have accumulated clean energy or research tax credits. Those companies could trade the credits in for cash. The bill also includes $430 million for the SBA to use toward its lending programs.

A few small business lobbying groups have already voiced their opinions. “More can and should be done,” National Small Business Association President Todd McCracken said in an email. “If Congress and President Obama are concerned about unemployment, they ought to look no further than the small-business community’s ability to create jobs and seriously consider more targeted proposals such as ending the self-employment tax on health insurance that only small businesses are forced to pay.”

The National Federation of Independent Business says the legislation “provides limited relief or incentives for small businesses and instead spends massive amounts of taxpayer dollars on programs that have little to no connection to economic growth or job creation.” They’d like to see a six-month payroll tax holiday included in the bill. That, they say, would “immediately put money back into the hands of consumers while simultaneously decreasing the cost of labor paid by employers. This is a sensible provision that will provide real help to small business owners.”

The Small Business and Entrepreneurship Council says the bill just doesn’t offer enough for small business. “The ‘economic stimulus’ measure that passed the House includes too much spending that has little to do with helping the economy, and not enough for small business owners and entrepreneurs to help them survive, create jobs and grow their firms. We fear this will do little to help the economy,” the organization says in a statement. “Small business owners are looking for tax certainty, relief and incentives,” the SBE Council adds.

Readers, do you believe the government is looking out for you? What kinds of tax breaks and incentives would help your business through these tough times?

The federal government thinks many small-business owners under-report their income, and thus has been cracking down on them to help shore up its own budgetary problems.

The message for you: The tax auditor might want to take a look at your books. So how can you avoid that?

Though it’s unlikely you can dodge an audit forever – the IRS tries to audit businesses on a cycle of some sort – there are “red flags” that can make your return look extra suspicious. We spoke with Bill Fleming, managing director of PricewaterhouseCoopers office in Hartford, Conn., to get some ways businesses might lessen their chance of an audit.

Here are some possible ways he recommends:

- Keep personal and business expenses apart. The IRS looks for common ways small-business owners cheat, and one way is claiming personal expenses as business expenses. Auditors will closely scrutinize use of business-owned autos, real estate, and materials to see if the entrepreneurs uses them at all for personal use. Mr. Fleming recommends being extra diligent about keeping business and personal expenses separate, holding separate business and personal credit cards and bank accounts so you have clearer documentation and lessen the chance you’ll inadvertently mix expenses in your tax reporting. And if you are audited, you better have your story straight: “Make sure that business auto looks like it’s used for business. Fill it with stuff, plaster advertisements on it,” Mr. Fleming says.

- Avoid “miscellaneous” expenses. Long schedule Cs filled with deductions – especially large ones – that the IRS can’t specify are sure to raise eyebrows. Clearly label every deduction so there’s no question. “Don’t have $2,000 or $3,000 of ‘other stuff,’” Mr. Fleming says.

- Keep organized records and receipts. Obvious, right? But it can’t be stressed enough. Messy records look like somebody’s trying to hide something or may have forgotten to document that one big payment. Use an accounting program that allows for double-entry bookkeeping, and keep very neat records and receipts.

- Hire a trusty accountant. Yes, professional help costs money. But it can also save you money and agony – especially when dealing with the federal government. A seasoned tax preparer can not only advise you on what tax breaks are available, but should have enough experience with audits to help you minimize your risk.

- Avoid the home-office deduction. Deductions are great when they save you serious money. But not every deduction is worth the hassle of taking. Many tax experts advise entrepreneurs to give second thought to taking the home-office deduction. Some businesses with high home utility costs and big home offices used exclusively for work do reap big savings. But for many, the tax break is meager compared to the potential headaches it can cause.

- File an extension. People used to believe that filing for an extension increased the risk of audit. But some studies have shown that filing for an extension actually reduces the audit risk at least slightly, Mr. Fleming says. Of course, not everybody wants their tax filing looming over them over the summer. “If you don’t mind delaying filing your return, it might help,” he adds.

Other tips on preventing tax audits can be found here, here and here.

Any other tips for avoiding the tax auditor? Has your business been audited?

Some people have questioned whether a venture capitalist is the right choice to head the Small Business Administration. But even further, what if that venture capitalist had a questionable track record investing other people’s money?

