Monthly Archives: October 2013

Women in Business: Mujeres de Exito

Women across the globe struggle to obtain low-interest loans in hopes of securing their families’ futures. One such woman is Marisol Santiago from Villalba, Puerto Rico. When she lost her job in the healthcare industry following the global recession, she was forced to take on three part-time jobs to support her children. Thanks to a small loan, Marisol was eventually able to launch her own pharmacy.

This is not so rare in Puerto Rico, thanks to Doral Bank. The bank, which has branches throughout the U.S. as well, teamed up with communities and non-profits to launch a program aimed at promoting women’s entrepreneurship. According to Doral, “these initiatives are focused on providing the requisite financial support and peer monitoring, so that women are propelled as drivers of economic growth.”

Marisol’s loan was a result of this effort. In fact, more than 25 women have received financial aid and mentoring for their businesses through Mujeres De Exito, or Successful Women, over the last two years. The program has already helped create more than 30 women-owned businesses and 100 jobs.

Still, Doral Bank and other programs like Mujeres De Exito have a lot of work to do. According to the Kauffman Foundation, less than 5% of venture financing goes to women-owned businesses in the United States today. In Puerto Rico, the number of women with bachelor’s degrees is significantly higher than men, and yet only about 1 of 100 women own their own businesses.

Doral Bank’s Lucienne Gigante explains: “There are millions of bold and ambitious women like Marisol in communities across Puerto Rico and the United States who deserve a more supportive hand. Financial institutions can play a vital role in this effort. If fostering entrepreneurship and advancing women are made distinct priorities at the local level, women will be empowered to take action, rebuilding communities one household at a time.”

Interview with Rob DeMartini, CEO of New Balance

Rob DeMartini, CEO of New Balance, recently discussed the company’s American factories, its plans to expand beyond running shoes, and the recent $500 million Brighton Landing project in an interview with the Boston Globe’s Taryn Luna.

Luna asked: “You’re pushing the federal government to apply the Berry Amendment, which requires the military to provide soldiers with US made gear whenever possible. How would this affect New Balance’s US manufacturing?

DeMartini: “We’re not making a push to do anything but get the military to enforce a law that has been on the books since the ’40s. US-made athletic shoes are available. It’s the only place on the uniform, head-to-toe, where the Berry Amendmentis not enforced. The commitment we’ve laid out is if Berry will be enforced, we’ll hire up to 250 more workers into our five factories.”

New Balance has been very vocal against changes to the Trans-Pacific Partnership that could remove a tariff on shoes exported to the US. If this happens, would your domestic factories remain open?”

“We’ve been making shoes in the US since 1938. No single piece of legislation is going to stop us, but it’s going to make it harder and harder.”

“New Balance is churning out more casual shoes than ever before. Why?

“Our casual shoes are coming out of our Made in the USA program. You can command a premium for it and consumers flock to it. I was in Mexico recently and some of our casual shoes are commanding $150 to $200 US dollars because American still means quality.

The New Balance brand is still a performance brand at its heart, but lifestyle is very popular. It probably makes up 35 percent of our total sales. It’s sports shoes worn on Friday and Saturday nights. The casual work environment has helped us. People don’t dress as formally anymore.”

“Brighton Landing just broke ground. Why invest $500 million in the project when many of the facilities won’t be used by New Balance and the current headquarters are more than adequate?”

“It’s a complex and complicated project that is bigger than New Balance the company. From a business standpoint, we’re preparing to be a $5 billion company. Our headquarters will be significantly bigger. The rest of the buildings, whether it be the medical-oriented office parks, the retail, the T stop, or the sports complex, that’s about giving back to Brighton.”

All Eyes on FATCA

All eyes are on the FATCA (Foreign Account Tax Compliance Act) at the moment, as it will be phased in from January 2014 by the United States. This will influence bank account holders around the world who are US citizens, including those in Switzerland.

Tax Attorney Bill Sharp is urging the US Department of Justice to clarify certain issues. He believes that taxpayers would have to make sure that not more than two percent of the deposit assets come from a US source, something that he points out is difficult to provide.

Lawyer Marnin Michaels of the law firm Baker & McKenzie does not agree with Bill Sharp.

According to Mr. Michaels, FATCA would include US taxpayers residing in Switzerland as part of the 98% local clientele.
Laut dem Zürcher Anwalt Marnin Michaels von der Kanzlei Baker & McKenzie zählen gemäss Fatca US-Steuerzahler mit Wohnsitz in der Schweiz zu den erforderlichen 98 Prozent Lokalkundschaft.

