Payday Lending’s Short Story In A Long Article

Posted by Admin | May 24th, 2010

BusinessWeek is carrying an interesting article on the evolution of payday lending stores–a phenomenon that has emerged in recent years and exploded nationwide recently. You know the stores–they lend against future paychecks. Think MoneyTree or Check Into Cash, both are payday lending stores of the type discussed in the article.

Allan Jones wasn’t looking to kick-start an industry when he flew his single-engine Piper Saratoga from his home in Cleveland, Tenn., to Johnson City in the spring of 1993. He only wanted to persuade a man to come work for him. Jones took over his father’s small collection agency when he was in his early twenties and built it into a multicity behemoth—”the largest in Tennessee,” he’d tell you. But it gnawed at him that nearly two decades later he had no presence in the northeast corner of the state. So when he heard that James Eaton, an old friend of his father’s, had been let go after years in the business, Jones jumped into his plane to go get his man.

Eaton was stately, a 56-year-old who wore glasses and smoked a pipe. “He looked to me kind of like Sherlock Holmes,” Jones recalls. That made it all the sadder when Jones found Eaton working out of an office in a dilapidated gas station. There, in a shack with paint peeling off the walls, Eaton had set up a meager-looking business called Check Cashing Inc. “I guess I’ve found myself my man in northeast Tennessee,” Jones told himself.

Sitting down to talk with Eaton, Jones discovered that the business was different than he thought. Eaton was loaning cash to people who needed a bridge until the next payday. The school janitor who needed $100 today, Eaton explained, would pay him back $120 when he received his next paycheck.

Jones had built a successful debt collection business with around 250 employees—but he didn’t enjoy it. Debt collection meant unhappy people. Watching Eaton run his payday shop and interact with his working class customers, Jones was struck by how friendly it all was. “People would thank him,” Jones says. “They would thank him and thank him and thank him.”

The story is well-worth the read, despite being very lengthy, both to discover the evolution of this important business trend and because it explores the story of Allan Jones, an exemplary businessman.

New Charges on Airlines

Posted by Admin | April 6th, 2010

Spirit Airlines is looking for extra ways to raise revenue during the recession–and they think they’ve found the way. While many airlines already charge you for your shipped baggage, Spirit Airlines is going to be the first to charge for carry-ons.

Spirit Airlines announced it will charge as much as $45 each way for a carry-on bag, a new fee the bigger airlines have yet to try.

The charge will apply to bags in the overhead bin. Personal items that fit under the seat, such as purses, briefcases, backpacks or laptops, will still be free.

Spirit said it will add measuring devices at the gates to determine which carry-ons are free and which ones will incur the charge.

The new charge is $45 if paid at the gate, and $30 if paid in advance, and begins Aug. 1. Customers who pay to join Spirit’s new “$9 Fare Club” will pay $20.

My guess is that this move won’t result in higher revenue–but in less customers. I guess we’ll see, it certainly is innovative, but they probably should have tried to slash spending instead of raising fees.

Jobs Bill On Its Way

Posted by Admin | February 24th, 2010

It appears that the Jobs Bill supported by President Obama and Democrats in Congress is going to pass. The bill is a $35 billion appropriation, total, which supporters claim will help increase employment numbers. Detractors claim any employment numbers will only be in the public sector, and will thus be pulling from the productive, private, sector. The tax-breaks are welcome news to businessmen all over the nation, though, who are looking for some kind of economic relief.

The bill up for a vote Wednesday would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year. It would also extend the federal highway programs through the end of the year and make a $20 billion cash deposit into the highway trust fund to make up for shortfalls from lower-than-hoped gasoline tax revenues.

The bill could have a major effect on the economy over the next couple of years, so it is essential that businessmen and economists pay close attention to its provisions.

Toyota’s Mistake

Posted by Admin | February 6th, 2010

It seems that Toyota has had to recall a number of its models because of a possible “sticky accelerator” problem. They have been lambasted in the media for not acting quick enough to recall the vehicles, too, which is certain to harm their image. Irreparable harm has already been done in the short term–while Toyota used to have an image of perfection and affordability, they’re now being talked about as if they have no standards.

This has been a public-relations nightmare for Toyota, as its brand name has been synonymous with quality and reliability. Crisis management does not get any more woeful than this and the cost of this bungling so far—the initial $2 billion recall and the loss of 17% of share value since Jan. 21, when the gas-pedal recall was announced—is only a down payment on the final tally. The recall will surely expand, including cars produced in Japan. Lawsuits are being filed and an expensive settlement looms. And then there are the idle factories and empty showrooms to account for.

All of this will amount to a great deal of lost business for Toyota.

Building Islands is Expensive!

Posted by Admin | November 27th, 2009

The United Arab Emirates is essentially a nation made up of seven small kingdoms, or emirates. The most well-known of these emirates is Dubai, an area which is extremely rich. The area is well regarded in the west because of it’s embracing of the free market and other so-called western ideals. Apparently, though, Dubai’s real estate market has both risen and fallen with the West’s efforts too. During the height of the real estate boom, they were building islands that looked like palm trees or maps of the world. In fact, that is what Dubai is best known for, the efforts of the State-owned business Dubai World, which specializes in these sorts of real estate ventures.

However, Dubai World is now floundering. The company has some $59 billion in liabilities, a huge sum for such a small government to have incurred. The company plans to get back into the black by receiving a bailout from nearby emirate Abu Dhabi. We’ll see how it works out–but one thing is for sure–as the United States real estate market goes, so goes the world real estate market.