ProPublica.org recently explored the performance of Solera Capital, the New York-based private-equity fund that newly appointed SBA administrator Karen Gordon Mills was managing director of from 2000 to 2007. The fund raised $250 million in initial funding, the article notes, predominantly from public pension funds. CalPERS, the huge California pension fund put more than $72 million into Solera and had received only $102,345 in distributions through June 30, 2008. The Oregon Public Employees Retirement System invested $51 million and received back less than $2 million through June.

These payouts are “meager,” the article says, considering it’s been nine years since the money was invested. The fund could still reap big payouts, but generally by year nine private-equity funds are “very much in the harvest phase,” Pavel Savor, an assistant professor of finance at the University of Pennsylvania Wharton School, told ProPublica. The typical life span of such a fund is 10 to 12 years.

Ms. Mills and the Obama transition team would not comment on questions about Solera’s performance, as a spokeswoman said they are not responding to reporters’ questions about Ms. Mills until she is confirmed.

We called Mark Heesen, president of the National Venture Capital Association, to get some more perspective. Mr. Heesen says while Solera’s performance, as reported by ProPublica, isn’t good by any measure, the majority of vintage year 1999 and 2000 private-equity funds are performing very poorly. Many of these funds are sitting on investment companies they thought would go public a long time ago, but haven’t because of the dried up IPO market. “Is that a black mark on Ms. Mill’s record? It’s hard to say,” Mr. Heesen says. “Unfortunately there’s a lot of companies with her in terms (of being) a first-time fund created at the height of the bubble. I’d also say that the jury is still out in that there could be one or two diamonds that could have payoff.”

Of course, Solera is only a small piece of Ms. Mills extensive professional experience. She has a Harvard MBA, and has led a couple other private-equity firms that ProPublica did not investigate. Ms. Mills is currently president of MMP Group, a Brunswick, Maine, private-equity firm and has worked to raise private-public investments and chaired Maine Gov. John Baldacci’s Council on Competitiveness in the Economy.

You can listen to a podcast about U.S. small businesses that Ms. Mills did with Business Week last October here.

Readers, do you think Solera’s performance should be considered when deciding if Ms. Mills is fit to run the SBA? Why or why not?

Consumers rate regional food chains above national fast-food chains in overall customer experience, according to a recent survey by Sandelman & Associates, a San Clemente, Calif., market research and consumer-trends firm.

In a survey of 94,000 users last year, In-N-Out Burger of Irvine, Calif., was the top winner in overall customer satisfaction, which takes into account, among other things, quality of food and service, cleanliness and value for the money, in the 2008 Quick-Track Awards of Excellence.

“It’s probably easier to maintain the highest standards if you’re only operating in a couple of states,” says Paul Clarke, vice president of sales and marketing at Sandelman & Associates. “So, customers recognize the difference.”

Indeed, consumers appear to be “trading down” from high-end restaurants and frequenting lower-priced restaurants more than they used to. Sales are predicted to pick up in quick-service restaurants by 0.4% this year, while full-service restaurant sales are expected to decline by 2.5%, according to the National Restaurant Association.

With customers recognizing the quality and value of local and regional food chains, there’s an opening here for local businesses to make inroads in their market.

Here’s the ranking of the top chains, their home base and the percentage of “excellent” overall rating:

1. In-N-Out Burger, Irvine, Calif., 60%

2. Raising Cane’s, Baton Rouge, La., 59%

3. Giordano’s Pizza, Chicago, 56%

4. Chick-fil-A, Atlanta, 55%

5. Panera Bread, St. Louis, 54%

6. Chipotle, Denver, 52%

7. Pei Wei, Scottsdale, Ariz., 51%

8. Firehouse Subs, Jacksonville, Fla., 51%

9. Taco Tote, El Paso, Texas, 50%

10. Qdoba, Wheat Ridge, Colo., 49%

Surveyed customers were also asked to rate restaurants according to 15 attributes. Here’s what they found out:

- In-N-Out Burger got the highest “excellent” rating on taste of food, as well as top ratings in quality of ingredients, friendliness of staff, and accuracy in filling orders, finishing in the Top 3 on eight of 15 attributes

- Subway, the chain with the most U.S. units, earned a top rating for healthy and nutritious food.