Interestingly, in Switzerland, the agreement that was negotiated with the United States varies from agreements drawn up with other European countries. It takes into account Swiss legal differences including those differences in the area of data privacy and Swiss banking secrecy law. As a recent statement in Bern, Switzerland said, “Swiss financial institutions will be forced to implement Fatca from this date, irrespective of an agreement between Switzerland and the United States, if they do not want to be excluded from the US capital market.”

According to information explained in Bern, areas that will not be part of the scope of the FATCA agreement include social security funds, private pension funds and property and casualty insurers.

Time will tell how FATCA will play out on the international scene. Swiss banks have yet to decide where they fall in the opinion poll. The Swiss Bankers Association did say in an article on Genevalunch “The banks nevertheless continue to view Fatca critically due to the costs it incurs and the administrative burden it creates. Were they, however, to refuse to implement Fatca, they would face competitive disadvantages internationally that would jeopardise their survival.”

Tax Foundation Reveals the Most Tax-Friendly States for Businesses

According to the Tax Foundation, many states are hampering business growth with complicated tax structures. The group’s 2014 State Business Tax Climate Index recently ranked all 50 states to reflect the competitiveness of a state’s policies to businesses both large and small. The report looked at state income, corporate, property, sales and unemployment insurance tax policies.

This year’s results, like last year’s, revealed that Wyoming has the best business tax climate in the country, while New York has the worst. Alaska and New Hampshire were also ranked among the most tax-friendly states for business.

Tax Foundation economist Scott Drenkard explained that income taxes were included in the report since 94% of all business filings are through this tax, and not corporate taxes.

“Individual income taxes matter because businesses are trying to attract labor to their state. If the choice is between New York City, which has as high as a 12% income tax, and say, Charlotte, where you have much more moderate income tax burdens, all else equal, people might go with the lower-tax option.”

According to the Foundation’s report, the most tax-friendly states for business are:

  1. Wyoming
  2. South Dakota
  3. Nevada
  4. Alaska
  5. Florida
  6. Washington
  7. Montana
  8. New Hampshire
  9. Utah
  10. Indiana

6 Pointers from Business Leader James Donovan

James Donovan recently gave a lecture at the University of Virginia School of Law. With more than two decades of experience, Jim Donovan, Goldman Sachs draws on his own career to provide first-hand, practical advice to his students. On October 4th, Mr. Donovan discussed his career and offered six pieces of advice for anyone working to improve their client relationships.

He began by explaining that cultivating client relationships is essential for any professional who works with clients, including lawyers, bankers, non-profit organizations and many others. First, he suggested, become a strategic adviser for your client. In other words, become the person they trust and rely on in any situation. Next, he explained that the ability to bring in new clients is not a natural skill, but something that can be learned. He also stressed the importance of taking courses in the law business section, as well as asking open-ended questions and listening attentively to the answers. This will build strong connections, Jim Donovan of Goldman Sachs explained. Last, he reminded his students to be creative and upbeat about their jobs and challenges.

Professor Donovan’s lecture was recently broadcast on the University’s website. Here is the full discussion:


Digital Tools in the Small Business World

USA Today Money’s Smart Small Business series focuses on expanding small firms and their tactics, challenges and triumphs.

Reuben Canada, founder and CEO of Canada Enterprises, explains why digital tools have a significant role in small business growth today. He explains that he uses several social media platforms, including Facebook, Twitter, and Youtube to promote his all-natural beverage, called Jin-Ja, which he created in 2009.


Business Leaders Remain Hopeful Despite Shutdown

The partial government shutdown on Tuesday had a minimal impact on business leaders. Partisan brinkmanship is not new to Washington, and according to the Boston Globe, businesses aren’t expecting any major changes in the near future. However, a threat does loom over the heads of business owners; when the federal government reaches its borrowing limit in the next two weeks, Congress will be forced to increase it or allow the U.S. to essentially default on its debt.

“The last time Congress tested the debt ceiling two years ago, the political stalemate unsettled global financial markets, caused stocks to tumble around the world, and dealt a setback to the economic recovery before Republicans and Democrats reached an eleventh-hour compromise,” the Boston Globe explained.

Nigel Gault of the Parthenon Group “The government can be shut down for quite a while without doing serious damage to the economy. Triggering the debt ceiling would very likely cause a recession. And if we go right up to the last minute, stock markets will panic.”

The University of Massachusetts and the Federal Reserve Bank of Boston recently published an assessment of the economic condition of the state.

“The sequester, the budget battle, and the debt limit brinksmanship threaten our fragile and sluggish recovery,” the report states, “and only extend the pain being experienced by families and businesses still awaiting an opportunity to participate in a recovery that is now several years old.”