- McDonald’s, the sales leader, appealed most to kids.

- Little Caesars earned kudos for value and affordability.

How would you rate your experience in regional fast-food chains? How can local businesses tap into consumer interest in buying local?

Photo: Associated Press

Small-business owners have griped for months that they’re being left out of the government’s massive bailout of big financial institutions and auto makers. They’re frustrated that the government is giving money to banks, and banks are stuffing it in their vaults instead of lending.

Now a few small businesses are finding out what it feels like to be bailed out. Two Southern California towns are offering low-interest loans to local car dealerships that have been pummeled by the weak economy and the area’s plunging real-estate market.

Victorville, Calif., is offering a $200,000 loan to a family-owned dealership called Victorville Motors. And Norco, Calif., has approved two $500,000 loans, to go to a local Dodge dealership and a local Mazda dealership. “The last thing we want is for them to shut down, leaving an empty building, an eyesore in the auto park, and more people unemployed,” Victorville’s mayor reasoned.

Some in the area worry that the cities have started traveling down a slippery slope - that other businesses will come looking for handouts, too. Cities and towns can’t offer financing to every business owner who comes knocking. And while local officials in these two towns say the dealerships are pillars of the community, selling cars these days is not exactly a growth business. As this story notes, thousands of dealerships are expected to close this year alone.

It’s not hard to see why these small businesses believe they deserve their own bailout. The city governments need the businesses’ tax revenue, too, so they have an incentive to help out. But is the answer to prop up businesses that may be doomed regardless? No one knows how long it’ll take U.S. consumers to get back on their feet and ready to buy new cars again.

Readers, what do you think? Should local governments prop up businesses in their town? Does small business deserve its own bailout? Or should these businesses accept that if they can’t muddle through the downturn, they need to restructure on their own?

Photo: Associated Press

Until now, being “green” has predominantly meant selling eco-friendly products or services. But today’s harsh economy presents a new opportunity for businesses to take environmental stewardship to a whole new level – by helping customers buy less stuff.

Joel Makower, editor of GreenBiz.com, argues in a recent blog post that green businesses have long downplayed the value of promoting sustainable consumer buying habits for a self-serving reason: Mass consumerism is what has kept so many businesses, green or not, vibrant for so long.

But consumers aren’t spending like they used to, and there’s a growing “voluntary simplicity” movement with people trying to live less materialistically, he says. Businesses should use this new frugality to their competitive advantage by actually encouraging customers to buy less and live more sustainably by selling quality products and marketing the concept of simple living. “To a large extent, this is the ultimate green-economy strategy — enabling customers to reduce their impacts by doing business with your company,” Mr. Makower writes.

Some companies have already pulled it off successfully. He points to an example: Outdoor-wear maker Patagonia cut its U.S. product line by 30% and founder Yvon Chouinard explained to customers: “What does this mean to you? Well, last fall you had a choice of five ski pants, now you may choose between two. This is, of course, un-American, but two styles of ski pants are all that anyone needs. They contain all that we have learned about design and the best available coatings for weather protection.”

While I doubt many small businesses will be telling their customers to “buy less” anytime soon, Mr. Makower makes a compelling point. Companies need to let go of the idea that only a big upswing in consumer spending will save them. Rather, consumers will be spending less, but they’ll be looking to spend their precious dollars with businesses that act ethically and take bold and authentic steps to reduce their environmental impact – not just selling green products. The businesses that will prosper may well be the ones that can show consumers how to save the planet and their money simultaneously.

Do you think Mr. Makower makes a good point? Do you see green marketing changing in this economy?

Photo: Associated Press

Reality shows usually cover things like Paris Hilton and her BFF trying to become domestic, or extreme makeovers of families with heartbreaking stories with their dilapidated houses. But a reality show for small business?

Yes, it’s called “Peter Perfect,” and it’s being shown on the Style Network and hosted by British personality Peter Ishkhans, an entrepreneur and life stylist. He and his team not only give a small business a new coat of paint, new signage, and a cohesive theme for its retail shop, but also personal makeovers for the owners and their staff.

The show premiered last March featuring nine businesses, including a roasting coffee shop, surf shop, candy store, flower shop and a neighborhood bar and grill. In its first season, all the businesses came from the California area. Now in its second season, having debuted Jan. 3, the series has branched out, transforming small businesses in Houston, Dallas, Cleveland, as well as several cities in California.

You can see on the right a clip from last season of a wedding-cake business from Thousand Oaks, Calif., called For Heavens Cakes.

“We really are looking for people who are at a point where it’s their last chance at keeping the door open,” says Stephanie Drachkovitch, executive vice president and co-owner of 44 Blue Productions, which developed the show. “They kind of don’t know where to turn at this point. They tried everything that they know and have in their arsenal. … They’re at their last straw.” Her previous work included developing “The Bachelor” and “Who Wants to Be a Millionaire.”

The show, not surprisingly, has increased visibility and sales for the retailers. A praline-brittle candy received $7,000 worth of orders a few days after its story aired; one month last summer, prior to the airing, the store owner sold only $30 of candy.

“I think it made us go, ‘Oh my God, are we the right show at the right time?’” Ms. Drachkovitch asked herself during the middle of shooting the second season last fall. “We read the headlines, and we started to look at it as ‘economic reality programming.’ This show could not be better timed. Now it’s taken on greater significance with viewers. … We definitely felt a stronger sense of mission as production continued on and these headlines emerged on a daily basis.”

Want to get in the show? Here’s a look at Ms. Drachkovitch’s thought process when she selects the small businesses that appear in “Peter Perfect”:

What’s Your Curb Appeal? Besides filling out a lengthy questionnaire online, applicants are asked to send a video tape of themselves at their store. So, they need to give a tour of the business, explaining their displays, as well as showing shots of the exterior and the neighborhood they’re in. Producers usually select small retail shops, not big warehouses. And also make sure that your town’s laws don’t have strict rules in changing signage.

Who are the Players? The show isn’t only focused on transforming businesses, but also making over the people who work there. Besides the owner, three or four others will get an image makeover, complete with new hair styles and clothing. The show’s host believes that renewed confidence in staff is a big part in the whole process of rebranding the business.

What’s At Stake? “Basically what we’re looking for is a business that is in need,” Ms. Drachkovitch says. “They need help. There has to be something at stake.” A struggling local bar that has been around for two decades and needs a facelift to get customers back. A mother-daughter tug of war over how a spirit-wear company should grow. A surf-shop owner who wants to propose to his wife but can’t risk that because his business isn’t doing so well. These are the stories that compel people to watch and stay tuned.

What’s Your Audience Appeal? The Style Network’s target demographic is primarily female ages 18-49, so businesses that would be attractive to that audience have a better chance of getting picked.

Can You Answer the Following? Mr. Peter Perfect himself always ask these questions: What was your original dream of this place? What did you want to accomplish? Can you describe your image to me?

With the economy souring for small-business owners, they may have a lot more applicants for next season. “Peter Perfect” airs on the Style Network Saturdays at 9 p.m. Eastern and 8 p.m. Central.

Would your business be right for a reality TV show? What would an episode be like?

A recent article in The New York Times offers what the author admits is “an unscientific survey of five business owners” to find out how they’re faring in these tough times. The verdict? These five small-business people, all on Cape Cod, are happy and feel they’ll emerge from the down economy just fine.

It’s nice to hear about business owners who are in good spirits. We hear way too much from the other side, where restaurants are closing and businesses are struggling to pull through the recession alive. But what struck me in the Times article was that two of the five business owners relied on extra income streams outside of their primary business. I’m no math major, but even I can figure out that’s 40% - a pretty high number.

One business owner, an exterminator who says he made $84,000 last year from that business, supplemented his income with $178,000 he earned by shorting stocks. He checks the stock market from his truck in between visits to pest-infested homes. Another business owner, a contractor, boosts his income through two rental properties. He’s also working on a side business coaching judo.

On one hand, entrepreneurs tend to see business opportunities everywhere they look, and it’s great to capitalize on them when they arise. That’s an entrepreneur’s specialty, no doubt. But how many small-business owners these days are forced to rely on a second - or third - income to live comfortably? Can you build your business when you’re distracted by other projects?

Readers, have you taken a second job to help ease your way through this recession? Is it worth the extra income?

Photo: AP